Karachi, March 11, 2022 (PPI-OT): Pakistan Autos: Feb’22 PSMC emerges as star performer

Feb’22 total industry sales of 27,153 vehicles (+28%YoY/+3%MoM), consisting of 18,053 passenger cars (+33%YoY/+6%MoM), 3,610 LCVs (+26YoY/0%MoM), and 501 trucks (+99%YoY/-27%MoM), witnessed a fine month in our view, posting growth despite fiscal tightening, although, at a declining rate.

8MFY22 total industry sales of 218,750 units (+48%YoY), consisting of 149,811 passenger vehicles (+57%YoY), 28,422 LCVs (+51%YoY) and 3,762 trucks (+72%YoY), continued to remain strong, especially passenger vehicles whose numbers have exceeded the previous high 170k units in 8MFY18. The effect of stimulus provided in FY22 budget continues to persist despite the reversal through supplementary finance bill.

Segment-wise, the 800cc and 1,000cc segments emerged victorious, posting growth of 71%MoM/60%YoY and 23%MoM/45%YoY, respectively. On the flipside, the sales of premium 1,300cc+ segment declined 32%MoM on account of supply chain issues due to persistent semi-conductor chip shortage. In 8MFY22, the volumes of 800cc/1,000cc/1,300cc+ segments have depicted a growth of 74/78/39%YoY.

Amongst major OEMs, PSMC presented robust growth of 40%MoM/42%YoY as the company was finally able to deliver its products this month which were supposed to be delivered last month. By contrast, volumes of INDU and HCAR both displayed a contraction of 32%MoM, missing their monthly targets. In 8MFY22, the sales of PSMC/INDU/HCAR have posted a growth of 69/38/42%YoY.

On the macro perspective, we expect slight slowdown in the volumes going forward where the sales figures in upcoming months are extremely important to analyze the intensity at which the industry gets hampered. To recall, auto loans have contracted 0.4%MoM, declining for the first time since Jun’20, thereby giving a clear indication that the growth has started to slowdown. In our base case, we expect the growth in passenger cars to close above 36%YoY in FY22.