Karachi: According to the latest numbers released by the PAMA, auto sales in the country rose by an encouraging 16%YoY to 112k units in 8MFY12.
According to AKD Securities, auto sales growth was underpinned by strong car sales (+17%YoY to 98k units) and 11%YoY growth in LCV unit sales. On a company wise basis, PSMC recorded the highest sales growth during the period under review with sales rising 35%YoY to 70k units white tractor sales recovered strongly after the reduction in GST to 5% and resumption in agri loans by ZTBL.
Auto sales up 16%YoY: According to the latest numbers released by the PAMA, auto sales in the country rose by an encouraging 16%YoY to 112k units in 8MFY12. Auto sales growth was underpinned by strong car sales (+17%YoY to 98k units) and 11%YoY growth in LCV unit sales. Amongst the Car’ sales, most of the growth in sales accrued from the 800cc and 1000cc categories with growth up by 30%YoY and 35%YoY, respectively, while sales of the 1300cc and above category were relatively flat (+1 %YoY), which was most likely due to lower sales of HCAR (production disruption following the Thailand floods). Auto sales for the month of Feb’12 stood at 15k units, which were up by 11%YoY, largely due to 12%YoY growth in `Car’ sales.
PSMC tops sales growth in 8MFY12: On a company wise basis, PSMC recorded the highest sales growth during the period under review with sales rising 35%YoY to 70k units. All of PSMC’s models with the exception of Liana recorded double digit sales growth in 8MFY12. Mehran and Bolan sales (both beneficiaries of the Govt. of Punjab Yellow Cab scheme) were up 37%YoY and 47%YoY, respectively, to 22.5k units and 127k units, while Ravi sales also rose by 8%YoY to 10.7k units. While PSMC sales have benefited from the Yellow Cab scheme, the ban on CNG kit imports will impact the company sales the most given its concentration in the lower engine size/economy class categories. INDU sales for 8MFY12 grew at a moderate pace of 4%YoY to 34k units, with sales growth largely driven by Corolla (+6%YoY to 29k units). HCAR sales in 8MFY12 fell sharply by 33%YoY to 7k units, with sales in Feb’12 plunging to just 33 units as HCARs production had yet to restart following the Thailand floods.
Tractor sales up sharply in Feb’12: Tractor sales recovered strongly after the reduction in GST to 5% and resumption in agri loans by ZTBL. Sales for Feb’12 surged to the highest ever monthly level of 8.9k units. Recall, tractor sales had plunged following the imposition of 16% GST in federal budget FY12, because of which cumulative sales for 8MFY12 are down by 52%YoY to 21.9k units.
Outlook: Automobile manufacturers are in for challenging times in the near term, particularly for the economy segment as i) surging petrol prices, ii) ban on CNG kits imports and iii) rising CBU imports (+170%YoY to US$284mn in 7MFY12) are likely to pressurize sales going forward. Furthermore, weakening of farmer economics (lower cotton and wheat prices) would also subdue demand from the rural sector. While the recent fall in JPY is a slight palliative for the sector, AKD Securities believes that revival in auto financing seems to us as the only real demand driver for local autos going forward.