Karachi: Pakistan's auto industry is poised for substantial growth in profitability and sales for the second quarter of fiscal year 2026, according to JS Global. The Topline Auto Universe, a key segment of the country's automotive market, is expected to report a 35% year-on-year increase in profitability, amounting to Rs14.7 billion, up from Rs10.9 billion in the same period last year. This growth is largely attributed to a surge in passenger car sales.
According to JS Global, the quarter-on-quarter profitability is also set to rise by 19%, bolstered by improved economic conditions, the introduction of new vehicle variants, and lower interest rates. Net sales are projected to increase by 63% year-on-year and 26% quarter-on-quarter, reaching Rs161.5 billion, driven by higher volumes and a stable Pakistani rupee.
The report highlights a 45% year-on-year and 36% quarter-on-quarter increase in volumes, with 27,821 units sold in 2QFY26. Excluding Millat Tractors Limited (MTL), passenger car sales for companies like Indus Motor Company (INDU), Honda Atlas Cars (HCAR), and Sazgar Engineering Works (SAZEW) rose to 21,486 units, reflecting an 84% year-on-year and 17% quarter-on-quarter increase, indicating a recovery in car demand.
Despite a slight decline in gross margins, attributed to shifts in product mix and cost pressures, the auto sector's total passenger car sales grew by 39%, and sales in the Topline Universe (excluding MTL) surged 84% year-on-year. This growth is expected to continue with new vehicle launches and favorable economic conditions.
Atlas Honda Limited (ATLH) maintained its strong position in the two-wheeler segment, with a 34% year-on-year and 15% quarter-on-quarter increase in volumes. Indus Motor Company is anticipated to see a 32% year-on-year rise in earnings, though a slight decline quarter-on-quarter. Honda Atlas Cars is expected to report substantial growth, with a 92% year-on-year and 47% quarter-on-quarter rise in volumetric sales.
Sazgar Engineering Works is also set to benefit from a low base effect, with earnings expected to increase by 92% year-on-year. Millat Tractors Limited, however, is expected to experience a 26% year-on-year decline in earnings due to high base effects from 2QFY25 but shows signs of recovery with a significant quarter-on-quarter increase in sales.
Overall, the auto sector in Pakistan is witnessing a period of robust growth, supported by favorable economic conditions, new product offerings, and increased consumer demand.
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