Auto sector rebounds on demand for small cars

Pakistan's automobile industry staged a remarkable recovery in financial year 2024-25, with total passenger car sales reaching 148,023 units, up 43% year-on-year (YoY) from 103,829 units in FY24, marking the first significant rebound after years of suppressed volumes.

The recovery was fueled by improved macroeconomic conditions, reduced interest rates and the launch of new models that revived consumer confidence, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

The momentum continued into June 2025 as monthly sales came in at 21,773 units, a 36-month high, reflecting a 47% month-on-month (MoM) and 64% YoY increase.

"In June 2025, automobile sales surged to a 36-month high of 21.8k units, registering a robust 47% MoM and 64% YoY growth," noted Menka Kirpalani, auto analyst at Arif Habib Limited.

Analysts attribute this sharp surge to a wave of pre-buying ahead of proposed GST hike on vehicles up to 850cc from 12.5% to 18% effective from July 1, 2025.

"June's boost was primarily driven by the unprecedented demand for small cars, particularly Alto," noted Myesha Sohail, auto analyst at Topline Securities. Alto sales hit a 39-month high of 9,497 units, leading to a 139% MoM increase in Pak Suzuki Motor Company's (PSMC) overall sales that reached 13,217 units.

PSMC was the top performer, recording the highest MoM growth of 2.4 times. Sales of Cultus and Swift also recorded remarkable increases of 108% and 125% MoM, respectively, while Wagon R was the only PSMC model that posted a decline (-32% MoM).

Sazgar Engineering Works Ltd (SAZEW) posted the second-highest monthly sales of 1,349 units in June 2025, up 47% MoM and 55% YoY. The launch of the facelifted Haval lineup contributed significantly to this jump. SAZEW's FY25 sales doubled, reaching 10,844 units versus 5,374 units in FY24.

In contrast, Indus Motor Company (INDU) saw its June 2025 volumes fall 24% MoM to 3,687 units, with Corolla and Yaris sales dropping to 2,902 units and Fortuner and Hilux sales down to 785 units. However, INDU still managed a 25% YoY increase in FY25.

Honda Atlas Cars (HCAR) posted a 10% MoM drop in June, selling 1,808 units. Despite the monthly decline, HCAR saw a 65% YoY increase in FY25 sales.

Motorcycle and three-wheeler sales in June totalled 138,509 units, up 54% YoY but down 9% MoM, taking FY25 volumes to 1.5 million units, a 32% YoY increase.

Meanwhile, the tractor segment rose 78% MoM in June to 2,791 units, driven largely by a 136% MoM surge in Millat Tractors' sales. However, overall FY25 tractor volumes were down 32% YoY, reflecting weak agricultural economics.

Truck and bus sales reached 737 units in June – a 2.5 times YoY and 21% MoM rise. FY25 volumes doubled to 5,232 units compared to 2,644 in FY24, signalling some recovery in commercial demand.

In contrast, India, the region's automotive giant, sold around 4.2 million units (FY25), dwarfing Pakistan's market by 28 times despite a slower 6-8% growth, as reported by the Society of Indian Automobile Manufacturers.

Looking ahead, analysts at AHL and Topline Securities forecast continued growth in FY26 as interest rates decline further and companies prepare new launches, particularly hybrid and plug-in hybrid vehicles, catering to evolving consumer preferences and fuel economy needs.