Honda Atlas Cars Limited (HCAR) has announced plans to enter Pakistan’s hybrid vehicle market, potentially with the HR-V model, as it faces growing competition from rivals like Corolla Cross and Haval. This development was revealed during a briefing on the company’s financial results.
HCAR disclosed that it intends to invest Rs5 billion in establishing a hybrid vehicle manufacturing plant. However, the company did not provide a specific timeline for this initiative. A similar announcement was made in July of the previous year, but details regarding the vehicle model or its launch date remain undisclosed.
Analysts have expressed caution regarding the potential success of the new hybrid vehicle. JS Research analyst Wadee Zaman noted that the success of the model will hinge on its features and pricing.
The company reported that, despite no issues with opening letters of credit, subdued demand and economic challenges have led to a decline in revenues. HCAR also shared localisation levels for its models: Civic at over 60 per cent, City at 73 per cent, and both BR-V and HR-V at less than 50 per cent.
According to Topline Securities, HCAR benefited from a tax adjustment due to its history of minimum tax payments, which lowered its effective tax rate from 86.9 per cent to 15.2 per cent for FY23-24. Sohail also noted that about 10-15 per cent of the company’s imports come from Japan, with the remainder from Thailand, leading to minor gains from currency devaluation.
According to Business Recorder, HCAR is also exploring opportunities in spare parts and CPU part exports. The company highlighted that the auto sector has faced significant challenges this year, including a 2 per cent increase in the policy rate, which rose to 22 per cent by March 2024. This contributed to a 45 per cent decline in the overall passenger car market.
Looking ahead, HCAR anticipates a potential recovery in the industry during MY25, with improvements expected in the lower car segment and hybrids as the policy rate decreases. The sector is projected to regain a reasonable size within two years.
For the current year, HCAR recorded earnings of Rs1.42 per share, a 40 per cent increase year-on-year but an 85 per cent decrease quarter-on-quarter. Gross margins fell from 8.4 per cent to 6.5 per cent. The company’s management has assured that margins will remain competitive.
