Karachi, May 11, 2022 (PPI-OT): Autos: Sales during April 2022 show signs of weakness
Auto sales for Apr-2022 are expected to clock in at 21,950 units, which is a drop of 19% on a MoM basis. Nonetheless, cumulative growth for 10MFY22 would compute to 50% YoY, reaching 226,481 units.
We believe sales during the month remained under pressure owing to price hikes led by PKR depreciation, higher taxes and rising costs, higher interest rates coupled with the impact of lower working hours during the month of Ramzan.
We anticipate a declining trend in overall auto sales volume for the remaining part of the year as the impact of interest rates and higher cost led price hikes weighs in.
Macro factors weigh in on automobile demand
Auto sales for Apr-2022 are expected to clock in at 21,950 units, -19% MoM. Nonetheless, cumulative growth for 10MFY22 would compute to 50% YoY, reaching 226,481 units. We believe sales remained under pressure owing to price hikes led by PKR depreciation, higher taxes and rising costs, higher interest rates coupled with lower working hours during the month of Ramzan.
After posting its highest ever monthly sales during last month, INDU is anticipated to see its sales decline by 17% MoM to 5,850 units owing to the factors mentioned above. Sales mix for Yaris/Corolla is expected to be 40%/60% while the same for Hilux/Fortuner is expected to be 56%/44%, respectively.
HCAR is anticipated to witness its sales drop to 2,500 units, down by 32% MoM as the sales mix tilts towards the higher priced Honda Civic while sales for PSMC are likely to clock in at 12,500 units for the month which is a decline of 17% MoM. New Swift sales would have likely gained momentum over initial consumer excitement while Cultus sales may have revived during Apr-2022 post production issues in Mar-2022.
Aggressive price hikes to improve profitability
Despite the Nov 2021 round of price hikes, margins of the auto assemblers have remained under pressure owing to steep PKR devaluation and surging freight rates. Going forward, the multiple price hikes announced by auto assemblers (11%-18% during 3QFY22) is expected to bring a sequential improvement to the sector’s margins. However, 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 interest rates and higher cost led price hikes weighs in.