Karachi, March 09, 2022 (PPI-OT): Pakistan Autos: Demand remains Buoyant

The ‘fear of missing out’ has fashioned autos as an asset class, providing a perfect platform for an inflation-hedged investment. The trend is indicated by secondary market prices surpassing that of the primary market by ~5-10% across various segments. This has been contributing to sustain demand lately and is likely to continue doing so in the near term in our view.

Tight supply or measured supply has been fueling this behaviour which is also likely to benefit OEMs to wither this period of high inflation environment and posting consistent profitability. The new model effect would additionally drive profits where our latest correspondence with industry players suggest Civic booking already passing 2k units.

Higher fuel prices have contributed in shaping a move towards newer and efficient vehicles. This puts PSMC (TP: PkR325/sh) in bright spot with Alto and Cultus among its star products. Similarly, we expect INDU’s investment in hybrid technology to bear ripe fruits in long term.

Lastly, we expect sustainable farm income to keep the purchasing power upbeat, providing additional cushion to sales of INDU (TP: PkR1,825/sh) and PSMC (PkR325/sh). Similarly, we expect higher demand for tractors as well – positive for MTL and AGTL.