Karachi, April 07, 2022 (PPI-OT): Autos: Growth momentum to continue in March 2022
Auto sales for Mar-2022 are expected to clock in at 25,800 units which is a growth of 29% on both YoY and MoM basis. Sales during 9MFY22 are set to grow by 50% YoY to 196,066 units.
We anticipate a declining trend in auto sales volume for the remaining part of the year as the impact of increase in taxes and the additional round of price hikes in Mar-2022 weighs in.
Growth streak continues
Auto sales for Mar-2022 are expected to clock in at 25,800 units, which is a growth of 29% on both YoY and MoM basis while sales during 9MFY22 are set to grow by 50% YoY to 196,066 units. Growth for the month was skewed towards the higher income segment cars after subdued sales last month as compared to the middle-income segment which is dominated by PSMC.
INDU is likely to post its highest ever monthly sales of 7,150 units which is up by 54% MoM driven by higher demand for Corolla. The company had its sales restricted last month owing to a plant turnaround and lesser number of working days. Similarly, HCAR is anticipated to post sales of 3,600 units, up by 31% MoM as sales for Honda City continue to remain upbeat. Sales for PSMC are likely to clock in at 15,050 units for the month posting a growth of 19% MoM despite deteriorating affordability of the middle-income group amid inflationary pressures and rising car prices.
Margins to remain under pressure
Although sales volume in the industry has shown little signs of slow down so far, margins of the auto assemblers however have taken a hit as can be seen from the Dec-2021 quarter financial results. Cumulative gross margins of the listed players have declined to their lowest since Sep-2021 (barring COVID-19 quarter). Primary reason for the decline has been the rising cost of imported materials amid sharp Rupee depreciation and rising freight costs. During 3QFY22, however, auto players aggressively passed on their costs by 11-18% which is expected to support profitability going forward. With some resistance coming from new model launches (Civic and Swift), we anticipate a declining trend in overall auto sales volume for the remaining part of the year as the impact of increase in taxes and the additional round of price hikes in March 2022 weighs in.