Lahore

The rise in auto financing owing to 42-year low interest rates and overall improvement in economic situation have increased the sales of local car assemblers, including LCVs, Vans and Jeeps, posting a rise of 66 percent annually in first half of fiscal year 2016, to reach 111,720 units versus 67,426 units in first half of fiscal year 2015.
According to latest data, Pak Suzuki (PSMC) has also increased prices by 1.0 percent owing to 1 percent hike in custom duty. To recall, both Indus Motors (INDU) and Honda cars (HCAR) increased car prices in Dec 2015 by 1.0 percent-1.5 percent. Car assemblers passed-on cost hike quite easily due to strong demand in the country.
Experts now forecast local car sales to grow at 15 percent in FY16 to reach at 206,777 units. This lower growth is due to 1) completion of taxi scheme in Feb 2016 and 2) decline in Civic volumes in anticipation of new model, which is expected to hit the market in July 2016.
Amongst individual companies, PSMC sales increased by 97 percent YoY to 70,482 units in 1HFY16 primarily due to Punjab Govt. Taxi Scheme.
Contrary to historical trend of December, volumes increased by 3 percent MoM in Dec 2015 primarily due to Taxi Scheme. Historically, it has been observed that customers defer their buying in December due to year end phenomenon as they usually prefer to purchase and register their vehicles in the first month of New Year.
INDU sold 30,481 units in 1HFY16 versus 22,883 units in 1HFY15. In Dec 2015, INDU sales stood at 4,738 units, up 16 percent YoY. On MoM basis, sales declined by 14 percent YoY due to year-end phenomenon.
HCAR sold 10,610 units in 1HFY16 compared to 8,578 units in the same period last year. In Dec 2015, HCAR sold 1,028 units, up 49 percent YoY (down 33 percent MoM). Volumes of Honda Civic are expected to dry out in coming months in anticipation of new model launch in July 2016.
Pakistan tractor segment posted a decline of 41 percent YoY during 1HFY16 to reach at 12,375 units. We attribute this decline to the delay in the launch of provincial tractor subsidy schemes. To recall, Punjab/Sindh Govt. in Budget FY16 announced subsidy of 25,000/29,000 tractors.
Millat tractors (MTL) and Al-Ghazi tractors (AGTL) both witnessed a decline in their volumes during 1HFY16. Our industry sources revealed that farmers are waiting for the execution of announced subsidy schemes by Punjab and Sindh Govt. On the other hand, tractor manufacturers are requesting Govt. either to execute or shelve the announced scheme so that farmers resume their normal purchasing. 
MTL sold 7,916 units in 1HFY16 compared to 12,811 units in the same period last year. On MoM, MTL sales decreased by 46 percent to 774 units in Dec 2015.
During 1HFY16, AGTL witnessed a decline of 48 percent YoY in its sales to 4,020 units. Company sold 144 units in Dec 2015, down 81 percent YoY (-81 percent MoM).
Trucks and buses segment of Pakistan automobile sector has posted an increase of 40 percent YoY to reach at 2,645 units during 1HFY15.