The automobile sector delivered outstanding financial results in 2QFY25, with profitability surging by an impressive 84% year-on-year (YoY) to PKR 15 billion.
This substantial growth highlights the sector’s strong recovery and resilience amid evolving economic conditions.
Analysts at Arif Habib Limited attributed this remarkable performance to several key factors. First, the decline in auto financing rates played a crucial role in boosting automobile sales, as auto financing expanded from PKR 230.5 billion in June 2024 to PKR 241.6 billion in 1HFY25. Second, decreasing inflation positively impacted consumer purchasing power, encouraging higher spending on vehicles. Lastly, the appreciation of the PKR against regional currencies improved gross margins for listed automobile companies, contributing to overall profitability.
As a result of these favorable conditions, automobile sales volumes—including light commercial vehicles (LCVs) and 4x4s—witnessed an 82% YoY increase, reaching 33,591 units in 2QFY25, compared to 18,471 units in 2QFY24. Additionally, the tractor segment experienced an 8% YoY growth, with sales climbing to 12,191 units from 11,321 units during the same period last year.
The automobile sector’s topline also recorded a substantial boost, growing by 49.4% YoY to PKR 153 billion in 2QFY25. This surge in revenue was driven by rising demand, supported by enhanced purchasing power, as well as higher vehicle prices compared to the previous year. Similarly, the sales volume of two-wheelers (ATLH) increased by 33% YoY, reaching 316,792 units, fueled by the same economic factors benefiting the broader automobile market.
The remarkable profitability surge in the automobile sector was primarily driven by improved margins across all major listed players. A significant decline in raw material prices, along with the appreciation of the PKR against the USD, led to enhanced gross margins. As a result, automobile manufacturers enjoyed better cost efficiencies, further solidifying their financial standing.
With robust consumer demand, a stable exchange rate, and improving macroeconomic conditions, the automobile sector remains on an upward trajectory. Market analysts expect continued positive momentum in the coming quarters, provided favorable policies and stable economic conditions persist.
