Locally assembled car sales decline 44% in first half of FY20

KARACHI: Pakistan’s locally assembled passenger car sales declined 38% in December 2019 taking 1HFY20 (July-December 219) decline to 44% given weak demand dynamics.

This is primarily attributable to higher car prices mainly due to PKR devaluation and higher interest rates, an analyst at Topline Securities said.

Overall Pakistan car sales jumped by 23% MoM to 12.1k units in Dec-2019, however the rise was largely led by 49% MoM increase in sales of Pak Suzuki Motor Company (PSMC).

The other two major manufacturers, Indus Motor (INDU) and Honda Car (HCAR) sales dropped by 12% MoM and 23% MoM, respectively.

The increase in sales of PSMC was largely driven by the announcement of increase in car prices by the manufacturer in mid of Dec-2019, which was effective from Jan 1, 2020.

The decline reported by the other manufacturers was largely in line with the historical year-end phenomenon, where consumers generally delay their purchases until the new year.

PSMC sales were down 26% YoY in Dec-2019, while INDU’s sales declined by 56% YoY with Corolla sales falling by 50% YoY. HCAR sales fell by 58% YoY during Dec-2019 with combined sales of City & Civic declining by 56% YoY.

Sale of motorcycles by Atlas Honda (ATLH) witnessed an increase of 6% YoY as sales clocked in at 85k units, however it recorded a decline of 11% MoM.

Tractor sales recorded a growth of 75% YoY with Millat Tractor (MTL) sales rising by 175% YoY. On the MoM basis, overall tractor sales were down 37% MoM.

Analysts expect recovery in car sales volumes from start of 2020 as they believe volumes would have bottomed out in Dec-2019.

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