Karachi, January 14, 2020: Overall Pakistan car sales jumped by 23 percent MoM to 12.1k units in Dec-2019, however, the rise was largely led by 49 percent MoM increase in sales of Pak Suzuki Motor Company (PSMC).
The other two major manufacturers, Indus Motor (INDU) and Honda Car (HCAR) sales dropped by 12 percent MoM and 23 percent MoM, respectively.
The increase in sales of PSMC was largely driven by the announcement of increase in car prices by the manufacturer in mid of Dec-2019, which was effective from Jan 1, 2020. The decline reported by the other manufacturers was largely in line with the historical year-end phenomenon, where consumers generally delay their purchases until the new year.
On a YoY basis, weak demand dynamics was again evident from a 38 percent YoY fall in sales in Dec-2019, taking 1HFY20 decline to 44 percent YoY. This is primarily attributable to 1) higher car prices mainly due to PKR devaluation and 2) higher interest rates.
PSMC sales were down 26 percent YoY in Dec-2019, while INDU’s sales declined by 56 percent YoY with Corolla sales falling by 50 percent YoY. HCAR sales fell by 58 percent YoY during Dec-2019 with combined sales of City & Civic declining by 56 percent YoY.
Sale of motorcycles by Atlas Honda (ATLH) witnessed an increase of 6 percent YoY as sales clocked in at 85k units, however it recorded a decline of 11 percent MoM.
Tractor sales recorded a growth of 75 percent YoY with Millat Tractor (MTL) sales rising by 175 percent YoY. On the MoM basis, overall tractor sales were down 37 percent MoM.
We expect recovery in car sales volumes from start of 2020 as we believe volumes would have bottomed out in Dec-2019. We are currently ‘Market-Weight’ on the sector.