Earlier today, Honda Atlas Cars Limited (HACL) conducted an analyst briefing where the company’s financial results and potential were discussed.
A 25–35 percent fall in sales is what the corporation anticipates will occur in August 2022 as a result of pricing increases, supply delays, and production reductions. It stated that consumer finance accounts for 40% of its overall sales. However, the manufacturer forecast that due to high financing rates, that number will probably drop to 30.
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Tough times lie ahead
HACL claimed that the US currency rate increases are mostly to blame for the price increases. It was noted that raw commodities account for 90% of overall costs, with dollar rate swings affecting 60–70% of them. At the time of the price increase, the USD/Rs exchange rate was 235.
Only two non-production days (NPDs), according to the carmaker, have been recorded thus far. According to a provision from the State Bank of Pakistan (SBP), the company is allowed to import 50% of the average CKD import for the previous four months in July, 60% in August, and 70% in September.
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Pakistan’s diminishing foreign exchange reserves are expected to be protected by the clause. These were some of the other conversation highlights:
- The levels of localization in all Honda cars are as follows:
- Honda BR-V — 50 Percent
- Honda Civic — 60 Percent
- Honda City — 70 Percent
- In terms of absolute amount (PKR), HACL’s localization level stands at 60 percent.
- The company is expanding its localization efforts to reduce production costs and increase profitability.
- HACL spoke on the impending launch of the new HR-V in Pakistan soon, without mentioning the exact timeline.
Read more: Why did Honda increase its car prices?
Due to rising transportation costs and the current status of the Pakistani rupee, HACL also forecast a drop in future profitability.