Pakistan auto sales hit 30-month high in May 2025: is the rally sustainable?

Key takeaways

• Auto sales in May 2025 reached the highest level since December 2022.
• Major players, INDU, HCAR, and PSMC, posted a combined 44% YoY and 49% MoM growth.
• Budgetary risks including tax hikes and regulatory changes could challenge growth in FY26.

Pakistan’s auto industry has made a roaring comeback. According to JS Global, auto sales in May 2025 hit a record high since December 2022, signaling a strong demand recovery after months of supply chain disruptions and economic slowdown.

Robust sales recovery led by INDU and HCAR

In May 2025, the three major listed auto players, Indus Motor Company (INDU), Honda Atlas Cars (HCAR), and Pak Suzuki Motor Company (PSMC), delivered a collective 13,334 units, reflecting a 44% increase year-on-year and 49% growth month-on-month.

• INDU led the charge with a 2.4x ifted Yaris and affordable Corolla variants.
• HCAR followed closely with a 69% YoY growth, delivering 2,005 units, mainly fueled by sedan sales, which accounted for 70% of its volume.
• PSMC saw modest 8% YoY growth but posted a 62% surge compared to April, delivering 6,500 units.

Source: JS Research, June 5, 2025

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May 2025 auto sales snapshot

This rally brings 11MFY25 cumulative sales to 106,643 units, up 38% from 77,475 units in 11MFY24.

Segment-wise highlights

• Yaris volumes are expected to rise 5.8x YoY.
• Corolla sales likely increased 3.6x YoY.
• Fortuner and Hilux volumes jumped significantly despite new entrants like JAC-T9 and Hyundai Tucson HEV gaining traction.
• On the downside, Corolla Cross volumes dropped by 61% YoY, challenged by hybrid competition.

Threats on the horizon: Budget FY26

While the sector’s performance in May is cause for optimism, upcoming budgetary measures could create headwinds:

1. Carbon levy: A proposed tax on petrol vehicles may reduce new car demand.
2. Sales tax hike: Vehicles up to 850cc, which account for 39% of total sales (mainly Alto), may face an increase in sales tax from 12.5% to 18%.
3. Used car imports: An extension of the age limit from 3 to 5 years could make used cars more affordable, hurting local assemblers.
4. Tariff cuts: Lowering of duties on CBU imports under IMF recommendations could further squeeze market share for local manufacturers.

Investment perspective

The May sales spike signals strong pent-up demand, particularly as delayed deliveries from April spilled into May. However, investors should be cautious about the policy risks ahead.

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INDU:

• Strongest performer with highest May volumes since June 2022.
• Demand driven by mid-segment sedans and premium variants like Fortuner.

HCAR:

• Solid sedan portfolio but needs revival in SUV segment.
• Hybrid launches in the pipeline could support future growth.

PSMC:

• Faces risks from increased taxation on its small car portfolio.
• Could be hit hardest by used car import relaxations.

Final word

The auto sector’s recovery in May 2025 is impressive, but sustainability depends on budget clarity and regulatory consistency. Investors should watch the FY26 budget closely for updates on carbon levies, sales tax adjustments, and used car import policy.

Source: JS Global Research

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →