Auto Sector: Car sales post a growth of 11%YoY

Karachi: PAMA statistics depict a growth of 11%YoY in autos sales (Cars & LCVs) in 11 MFY11.

According to AKD Securities, Car sales posted a growth of 11%YoY in the review period, while LCV sales grew by 14%YoY in 11 MFYI 1. PSMC’s smaller low-cost vehicles continued to lead the market with a 56% market share. Together with HCAR (up 19%YoY), PSMC out-performed the industry by reporting an off-take growth of 18%YoY in IIMFYI1, with sales driven by increasing popularity of the Swift variant.

On the tractor front however, total volumes declined by 3%YoY to stand at 62,251 units in 11MFY11. While MTL continued to deliver flat volumes, AGTL’s off-take declined by 10%YoY in the review period. AKD Securities expects auto demand to stay limited in the current month, with buyers likely to stay on the sideline ahead of likely lower prices in Jul11 (e.g. GST reduction to 16%). That said, PSMC may emerge as a beneficiary of Punjab government’s plan to provide 20,000 cabs (cost: PkR4.5bn) in FY12.

INDU disappoints; PSMC to benefit: Higher volumes in HCAR (up 19%YoY) and PSMC (up 18%YoY) led to an overall 11%YoY growth in total cars and LCV off-take in 11MFY11. INDU however revealed a volume growth of just 2%YoY in the review period. Increasing popularity of Swift (up 92%YoY) along with growing volumes in Mehran (up 18%YoY) and Alto (up 20%YoY) in 11MFY11 led to PSMC’s market shares improving from 52% to 56% At the same time, HCAR reported an off-take growth of 19%YoY led by respective growths of 19%YoY & 18%YoY in sales of its premium brands City and Civic. INDU however posted flat volumes (up just 2%YoY) in 11MFY11. On a sequential basis, overall auto sales declined by 5%MoM to 13 126 units in May’11. Going forward, PSMC may emerge as a beneficiary of Punjab governments plan to provide 20,000 taxi cabs (cost: PkR4.5bn) in FY12. Assuming PSMC fulfils the entire order, the company’s FY12 sales volume should pick up by at least 10% viz, base- case estimates.

Tractors: The tractor industry revealed an off-take decline of 3%YoY to 62,251 units sold in 11 MFY1 1. Decline stemmed from lower off-take by AGTL (down 10%YoY in 11MFY11) due to AGTL being more affected by Aug’10 floods on the back of its majority in flood hit areas (Sindh & KP). On the other hand, MTL recorded fiat volumes of 37,071 units in the review period. On a sequential basis, MTL and AGTL posted respective volume growth of 18%MoM and 9%MoM in May’11. This growth stemmed from a higher cash market (surge in crop prices) and effective marketing by tractor companies in lower penetration areas.

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