Auto sales to increase in May, but a slowdown is right around the corner in Pakistan

Auto sales (passenger cars and light commercial vehicles) in May are expected to hit 22,700 units, which would be a 45% year-on-year and 1.7% month-on-month increase, data compiled by JS Research shows.

This will take eleven-month car sales during the outgoing fiscal year (2021-22) to 249,304 units, a 49% increase on a yearly basis.

"The stable volumes are likely to be driven by double-digit growth in HCAR, owing to higher demand shifting the sales mix back to lower priced/high volume Honda City, more than compensating for decline in other models," stated JS Research. "That said, HCAR sales are likely to be lower than sales reported in Mar-2022 (3,651 units), a trend witnessed by peers as well.

"INDU is anticipated to report single-digit growth, cushioned by higher demand for Yaris. Excluding Yaris sales, the company’s sales may witness a declining trend.

"Similarly, sales for PSMC are likely to decline by 5% MoM owing to the deteriorating purchasing power in the segment."

The report added that sales of HCAR are likely to clock in at around 3,000 units, INDU at 6,000, while PSMC will remain the market leader with 12,000 units. Hyundai will likely see sales volume of around 1,700 units.

However, the report added that a declining trend in overall auto sales volume may be witnessed from here on.

"Despite some support coming from new model launches (Civic & Swift), we anticipate a declining trend in overall auto sales volume from here on (decline of 25% YoY during FY23) as the impact of interest rates, measures taken by the regulators to curb auto imports and cost-led price hikes weigh in," stated JS Research’s analyst Wasil Zaman in the report.

“However, we project sector margins to be supported in the coming quarters, owing to the multiple rounds of price hikes announced during March to May 2022,” he added.

Earlier in March, IMC CEO Ali Asghar Jamali said the sector can see a minimum 10 to 15% reduction in sales in the coming fiscal year.

An official, speaking on condition of anonymity, also told Business Recorder that sales are likely to decline in coming months as bookings have already reduced.