KARACHI: Pakistan auto sales are up 1.0 percent in December 2018 to 19,423 units compared with 19,237 units sold in December 2017. However, sales are up 11 percent compared with November 2018. “This is the first time in 12 years (since December 2005) that sales have increased in December on a sequential basis”. Total sales in the first half of the fiscal year (July-December 2018) clocked in at 120,066 units, down 3.0 percent compared with 124,138 units in the same period last year. “This is the first time in five years that sales have declined during the first half of a fiscal year since FY13,” Daniyal Adil at Topline Securities said. Despite seemingly better numbers in December 2018, analysts continue to expect significant slowdown in auto sales given deteriorating economy, law barring tax non-filers from purchasing cars and multiple price hikes in the past 12 months. Indus Motor Company (IMC) recorded robust growth of 16 percent led by 84 percent and 10 percent increase in Hilux and Corolla sales, respectively. On the other hand, Fortuner sales declined by 33 percent. On a monthly basis, volumetric sales are down 3 percent while sales are up 8 percent for six months. “Indus Motor Company (IMC) has been able to maintain its volumetric growth despite the macroeconomic headwinds. This is attributable to the strong order book of the company that existed, where lead times for some variants of the company used to be as much as five months,” Topline Securities report said. However, the lead times have now come down to a month or less for most variants as demand has slowed down and capacity constraints in the plant have been resolved. Moreover, it must be noted that the company continues to carry out capex in order to increase its production capacity to 75,000 units. Honda Cars (HCAR) sales fell by 26 percent YoY and 31 percent MoM while sales for half year fell by 2.0 percent. The fall in sales in December 2018 was led by 50 percent lower BR-V sales and 19 percent lower sales of City and Civic units. Honda Cars (HCAR) had been showing a robust trend in monthly sales up until October 2018. “However, with thinning of its order book, as depicted by decline in lead times (cars available in 15 days to a month), the company started showing slowdown in sales where in the past two months cumulatively, volumetric sales have fallen by 24 percent,” Topline Securities report noted. Sales of BR-V have shown the most decline as the initial high growth phase of the new car came to an end. Pak Suzuki Motor Company (PSMC) performed relatively better during the month of December 2018 where sales are up a meager 2.0 percent YoY. Higher sales were led by 32 percent and 13 percent increase in Cultus and Ravi sales, respectively. On the other hand, sales of Wagon-R, Mehran, Bolan and Swift are down 1.0 percent, 5.0 percent 10 percent and 7.0 percent, respectively. Sales in six months are down 9.0 percent. Pak Suzuki Motor Company (PSMC) intends to set up a new plant with 100,000 capacity with expected investment of $460 million. “Hence in our view, the intention to raise authorized share capital is to finance this potential investment. However, the viability of the plant hinges on incentives by the government, the like of which have been offered to new entrants (Greenfield status),” Topline Securities report said. Further, PSMC’s plan to launch new Alto by April 2019 is still on track which should lend support to declining profitability.