Karachi, September 06, 2021 (PPI-OT): Auto: Aug-2021E sales to report 13% MoM decline from record sales

Auto volumes for the listed OEMs are expected to grow by 81% YoY in Aug-2021 to ~21k units. The volumes in SPLY were lower primarily due to plant shutdowns and economic slowdown due to the pandemic.

Just last month the auto sector had posted highest monthly volumes in the last three years and one of the highest in the history of the auto industry in Pakistan. We expect healthy growth in volumes going forward due to reduced car prices after duty and tax relief measures announced in the federal budget, which became applicable from last month.

Honda Atlas Cars (HCAR) is expected to post a 43%/40% YoY/MoM increase in volumes in August and we believe it will continue to post better volumes due to positive customer interest in the newly launched City. Pak Suzuki (PSMC) and Indus Motor Company (INDU) are however expected to register a sequential decline during the month.

We believe volumes are likely to remain on the higher side over the next few months, given reduced prices prevailing at the moment coupled with lower financing options. However, given the recent rupee depreciation and surge in commodity prices and freight costs, it remains to be seen how long the OEMs can hold off passing the impact of increased costs to end consumers. The ongoing chip shortage adds to a key risk in the near future.