Pakistan Automotive Manufacturers Association (PAMA) has released auto numbers for the month of June 2011, exhibiting a drop of 54 per cent year on year to 7,519 units compared to 16,214 witnessed in the same period last year. Car sales recorded a decline of 52 per cent year on year to 6,145 units.
Light commercial vehicle and pick up segment demand, plunged by 59 per cent year on year. This was due to relaxation of import policy and production constraints post Japan tsunami. Production during the period was down by 9 per cent year on year to 12,344 units as compared to 13,598 units in June’10.
Likewise, industry auto sales on a month on month basis recorded a decrease of 43 per cent to 7,519 units. The dip in sales is due to expectations of price decline consequent to reduction in GST of 1 per cent to 16 per cent and abolishment of 2.5 per cent special excise duty, which was unveiled in the FY12 budget. 1000cc cars recorded the highest decline of 56 per cent month on month to1,280 units. On a company wise basis Pak Suzuki Motor Company (PSMC) recorded a massive drop of 70 per cent whereas Indus motor company and Atlas Honda auto sales dipped by 8 per cent and 6 per cent month on month, respectively.
In FY11, total car sales were up by 4.5 per cent to 145,485 units. This was mainly due to higher commodity prices which resulted in higher sales from the rural areas. During the period light commercial vehicles and pick up segment recorded a healthy growth of 26 per cent year on year. Pak Suzuki Motor Company and Atlas Honda recorded a growth of 8 per cent and 10 per cent year on year to 79,884 and 15,586 units, respectively. However, Indus motor company registered a decline of 2 per cent year on year.
Tractor off-take in June 2011 grew by 11 per cent MoM. However, cumulative sales for FY11 declined by 3 per cent YoY due to floods. This decline stemmed from 10 per cent YoY drop in sales of Al-Ghazi Tractors Limited (AGTL), whereas Millat Tractors Limited (MTL) sales grew by 5 per cent YoY to 37,000 units.
FY12 budget was a non event for the auto assemblers. Fortunately there was no decision taken regarding the new entrant policy and no further relaxation was provided to the importers, contrary to expectations. We have an underweight stance on auto sector given supply side issues post Japan tsunami, skyrocketing car prices and PKR weakening against JPY Yen, as PKR has depreciated by 5% since April 2011, therefore, 4QFY11 corporate results would remain under pressure due to weak gross margins, said Shahbaz Ashraf at AHL.
