Car sales likely to decline 14% in August
Car sales of local assemblers are likely to register a slight decline of 14%MoM to 20,7000 units in August 2021 versus 24,2000 units in July 2021.
This decline in sales is likely due to the high base effect in July 2021 as it included carry-over sales from the last few months since buyers delayed their orders in anticipation of a reduction in car prices following the FY22 Budget.
Otherwise, demand for locally-assembled cars is still rising on a monthly basis in Pakistan, thanks to low markup rates on car financing and rising income levels.
To recall, our monthly sales estimates only include major local players which are registered with Pakistan Automotive Manufacturers Association (PAMA).
Read More: Car Prices in Pakistan-A Complete Guide
Company-wise data shows Honda Car (HCAR) is likely to register sales of around 3,200 units in August 2021 versus 2,307 units in July 2021, up 39%MoM. The sharp rebound in sales is due to the launch of the new 6th generation Honda City as the company started delivering the new variant from August 2021.
On the other hand, Pak Suzuki Motors (PSMC) is likely to post-sales of 12000 units which is likely to remain 21%MoM lower versus 15,1000 sales units in July 2021.
Similarly, Indus Motors is likely to register a sales decline of 18%MoM to 5,5000 units.
With the Pak rupee depreciating by 5.6% each against US Dollar and Japanese Yen since the beginning of FY22 and rising steel prices, local assemblers may increase car prices in the next few days, we believe, Sherman Securities said in a report.
Our understanding suggests that price hikes may be gradual (in the first phase 3-4% for cars below 1000cc and 1-1.5% for cars above 1000cc). However, it said the upcoming price hike will only partially offset the earlier benefit of price reduction announced following the FY22 budget. In this way, car prices would still be cheaper than the prices before the reduction of sales tax and FED in June 2021, it said.
