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SCS Research | Auto sector

January 3, 2020

Auto industry sales may pick up in 2HFY20 amid currency improvement…

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Standard CapitalSecurities (Pvt.) LtdCommitted to intelligent investing

Auto industry sales may pick up in 2HFY20 amid currency improvement…

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We expect high-end auto sales to pick up in FY20-21 given certain ease in market conditions. Though auto

industry witnessed declining sales during 1HFY20 owing to several reasons. One of the general reasons

remained ‘compressed’ business activity in the country driven by stiff IMF program where demand in the

country is being ‘curbed’ for the time being.

Auto assemblers increased market prices in the range of 20%-30% on their respective variants at the

pretext of Rupee devaluation. In addition, taxes and duties also increased. This gave assemblers an ample

reason to try to pass-on impact to end users. However, Rupee appreciated in last 2-3months given

improvement in C/A deficit situation but somehow prices of variants continue to increase at one pretext or

the other. Thus we see this to ‘improve’ margins of these auto players at least in December filings albeit

anticipated decrease in monthly sales numbers.

Nevertheless, recent changes in NAB Ordnance orchestrated by government will provide respite to big

‘users’ wherein we expect sales of high-end variants to pick up in 2HFY20 in our view.

In 2HCY19 we expect jump in sales. Yet sales significantly reduced during July-Nov (shown in chart

below). Sales dropped by 54% to 54,950 (July-Nov19) from 119,570 (Jan-June 19). We expect December

figures to decline further. During the period inventory built up was noticeable wherein ‘companies

announced in media’ only to temporarily shut down production facilities, yet we still see sales continued.


REP-033 Ι www.jamapunji.pk

Asad Rafiq

Analyst

[email protected]

111 111 721 ext 107

www.scstrade.com

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Honda

Toyota

PSMC

Volumetric Sales

July-Dec 19 Jan-Jun 19 Jul-Nov 19

http://www.jamapunji.pk/

mailto:[email protected]


Pak Suzuki (PSMC): Also depends on sales of variants directed towards middle income groups

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PSMC launched new 660cc Alto in June 2019;

Alto reported highest number of sales in 5 months regardless of

price increase of all variants (up by 14%-19%) in 6MCY19 time

period;

price increased by 20-25% from Jan to December 2019; rupee

devaluation used as a pretext

PSMC increased prices from Jan 2020 of Alto VXR by Rs 90,000

and VXL by Rs 80,000 respectively;

there is discontinuation of Mehran from first half of 2019 led to

drop in sales of the variant;

overall sales numbers have dropped 43% in Jul-Nov YoY.

PSMC still having accumulated profit of Rs 24.5bn as on 9MCY19.

Despite that company increased sale price during CY19.

MODELS VARIANT Jan-19 Dec-19 Change %chALTO VX 999,000 1,135,000 136,000 14%

VXR 1,101,000 1,308,000 207,000 19%

VXL 1,295,000 1,518,000 223,000 17%

WAGONR VXR 1,224,000 1,540,000 316,000 26%

VXL 1,315,000 1,625,000 310,000 24%

CULTUS VXR 1,410,000 1,745,000 335,000 24%

VXL 1,531,000 1,855,000 324,000 21%

AGS 1,638,000 1,975,000 337,000 21%

SWIFT DLX 1,555,000 1,905,000 350,000 23%

AT 1,691,000 2,050,000 359,000 21%

BOLAN CARGO VAN 820,000 990,000 170,000 21%

VX EURO II 854,000 1,050,000 196,000 23%

RAVI EURO II 776,000 941,000 165,000 21%

Price (Rs)

PAK SUZUKI


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PSMC


Developments in Indus Motors (INDU): Makers of Toyota brand in Pakistan

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MODELS VARIANT Jan-19 Dec-19 Change %chCOROLLA Xli 2,044,000 2,499,000 455,000 22%

Xli AT 2,119,000 2,599,000 480,000 23%

Gli 2,299,000 2,749,000 450,000 20%

Gli AT 2,374,000 2,849,000 475,000 20%

Altis 1.6 2,574,000 3,149,000 575,000 22%

Altis 1.8 MT 2,689,000 3,299,000 610,000 23%

Altis 1.8 CVT 2,814,000 3,499,000 685,000 24%

Grande MT 2,864,000 3,499,000 635,000 22%

Grande CVT 2,999,000 3,699,000 700,000 23%

HILUX 4x2 Standard 2,929,000 3,159,000 230,000 8%

4x2 Up-spec 2,959,000 3,479,000 520,000 18%

4x2 Deck-less 2,674,000 3,159,000 485,000 18%

4x4 Standard 4,159,000 4,849,000 690,000 17%

Double Cab 4,549,000 5,249,000 700,000 15%

REVO G 2.8 4,859,000 5,599,000 740,000 15%

G 2.8 AT 5,089,000 5,899,000 810,000 16%

V AT 2.8 5,399,000 6,249,000 850,000 16%

FORTUNER Petrol 6,399,000 7,999,000 1,600,000 25%

Diesel 6,799,000 8,649,000 1,850,000 27%

INDUS MOTORPrice (Rs)

INDU launched new variant of its compact SUV Fortuner G 2.7

today with price tag of Rs7,299,000 which is comparatively

cheaper than existing variants;

INDU also increased prices of some of its variants of Corolla by Rs

20,000;

INDU is expected to launch a new variant of 1.8L Altis Grande

named Altis Grande X soon;

Sales dropped by 64% YoY wherein certain economic factors

highlighted; we see economy to pick up with ease in economic

conditions thus there is window of opportunity for INDU.

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Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

INDUS


Honda Car: Developments in HCAR; ‘produces’ high end variants…

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MODELSVARIANT Jan-19 Dec-19 Change %chCIVIC 1.8L VTEC 2,809,000 3,499,000 690,000 25%

Oriel 1.8 2,959,000 3,749,000 790,000 27%

1.5L Turbo 3,505,000 4,399,000 894,000 26%

CITY 1.3L MT 1,854,000 2,309,000 455,000 25%

1.3L AT 1,994,000 2,489,000 495,000 25%

1.5L MT 1,914,000 2,369,000 455,000 24%

1.5L AT 2,054,000 2,539,000 485,000 24%

1.5L aspire MT 2,064,000 2,539,000 475,000 23%

1.5L aspire AT 2,204,000 2,699,000 495,000 22%

BRV i-VTEC MT 2,234,000 2,899,000 665,000 30%

i-VTEC 2,384,000 3,099,000 715,000 30%

i-VTEC S 2,484,000 3,249,000 765,000 31%

HONDA ATLAS MOTORPrice (Rs)


January 2, 2020

City & Civic is the backbone of HCAR;

sales dropped by 72% in 5MFY19 (Jul to Nov);

there is massive “surge” in ex-factory prices which is more than

25%;

In addition to hike in prices, taxes and duties takes the ex-factory

price up by 4% to 6%;

Price of BR-V gone up by 30% and sale dropped by 56%;

Expect subdued sales in Dec; sales likely to pick up from 2020

onwards amid improvement in Pak Rupee.

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HCAR

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