LAHORE - Pakistan auto sales fell by 20 percent YoY in Aug 2018, showing signs of much anticipated demand contraction in the auto sector.

This is the first time that auto sales have declined in first 2M of a fiscal year since FY15 (excluding Taxi scheme). Reasons for sales slowdown in Aug 2018 included, 1) lower number of working days due to Eid-ul-Adha, 2) deteriorating macroeconomic environment, 3) 3-4 price hikes in ongoing calendar year and 4) impact of law requiring car purchasers to be filers. It is expected this slowdown will continue in coming months as rising interest rates and PKR depreciation take their toll on auto sector, with former due to likely decline in consumer financing and latter due to further price hikes.

Indus Motors (INDU) performed the best amongst its peers, but still the company recorded 9 percent YoY decline in units sold (compared to sector wide fall in sales of 20 percent). Moreover, in 2MFY19, the company sold 10,486 units, up by 3 percent YoY. Sales are being led by Hilux, which continued its robust growth trajectory, going up by 23 percent YoY. On the other hand, Corolla and Fortuner sales dipped by 12 percent and 23 percent YoY, respectively.

Honda (HCAR) witnessed considerable decline with unit sales down by 15 percent YoY to 3,961 units. In the 2MFY19, sales have declined by 3 percent YoY. Variant wise, Civic and City fell by 12 percent YoY while BR-V sales continued its dismal performance from last month, falling by 32 percent YoY.

Pak Suzuki Motor Company (PSMC) experienced significant decline in sales, with volumes down by 27 percent YoY to 8,683 units, where the major decline was witnessed in Ravi and Mehran with 50 percent and 42 percent YoY respectively, while Wagon-R was still able to maintain growth (11 percent YoY), albeit at a slower pace.