LAHORE - As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), auto sales bounced back in Jul 2017 and witnessed an increase of 27 percent.
The recovery in volume follows a 25 percent decline witnessed in June 2017 mainly due to seasonality. Volumes tend to be sluggish in June, in addition to likely delay in deliveries due to Ramazan and Eid holidays. Sequential decline in earnings for PSMC (-48 percent QoQ) in 2Q17 came in as a bummer while HCAR fared bit better (-2 percent QoQ), with both seeing a decline mainly due to sluggish volumes, decline in margins and extension of super tax.
On YoY basis, both PSMC and HCAR earnings saw significant improvement, with HCAR outshining with a 99 percent YoY increase in bottom-line growth, benefiting from launch of new model of Civic. Recent strength of JPY against USD (4.2 percent appreciation seen since last month’s low) due to geo political concerns is unlikely to bode well for OEMs’ margins this quarter, though recovery in volumes could offset the impact to some extent. For HCAR, City and Civic volumes on combined basis jumped by 81 percent, taking its July 2017 total sales number to 4,511 units.
Indus Motor Company Ltd (INDU) saw 28 percent jump in sales, mainly led by 29 percent MoM improvement in Corolla sales. PSMC’s sales improved by 16 percent, primarily led by its LCV variants (up 38 percent MoM) while laggards were Cultus (up 7 percent due to high base last month) and Swift (-23 percent MoM). Although tractor sales are much higher than last year’s tepid growth (up 125 percent YoY), volumes have steadied in recent months (up 4 percent MoM in July 2017 after falling 21 percent MoM in June 2017) mostly likely due to anticipation of tractor subsidy (announced by Sindh in its FY18 budget).