Dear Clients,

According to data released by Pakistan Automobile Manufacturers Association (PAMA), the automobile industry registered sales of 17,515 units for Jan’21. On a Y/Y basis, sales have grown by a healthy 47% compared to just 11,894 units sold last year. On an M/M basis, the automotive manufacturers saw an increase of 26% increase in sales. We peg the sequential growth to the New Year phenomena. Passenger car sales during the month stood at 14,543 units, up by 44% Y/Y while LCV and 4x4s sales stood at 2,972 units higher by 59% Y/Y.

Honda Atlas Cars (HCAR) and Indus Motors (INDU) cumulatively drove the industry sales across all segments whereas a sequential decline was reported for GHNL. In LCV and 4x4s, D-Max and Fortuner stood out with a 50% M/M and 56% M/M increase, respectively.

Overall, 7MFY21 sales remained healthy with 97,469 units sold, a notable rise of 23% Y/Y, as compared to 79,461 units sold during the same period last year. Pak Suzuki Motor Company (PSMC) remained a laggard with a lull seen in Alto sales while a recovery in Wagon-R and Bolan sales has helped the company restrict the decline in its market share.

– Indus Motors (INDU) enjoyed a phenomenal increase in vehicle sales with 5,452 units sold for the month, an increase of 36% M/M, led by Yaris and Fortuner variants. On a Y/Y basis, the launch of Yaris displaced absence of Corolla sales in the 1.3L segment and outpacing the former increasing 179% Y/Y increase. Cumulative sales for 7MFY21 stood at 31,591 units (up by 74% Y/Y).

– Honda Atlas Cars (HCAR) saw a sequential rise in sales during the month to 2,450 units as compared to 1,764 units in the previous month. The 39% M/M growth was witnessed across its model line-up. During the month, 387 units of BRV were sold as compared to 235 units last month. City/Civic sales also saw an increase to 2,063 units sold as compared to Dec’20. On a Y/Y basis, City/Civic cumulative sales stood at 14,021 units during 7MFY21, a rise of 59%.

– Pak Suzuki Motor Company (PSMC) sales saw better utilization levels sequentially after production inched up sequentially despite supply chain constraints. On the sales front, the company sold 9,013 units in Jan’21. Cultus emerged as a laggard for the company with a 14% Y/Y decline.  Alto, WagonR, and Swift saw triple-digit growth in sales. As a result, PSMC managed to report a 7% decline in sales for 7MFY21.

– Hyundai Tucson sales remained sticky sequentially with 393 units sold. Moreover, Porter depicted a decline of 1% M/M.

– Tractor sales have recorded a strong rise of 57% M/M led by Millat Tractors reporting sales of 3,862 units. On the other hand, Al-Ghazi Tractors garnered sales of 1,347 units for the month.

– Truck and bus sales reported a 6% uplift on M/M basis with 363 units sold. On a cumulative basis, sales were lower by 8 Y/Y in 7MFY21 amid a slowdown in demand.

– We have an Outperform stance on the sector as volumes are expected to depict sustainability after thoroughly recovering from the peak-Covid lull. We do not see competition to displace the volumetric outlook of the Japanese 3. We prefer INDU, PSMC, and HCAR.

Regards,
KASB Research