Recovery in the automobile sector appears to be gaining traction, reflected in the recently released numbers by PAMA. However, an uptick was also expected with the phasing out of the month of Ramzan as total car sales posted a massive month-on-month increase of 76 percent.
But, for the 2M FY15 period, automobile sales still remain subdued by 11 percent compared with last year. The new model of Corolla along with the Punjab Yellow Cab Scheme has so far been seen as key propellants for auto sales over the coming months. According to Numair Ahmed, Analyst at Arif Habib Limited, sales of Corolla will remain robust with the launch of lower priced variants, including GLi (launched during the ongoing month) and the XLi version (expected next month).
At the same time, however, an impact is expected from the recent flooding across Khyber-Pakhtunkhwa and Punjab. As it is, tractor sales are showing a bleak picture, having come down by 83 percent this year, despite a decent duty cut. Similarly, the launch of the Punjab Yellow Cab Scheme, which is expected to be a major boost for Pak Suzuki Motors (PSMC), has now reportedly been delayed.
One does observe that the market leader made a riveting entry, with Corolla’s Grande leaving a dent on Honda (KSE: HCAR) sales; sales of the former rose by 34 percent year on year, while the latter experienced a decline of 23 percent for the same period.
PSMC, which caters the economy segment and has struggled due to the budgetary measure of advance tax, was able to post 58 percent growth month on month, with Ravi, Cultus and Mehran being the key contributors, suggests Sajjad Hussain at BMA Capital.
However, one notes that the newly launched WagonR (a replacement for the popular model Alto) continues to struggle. Sales came down by five percent contrary to sectoral trend, as much as PSMC has been busy marketing the car while even offering a replacement with an older-used Alto. This is an interesting development, particularly at a time when imported used cars have become subject to higher duties. It appears that the Pakistani consumer is becoming increasingly cognizant of car design and aesthetics.

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