Honda Atlas Cars Limited, HCAR, has decided to share its plan to soon take a step into the hybrid market after Pakistan, feasibly with the HRV model. It was specifically in reaction to increased competition from Corolla Cross, and Havel, depicted by several analysts on Thursday, as the organization held a briefing after declaring its financial consequences.
As per the details shared by the analysts, HCAR claimed that it will try to make a capital expenditure of around Rs. 5 billion to create a hybrid plant. Meanwhile, the organization did not share any timeline for this goal. However, It made a similar declaration in July of last year.
The organization has not decided to reveal anything about the vehicle and the company has also not told when will be the time to launch the model. Topline Security Analysis Analyst Sunny Kumar informed the Business Recorder last year. However, JS Research Analyst Wadi Zaman on Thursday claimed that it would be too early to claim that the new vehicle will go to the pinnacle of success.
It will be based on the features and price tags, he claimed. Honda Atlas claimed this year there were no complications with the opening of letters of credit. Meanwhile, subdued claims and demands and the shrinking economy led to lower revenues.
Read more: Honda Reports A 100% Month-Over-Month Increase In Sales In September 2023
The organization also shared localization levels for different models. Citi 73%, DRV and HRV at less than 50%, and Civic at over 60%. The tax advantage in the March quarter is consequent from SCAR’s consistent history of paying minimum tax. This collection of minimum tax payments caused an adjustment in the company’s tax liability, which is Rs. 1.13 billion, which is reduced from the effective test rate of 86.9% to 15.2% for FY23-24. This is written by Maisha Sohail in her report for Topline Security. Next, around about 10-15% of the imports arrived from Japan, while the remainder was from Thailand.
As a result of this minor advantageous currency devaluation emerged, Maisha wrote.
HCAR officials claim that they are exporting the spare parts of these cars and exploring further opportunities to explore more CPU parts. The organization has also claimed that this year the policy rate had about to increase by 2%, reaching 22% by the end of March 2024, which posed massive challenges for the auto sector, and the all-inclusive passenger car market, which generally reduced by 45%.
During FY25, the industry is anticipated to reflect some recovery as the policy rate is anticipated to reduce, leading to significant renovations and improvements in the lower-car segment and hybrids. SCAR recorded earnings of Rs. 1.42 per share, up 40% year-on-year, but reduced 85% quarter-on-quarter. Gross margins reduced from 8.4% to 6.5%. Management claims that the margins will remain competitive with the market.
The future outlook of this hybrid plant
If we look at the prospects of the future, HCAR, the strategic decision plan HCAR is to head into the hybrid market is considered the most important step that could massively influence the automatic land spec of Pakistan. The growing information awareness and the greater demand for environment-friendly vehicles among customers depict a promising opportunity for HCAR to create a substantial market share by launching a hybrid model HCAR is considered to be a challenge for key competitors like Cross, Havel, and Corolla will potentially reshape the competitive dynamics in the market. If we talk about the economic implications, this decision will not only prove to be beneficial for the environment but also will prove to be beneficial from an economic perspective.
The planned investment of 5 billion in this project hybrid plant can create new jobs help in technological advancements and will boost foreign direct investment. Furthermore, the price implications for the consumers will still be a major issue as competitive pricing will be important to gain most of the attraction from the wide customer base.
Potential challenges now we will discuss, there are some optimistic advantages but despite the optimistic approach, there are some challenges that it is about to pose. Regulatory issues could create significant barriers to the successful launch of the hybrid plant or vehicles. Furthermore, supply chain issues will be raised by economic and import challenges which will massively impact the production and distribution timelines and HCAR will be required to navigate these issues with cautious measures to ensure smooth market entrance.