April 07, 2020 (PPI-OT)

Autos: Volumes expected to shrink by 70% YoY in Mar-2020

We preview unit sales for Mar-2020, where volumes are expected to contract by a mammoth 70% YoY to ~6,800 units, owing mainly to production halts implemented by the OEMs due to the current lockdown scenario.

For Mar-2020, Pak Suzuki Motor Company (PSMC) is likely to be the hardest hit, as volumes are likely to drop by a massive 81% YoY to ~2,650 units.

Indus Motor Company (INDU) and Honda Atlas Cars (HCAR) are likely to experience a sharp dent in volume of 50% YoY and 59% YoY, respectively.

We preview unit sales for the month of Mar-2020. During the month, volumes are expected to contract by a mammoth 70% YoY to ~6,800 units, owing mainly to production halts implemented by the OEMs due to the current lockdown scenario. Amid COVID-19, it appears unlikely that volumes will recover in Apr- 2020 as the lockdown continues and we might see volumes plunge even further, causing further pressure on already depleted earnings for the assemblers.

For Mar-2020, Pak Suzuki Motor Company (PSMC) is likely to be the hardest hit, as volumes are likely to drop by a massive 81% YoY to ~2,650 units. Indus Motor Company (INDU) and Honda Atlas Cars (HCAR) are likely to experience a sharp dent in volume of 50% YoY and 59% YoY, respectively. After the first two months of CY20, it appeared that the worst was over for auto volumes as the rate of decline in volumes was clearly not as sharp as previously observed, bolstered by a more stable PKR/US$ parity and improvement in macroeconomic indicators. However, since COVID-19, the rupee has depreciated further and this bodes negatively for OEMs' profitability and might cause them to raise prices further once the lockdown ends. Given this scenario, further pressure on OEM's stock prices cannot be ruled out.

© Pakistan Press International, source Asianet-Pakistan