Automobile Assemblers stocks rise as duty on imported cars increased

As per the industry whispers, the duty on imported cars has been increased by 15 percent across all car segments as the Government makes her move to decrease the widening deficit and curb imports. The biggest beneficiaries of the revised duty are going to be local automobile assemblers especially Pak Suzuki Motor Corp (PSMC).

Record imports of Completely Built Units CBUs as per BOP were seen in the month of June this year as Pakistan witnesses a significant demand for low-cost imported vehicles.

Pak Suzuki faces extreme competition in the face of imported cars as it is the leading manufacturer of 1000cc low priced vehicles in Pakistan. The increase in duty is expected to increase the demand for locally manufactured vehicles i.e. Suzuki Cultus and WagonR models.

However, the entire sector would benefit from this duty the biggest beneficiary is expected to be PSMC which has been facing direct competition from the imported cars. Honda Atlas (HCAR) and Indus Motor Corp (INDU) will not benefit as much as the PSMC as the companies do not face direct competition from the imported cars.