Auto sales up 23% in FY12

The Pakistan car industry grew by 23% to 178,753 units YoY in FY12 where PSMC contributed 60% followed by INDUS contributing 29% to the total industry sales. The increase can be attributed primarily to 1) good agricultural income 2) deferred sales due to reduction in Sales Tax and 3) Yellow cab scheme In Jun12,car sales stood at 19,140 units, depicting an exceptional increase of 158% from 7,419 units sold in Jun11 mainly because of the low base effect as the government was expected to reduce Sales Tax by 1% in Jun11 PSMC had a phenomenal FY12 as it witnessed a 40% YoY jump in its sales figures contributing more than 50% to the industry’s total sales pie. This growth in units from 79943k to 112157k units was mainly triggered by Punjab Government Yellow cab scheme where PSMC was the prime beneficiary. INDU also saw its sales units go up to 54477 units from 50015k (9% up in FY12) on the back of good agricultural growth and subsequently good rural income Segment wise YoY analysis makes Corolla(+58%), Cultus(+ 20%) and Mehran(+ 46%) the star performers in 1300cc, 1000cc and 800cc respectively. We believe Corolla on the back of agricultural income and Cultus and Mehran as substitutes to Alto and Cuore will continue to capture the customer interest Going forward, phasing out of the Yellow Cab scheme coupled with discontinuation of ALTO would reduce the volumetric sales post CY12 thus suggesting a Neutral stance on PSMC whereas good agricultural output will keep INDU’s margins intact justifying our ADD stance on the company

Auto sales up 23% in FY12