Surge in Pakistan Auto Sales Marks Strong Recovery in April 2024

Islamabad, Pakistan's auto industry reported a significant uptick in sales in April 2024, with a remarkable year-over-year increase of 77%, totaling 13,800 units sold. The substantial growth is attributed to low base effects from previous industry shutdowns and strong monthly sales from key manufacturers.

According to AKD Securities Limited, passenger car and light commercial vehicle (LCV) sales rose by 12% month-over-month and more than doubled year-over-year. This surge was driven largely by robust performances from PSMC and INDU, while tractor sales saw a 33% decline due to seasonal adjustments associated with agricultural cycles. HCAR, although experiencing a dramatic annual rise due to last year's supply chain disruptions, saw a significant month-over-month decrease, attributed to a temporary price reduction in March for the 'City' model to clear inventory. Conversely, INDU reported increases in both monthly and annual terms, notably with its Corolla Cross, which benefited from the launch of competitive non-hybrid variants. PSMC's sales rose by 46% month-over-month, with the 'Alto' model showing strong sales, particularly in the sub-800cc car segment.

The report suggests that while there have been strategic price adjustments for low-selling models by several companies, this does not indicate an industry-wide price war but rather a tactical shift in marketing lesser-demanded models. Looking forward, the industry anticipates the introduction of new model facelifts and hybrid variants to stay competitive.

Despite these positive developments, the average monthly sales volume for the 10 months ending in April 2024 remains 53% lower than the average from 2016 to 2023, indicating ongoing challenges such as high interest rates and reduced auto financing, which fell by 24% in March 2024. AKD Securities projects a gradual recovery for the sector, recommending INDU as a stable investment option with a potential upside of 23% by December 2024.