Indus Motor says lower government procurement affected Hilux sales, while the company plans Rs4–5bn in capital expenditure for FY27.
KARACHI: Indus Motor Company (INDU) has reported a decline in Toyota Hilux sales during FY2026, attributing the drop mainly to lower government procurement amid geopolitical uncertainty and the ongoing regional conflict involving Iran.
The company’s management shared the details during its 37th Annual General Meeting, held following the release of its financial results for FY26.
Government demand weighs on Hilux sales
According to management, government purchases of Hilux vehicles declined during the year amid geopolitical uncertainty and the ongoing conflict, weighing on overall sales of the popular pickup model.
The company said the lower procurement contributed to weaker Hilux volumes during the financial year.
Indus Motor also raised concerns over what it described as the mis-declaration of certain competing products as range-extended electric vehicles (REEVs) to benefit from a lower goods and services tax (GST) treatment.
Management said the matter is currently under review by the relevant regulatory authorities, including the Federal Board of Revenue (FBR), and expressed expectations that the issue would be resolved soon.
According to the company, regulatory action on the matter could help create a more level competitive environment in Pakistan’s automobile market.
Toyota EV and PHEV strategy
On its future product portfolio, Indus Motor management reiterated that Toyota globally offers vehicles across multiple categories featuring the latest electric vehicle (EV) and plug-in hybrid electric vehicle (PHEV) technologies.
The company said its strategy for introducing new EV and PHEV models in Pakistan would be aligned with the government’s automotive policy once it is approved, ratified and formally announced.
The policy is expected to influence automakers’ future product strategies as Pakistan’s automotive industry gradually moves towards electrification and alternative powertrain technologies.
Indus Motor margins come under pressure
Indus Motor’s gross margins came under pressure during the fourth quarter of FY26.
The company reported a gross margin of 10.3 percent in 4QFY26, compared with 13.3 percent in 4QFY25 and 15.5 percent in 3QFY26.
Management attributed the decline primarily to strategic pricing decisions and higher dealer incentives introduced to support marketing activities.
The weaker margins come as automakers contend with demand conditions, increased competition, pricing pressures and changing consumer preferences in Pakistan’s automobile market.
Rs4–5bn capex planned for FY27
Looking ahead, Indus Motor plans to invest approximately Rs4 billion to Rs5 billion in capital expenditure during FY27.
The planned investment is aimed at further increasing the localisation of parts and components, which could strengthen the company’s domestic supply chain and reduce its reliance on imported components.
Management also disclosed that the company had increased inventory levels to mitigate potential shipment delays resulting from the prevailing geopolitical situation.
The higher inventory was intended to support production continuity and reduce the risk of manufacturing disruptions caused by delays in the movement of components and other supplies.
Indus Motor continues to operate in a challenging environment shaped by geopolitical uncertainty, evolving automotive policies, pricing pressures and the gradual transition towards new-energy vehicles.