Karachi, September 5, 2023 – Indus Motor Company Limited (INDU) has refrained from announcing the prices of its upcoming hybrid vehicles, scheduled for launch in early 2024. The decision comes as the company grapples with the volatile exchange rate situation.
During its FY23 corporate briefing session held on Tuesday, the management of Indus Motor discussed the company’s financial performance and future prospects. While the management confirmed that the hybrid vehicle launch is on track for early 2024, they declined to comment on the pricing range. They cited the ongoing economic uncertainty, particularly the daily fluctuations in the US dollar exchange rate, as the primary reason for withholding pricing details.
According to analysts at Topline Securities, the company expects to sell between 28,000 to 30,000 units of the hybrid vehicle in FY24, a slight decrease from the 31,602 units sold in FY23.
In the fourth quarter of FY23, INDU reported a one-off gain attributed to exchange rate fluctuations, resulting in higher-than-expected gross margins.
The management also revealed that the localization rate in value terms for models like Yaris and Corolla stands at 60 percent after accounting for taxes and duties.
Indus Motor’s current production capacity ranges from 76,000 to 80,000 units on a double shift basis, which can be increased to 90,000 units with overtime.
In terms of the broader automotive sector in Pakistan, total car sales, including non-Pakistan Automotive Manufacturers Association (PAMA) vehicles and used imports, declined by 57 percent year-on-year to 163,000 units in FY23. This decline is attributed to import restrictions and decreased consumer demand. Specifically, Pakistan imported 6,583 used cars in FY23 compared to 28,123 units in FY22.
Indus Motor’s market share in FY23 stood at 19.3 percent, down slightly from 19.9 percent in FY22. Meanwhile, Pakistan Suzuki Motor Company (PSMC) held a 40.0 percent market share in FY23, compared to 39.6 percent in FY22, and Honda Atlas Cars Pakistan (HCAR) maintained a 10.3 percent market share in FY23, down marginally from 10.4 percent in FY22.
Looking ahead, the management anticipates that the auto sector will continue to face challenges due to the ailing economy. Factors such as the persistent devaluation of the Pakistani Rupee against the US dollar, high inflation, elevated interest rates, and increased taxes are expected to erode consumer purchasing power.
In FY23, INDU reported a 36 percent year-on-year decline in net sales, falling from Rs 276 billion in FY22 to Rs 178 billion in FY23. Similarly, profit after tax decreased by 39 percent year-on-year to Rs 9.7 billion in FY23, down from Rs 15.8 billion in FY22. The decline in profitability is attributed to increased input costs driven by significant rupee devaluation and high inflation. INDU recorded gross margins of 4.5 percent in FY23 compared to 6.7 percent in FY22.