KARACHI: Pakistan's listed automakers recorded their most profitable quarter on record in the three months ending June 2026, according to a research note published Friday by a brokerage.
The brokerage's review of eight listed auto companies, representing 98% of the sector's market capitalization, found combined net profit rose 44% from a year earlier to roughly Rs30 billion.
The gain was driven largely by a 34% jump in revenue to Rs318 billion, itself fueled by a 29% increase in vehicle sales volumes, according to the report, authored by JS Global analyst Wadee Zaman.
For the full fiscal year, the eight companies posted combined sales of Rs1.075 trillion, the industry's highest annual total ever, the report said. Analysts attributed the growth to stronger volumes, new model launches, an improving economy and a more stable exchange rate.
Sindh Global (SAZEW) was the standout performer, with revenue surging 181% year-over-year on higher sport utility vehicle sales and the addition of Tank 500 models, the report said. Profit at the company jumped 151%.
Honda Atlas Cars (HCAR) also posted sharp gains, with profit roughly tripling on higher volumes, a one-time tax-related gain and a lower effective tax rate.
Not every company shared in the gains. Ghandhara Automobiles (GAL) saw revenue fall 33% from the prior year, which the report attributed to unusually strong demand a year earlier tied to its T9 pickup truck.
Profitability was also boosted by a 54% year-over-year rise in other income, which the report linked to one-time gains recorded by three Japanese-affiliated manufacturers, Honda Atlas, Indus Motor and Atlas Honda, tied to the Sindh Infrastructure Development Cess.
Gross margins across the sector held roughly steady from a year earlier at about 15.7%, but fell three percentage points from the prior quarter, which the report attributed to higher shipping and freight costs linked to conflict in the Middle East.
Analysts cautioned that pressure on margins could persist into the current quarter, noting automakers have yet to raise prices to offset the higher costs amid increased competition from new market entrants.
Despite the earnings growth, auto stocks have lagged the broader market this year. The sector has gained 22% year-to-date, compared with a 36% rise in the KSE-100 index, according to the report. Analysts attributed the underperformance to uncertainty over the government's long-delayed auto policy.
That policy has been finalized and approved by the prime minister, the report said, but still awaits consultation with the International Monetary Fund, expected in October, as well as Cabinet approval. The draft policy would offer incentives such as reduced duties and sales tax to producers of new-energy vehicles while gradually lowering tariff protections for local assemblers on imported vehicles.
