Islamabad, Auto sales in Pakistan showed a notable increase of 33% year-on-year in February 2024, though they experienced a monthly dip of 8% compared to January 2024. The automotive industry reached a total of 13,400 units sold during the month, primarily driven by the low base effect from the previous year, as reported by AKD Securities Limited. Last year's sales were significantly affected due to raw material shortages caused by import restrictions, which led to temporary closures of manufacturing plants.

According to AKD Securities Limited, the surge in year-on-year sales marks the first significant growth since June 2022, despite a month-on-month decline due to the unusually high sales in January, influenced by New Year festivities. The passenger car segment showed resilience, especially in the sub-800cc category, which saw a 14% increase month-on-month. PSMC led the industry growth with a substantial rise in sales, leveraging the low base effect from last year when its production was severely impacted. Conversely, INDU faced challenges in the high-end segment, witnessing a 26% month-on-month decrease in sales.

The investment perspective remains cautious with expectations of subdued auto sales in the near term due to high vehicle prices, reduced purchasing power, and elevated interest rates. Nonetheless, a potential ease in interest rates and resilience in low-end auto sales could offer some recovery prospects. The market outlook for auto companies varies, with HCAR being highlighted as a potential investment opportunity, given its promising target price projection and expected dividend yield.