Karachi, December 07, 2021 (PPI-OT): Autos: Sequential decline expected in Nov-2021

Auto volumes for the PCs and LCVs are expected to grow by 32% YoY in Nov-2021 to ~19k units. Volumes in SPLY were lower primarily as the sector was going through a recovery phase post halt in sales during the lock down.

However, during 5MFY21 volumes may still report a robust growth of 59% YoY, accumulating to 103k units.

Honda Atlas Cars (HCAR) is expected to post a 35%/14% YoY/MoM increase in volumes in November. Moreover, we believe sales will continue to grow for the OEM over high customer interest in the newly launched City.

Indus Motor Company (INDU) is expected to register a growth of 28% YoY however, an 8% MoM decline. Similarly, Pak Suzuki (PSMC) is expected to post a 25% YoY growth, and a 17% MoM decline in sales volume during the month.

While the constant cost pressures and unfavourable currency movement are key risks to forthcoming margins amid delay in price increase announcements, the persisting chip shortage remains a risk on ongoing robust production.

Moreover, an increase in FED on locally manufactured vehicles from 5% to 10% is now on the cards as one of the potential revenue streams the government is eyeing in the probable Mini Budget. Furthermore, given restrictions on banning imports under the WTO, the government is now contemplating on raising import duties on imported CBUs to 50% in efforts to discourage imports and curtail the country’s piling import bill.