Total automobile sales closed the year on a relatively high note, exhibiting recovery throughout the board. Jun20’s sales are likely a reflection of easing lockdown restrictions resulting in the fulfillment of order backlogs. We believe the pent-up demand influenced growth in all major automobile segments including HCAR (+514% MoM) and INDU (+363% MoM).

A yearly comparison, however, reveals a more telling picture with car sales depicting a fall of 50% compared with Jun19’s sales. On a cumulative basis, total car sales declined by 54% YoY to 96,455units largely due to: 1) overall economic slowdown and high inflation reducing purchasing power, 2) higher vehicle prices due to PKR depreciation, and 3) higher interest rates limiting auto financing.

  • Within the passenger vehicles’ segment, bulk of the increase on a monthly basis was witnessed in the 1,300cc and above category supported by most major brands in City, Civic, Corolla, and notably, Yaris.
  • HCAR’s sales grew by 514% MoM to 2,003units during Jun20 with majority of the increase being witnessed in Civic and City sales (+599% MoM). Meanwhile, BR-V sales also benefitted from easing lockdown as they grew by 160% MoM.
  • An annual comparison, however, suggests HCAR’s sales fell by 61% YoY to 16,387units during FY20 due to significantly higher vehicle prices and limited purchasing power.
  • INDU’s sales also benefitted from the easing of lockdown restrictions, depicting a growth of 363% MoM to 2,531units during Jun20. Yaris sales during the month were able to outpace Corolla’s with 1,160units sold (+595% MoM), primarily on account of the new-model effect. On a yearly basis, INDU was also unable to weather the economic slowdown and depicted a decline of 51% YoY to 29,333units during FY20.
  • PSMC sales portrayed a contrasting trend to the industry, witnessing an increase of just 9% MoM to 3,912units. While Suzuki Swift and Alto managed a recovery of 159%/27% MoM to 202/1,656 units, Cultus and Bolan sales fell 10% MoM and 16% MoM, respectively. Note that PSMC had recently hiked the prices of its offerings, likely affecting sales during the month.
  • Tractor sales also recovered by 187% MoM to 5,314units with AGTL witnessing an increase of 1,295% MoM to 1,925units and MTL depicting a growth of 97% MoM to 3,378units. Overall tractor sales fared relatively better during FY20 albeit witnessing a decline of 35% MoM to 20,706units.
  • ATLH was the only industry that managed to recover to pre-COVID levels of sales, growing by 644% MoM to 90,039 units. Even on a yearly basis, the company’s demand remained relatively insulated from the economic slowdown, falling by 22% YoY to 873,902units. We believe that while the demand for motorcycles was present, the company’s sales were affected largely due to the lockdown restricting the company’s operations.
  • As mentioned, we believe the monthly recovery largely reflects easing of lockdown restrictions enabling companies to cater to the pent-up demand. While lower interest rates may support vehicle demand via car financing, organic demand may likely materialize at a relaxed pace due to the overall slowdown in the economic landscape.