Saturday, December 7, 2024

Pakistan Auto Industry to Witness an Unprecedented Annual Rise in Car Sales in FY21

Currently, the Pakistani automotive industry is in an interesting position, having seen more newcomers this year than it has in a long time. In the financial year (FY) 2021, which involves the sales of new entrants, analysts predict a sixty percent increase in car sales.

According to Syed Fawad Basir, senior research analyst at Topline Securities Limited, the “faster-than-expected economic recovery” and “low interest rates” are the two main drivers of the rise in vehicle sales.

“Taking into account FY21’s higher-than-expected unit sales in the first four months (July-Oct) and an upward revision in margin assumptions, we are revising our earnings projections for the Pakistani automotive universe by up to 53% for the next two years,” Basir said.

“We are increasing our previous FY 21 and FY 22 sales assumptions for automobiles and light commercial vehicles by nineteen percent (to 201,000 units) and five percent (to 228,000 units) respectively,” he added.

Data shared by the Pakistan State Bank (SBP) show that car loans increased from Rs. 251 billion in March 2020 to Rs. 270 billion in October, reflecting an eight percent rise. As Basir notes, however, sales will still be 40% lower than the highest amount Pakistan has ever achieved in FY18 when car sales were at 329,000 units.

Basir further claimed that during FY21-FY22, Toyota Indus Motor Company Limited (IMC) is likely to experience a four to fifteen percent increase in earnings, largely due to the new Yaris performance.

He added that Honda Atlas Cars (HCAR) is likely to see a rise in earnings of three to fifty-three percent, mainly because of a higher than anticipated performance in the 1st half of FY 2020-21, coupled with an upward revision of the estimates of the combined industry.

Basir also projected that Pak Suzuki Motor Company Limited (PSMC) sales would rise at a steady pace due to the rising operating costs that came while the economy was struggling with the launch of new models.

As there are several new entrants waiting for the chance to take the lion’s share in the automotive market, the auto industry is in for a big paradigm change. It is fair to assume that 2021 will be a very exciting year for the auto industry, even if it is too early to make any predictions.

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