The brunt of flood-related disruptions in the auto sector is expected to fall on tractors and two- wheelers, given their strong linkage to agricultural output and rural household incomes with historical patterns reinforce this vulnerability, brokerage house Arif Habib Limited (AHL) said in a report.
In the 2010 floods, tractor and motorcycle sales contracted 33% and 7% MoM in August 2010, while passenger car volumes fell 34% MOM in July 2010 and remained subdued in August 2010.
Similarly, the 2022 flash floods caused an even sharper contraction, with tractor and bike sales plunging 70% and 31% MoM in Jul 22, while passenger car volumes dropped 68% MoM, the report noted.
The reported noted that medium-term impact is also telling with tractor sales falling 3% YoY in FY11 and a further 28% YoY in FY12, reflecting the multi-year strain on farm incomes.
Two-wheeler sales stagnated over the next two years, recording -1% YoY in both FY12 and FY13. Passenger cars, however, were more resilient during that cycle, growing 3% YoY in FY11 and 23% YoY in FY12.
By contrast, the 2022 floods weighed on all segments: tractor and bike sales declined 23% and 34% YoY in FY23, while passenger cars dropped sharply by 55% YoY in FY23 and a further 18% YoY in FY24, exacerbated by high interest rates and inflation.
READ MORE: Tractor Sales in Pakistan Hit 22-Year Low
Looking ahead, tractors are likely to face the steepest impact from the 2025 floods, given already weak farm economics. The brokerage house expects tractor sales to contract 5% in FY26, before recovering strongly by ~30% from FY27 onward as farm incomes normalize.
Passenger cars, meanwhile, are expected to see a limited direct impact from the floods. Nonetheless, the brokerage hose has revised its FY26 growth forecast down to 25% (188k units) from an earlier estimate of 30%, reflecting some near-term demand moderation.
