KARACHI, Jan 13: Auto assemblers' performance at the local bourse had not remained impressive in 2004 as out of 13 listed companies, only six outperformed the KSE 100-share index
whereas the rest were quite below the line while four companies gave a negative return to investors.
The auto sector as a whole provided a return of 13 per cent in 2004, under performing the KSE index by 26 per cent. Out of the four main car assemblers (Pak Suzuki Motors, Indus Motors, Dewan Motors and Atlas Honda), three provided a negative return during 2004.
Honda Atlas gave a return of nine per cent. High steel prices and Japanese yen appreciation squeezed car assemblers' margins during 2004. According to a report prepared by Abdul Azeem of Invest Capital and Securities, motorcycle manufacturing companies performed well in the same period.
Atlas Honda returned 144 per cent while Suzuki motorcycle returned 63 per cent. Despite the reduction in motorcycle prices and the rise in steel prices, companies' profitability increased on the back of rising sales.
Out of two tractor manufacturing companies, Millat Tractors performed quite well and returned 56 per cent to its investors whereas Al Ghazi produced negative return of six per cent, the report said.
Car sales in 2004 went up by 39 per cent to 110,200 units from 79,600 units in 2003 while production also increased by 39 per cent to 111,000 in 2004 from 79,900 units in 2003.
With the ever increasing demand, car makers, amid government pressure, have slowly begun to increase their production capacities. Indus Motors will raise its production capacity to 42,000 units in 2005 followed by 84,000 units by Suzuki this year and 30,000 units by Honda.
The report said that the low interest rates being offered by different institutions, introduction of new models and overall economic growth had resulted in a huge increase in auto demand in 2004.
