By: Sonia Agarwal
92 21 5612290-94 Ext 335
Foundation Securities (Pvt) Limited
According to latest data released by Pakistan Auto Manufacturers Association (PAMA), auto sales fell 18% YoY and stood at 9,933 units in Jul’14 with INDU witnessing the major hit of 62% YoY. Similar trend was observed on MoM basis where the total auto sales plunged significantly by 31% from 12,042 units in Jul’13. Weak performance is attributed to (1) delay in customer purchases in anticipation of basic Corolla model launch (XLI/GLI in end Aug’14 likely) (2) slowdown in economic activity in Ramadan and 3) unclear structure of withholding tax on cars introduced in budget FY14-15. We believe sales would rejuvenate in Aug-Sept’14 on the back of launch of complete range of Corolla 2014 (full impact in Sept’14 onwards). We elevate PSMC as our preferred pick in the sector post selection for apna rozgar scheme.
31% MoM decline in Jul’14: Auto sales recorded a decline of 31% MoM to 9,933 units compared to 14,302 units registered in the last month. The decline is mainly attributed to lack of clarity on the new mechanism of tax collection by car assemblers (earlier tax was collected directly by excise and taxation department at the time of registration) and introduction of different rates of withholding tax for filers and non filers.
Passenger car segment – During Jul’14, auto assemblers witnessed 44% MoM decrease in passenger car sales to 5,094 units. Within the passenger cars segment, the 1300+cc category fell by 41% MoM in Jul’14. In the 1000cc and 800cc segment, sales fell by 40% MoM and 50% MoM respectively attributed to pre-buying seen in Jun’14.