Equity Analysis /
Pakistan

Pakistan Autos: Negligible sales in April due to country-wide lockdown

  • Pakistan auto industry sold only 39 units (HCV’s only) in April as there was no car sales due to the lockdown

  • Tractor industry recorded sales of 2,035 units, down 30% mom and 63% yoy due to agricultural links (essential business)

  • Sales of 2/3 wheelers declined to a mere 2,783 units from 89,131 units in March 2020, down 97% mom and 98% yoy

Intermarket Securities
12 May 2020

Pakistan's auto industry sold only 39 units in April 2020, which comprised trucks and buses only. There was no passenger car sales, primarily because of the country-wide lockdown (started 24 March) which resulted in the OEMs shutting down their plants and dealerships being closed.

The tractor segment recorded sales of 2,035 units, down 30% mom and 63% yoy. Sales for AGTL saw a 19% mom increase, while those of MTL declined 51% mom. This brings the 10M FY 20 industry sales to 25,534 units (down 41% yoy). The decline in sales was probably because of a partial lockdown, which was later eased for the tractor industry given its links to the agriculture sector amid harvesting season. Sales of 2/3 wheelers declined to a mere 2,783 units from 89,131 units in March 2020.

With the easing of lockdown in the country effective 11 May, we expect sales to resume for the last two weeks of May. Sales are expected to pick up modestly in H2 FY 21, due to the recent price hikes announced by INDU and HCAR, with PSMC likely to follow, in our view. However, following the recent monetary easing of 425bps, auto-financing may pick up earlier than expected. INDU is our top pick in the space with a TP of PKR1,273/sh, due to the availability of sufficient cash and investments in an uncertain business environment (also more comfort on payouts) and the eventual jump in sales expected due to the Yaris launch.