Karachi, May 10, 2023 (PPI-OT): Autos: Apr-2023E volumes to hit lowest mark since Dec-08

We preview auto sales volume for Apr-2023 where we foresee sales to hit its 14-year low levels to 3.7k units, down 56% MoM. The decline comes amid ongoing plant closures coupled with the impact of Eid holidays. To recall, HCAR's plant remained closed throughout the month, PSMC's plant for 2 days while INDU's plant remained operational during Apr-2023.

As the country's foreign exchange reserves remain far from comfortable levels and the IMF program at a standstill, administrative controls on imports are expected to remain intact. We expect cumulative volume decline for FY23 to clock in at more than 50% YoY, extending into 1HFY24 as well.

We maintain our Sell stance on the sector where we expect the combined impact of subdued demand and supply constraints to keep profits in the sector restricted. Any drastic resolution of supply side issues remains an upside trigger to our investment thesis