Local Car Assemblers Face 26% Sales Slump in October 2023
Staff Report
Sales of local car assemblers have dropped by 26% MoM to 5,310 units during Oct 2023, while YoY sales are expected to drop by 59%. Just to recall, these are provisional sales numbers of major companies that are listed on PSX.
Even though some auto assemblers started to offer cars on an installment basis, sales remained at a 3-month low on Oct 23. This is primarily due to weak demand amid peak cycle interest rates which have affected car leasing in Pakistan.
Moreover, higher car prices and economic slowdown also affected the purchasing power of cash buyers.
Company-wise data shows that sales of Honda Atlas Cars (HCAR) plunged 66% MoM to around 455 units (a 4-month low). Sales of flagship Civic and City together trimmed by 67% on a MoM basis. Pakistan Car Sales Surged by 10% in September 2023
Similarly, sales of Indus Motors (INDU) are anticipated to drop by 33% MoM to 1,050 units, while Pak Suzuki (PSMC) is expected to post a 10% decline in sales.
Going forward, the availability of auto parts (CKDs) will be crucial for meeting demand, as industry channels suggest that car assemblers are again facing issues related to CKD imports.
| Car Companies | October 2023 | Month-over-Month Change | Year-over-Year Change |
|---|---|---|---|
| Sales of Local Car Assemblers (units) | 5,310 | -26% | -59% |
| Honda Atlas Cars (HCAR) Sales (units) | 455 | -66% | -% |
| Indus Motors (INDU) Sales (units) | 1,050 | -33% | -% |
| Pak Suzuki (PSMC) Sales (units) | N/A | -10% | -% |
| Monthly CKD Import Figures (Sep 2023) | US$54 million | ||
| Market Capitalization Increase | 45% | (21% excluding PSMC) |
The latest monthly motor cars CKD import figures (Sep 2023) stood at US$54 million (4-month low),” Sherman Research said in a report.
Interestingly, ever since Pakistan Suzuki (PSMC) announced its de-listing on Oct 12, the cumulative market capitalization of three major car assemblers (INDU, HCAR, and PSMC) recorded an increase of 45% (21% excluding PSMC).
With the recent 3-5% cut in car prices, weakening of PKR against USD, and restricted imports, investors may take a cautious stance on car assemblers. The sector is currently trading at a P/BV of 1.5x, which is a 17% discount to the average P/BV of 1.8x during the last 15 years
