Honda Atlas plans hybrid entry with HR-V in Pakistan

Honda Atlas Cars Limited (HCAR) announced its intention to enter Pakistan’s hybrid market, potentially with the HR-V model, in response to rising competition from Corolla Cross and Haval.

The company plans to invest Rs5 billion in setting up a hybrid plant, although no timeline was provided. This move follows a similar announcement made in July last year.

Moreover, HCAR’s financial results reveal no issues with letter of credit openings this year, but lower revenues due to subdued demand and a shrinking economy. Localisation levels vary across models: Civic at over 60%, City at 73%, and BRV and HR-V at less than 50%.

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The company’s tax rate adjustment, benefiting from a history of minimal tax payments, reduced its effective tax rate from 86.9% to 15.2% for FY23-24. Imports are split between Japan (10-15%) and Thailand, with minor benefits from currency devaluation. HCAR is also exploring spare parts exports and CPU part opportunities.

In response to the 2% increase in the policy rate, reaching 22% by March 2024, HCAR faces challenges alongside a 45% decrease in the overall passenger car market. However, industry recovery is anticipated in MY25 with potential improvements in lower car segments and hybrids.

HCAR reported earnings of Rs1.42 per share, up 40% year-on-year but down 85% quarter-on-quarter, with gross margins declining from 8.4% to 6.5%. Management expects margins to remain competitive.