Tuesday, November 5, 2024

Honda Cars in Pakistan: Significant Decline in Profit

Honda Atlas Cars Limited (HCAR) recently announced its financial results for the final year ended March 31, 2023 (FY23). The company's profit after tax experienced a significant decline of 89.6 percent year-on-year (YoY), reaching Rs. 260.14 million, in contrast to the profit of Rs. 2.5 billion in the same period last year (SPLY).

Honda Atlas Cars Limited, one of the leading automobile manufacturers in Pakistan, released its financial report for FY23. The report reflects the company's performance in terms of profit, sales, costs, and other financial indicators. Let's delve deeper into the numbers to understand the factors that influenced Honda Atlas Cars Limited's financial results.

Honda Atlas Cars Limited's Financial Performance in FY23

Profit After Tax Decline

The financial report reveals that Honda Atlas Cars Limited witnessed a substantial decline in profit after tax. The figure dropped to Rs. 260.14 million, marking a staggering 89.6 percent decline YoY. This decline can be attributed to various factors affecting the automotive industry and the company's operations.

Dividend Announcement

Despite the profit decline, Honda Atlas Cars Limited did not announce any cash dividend for the year. This decision indicates the company's focus on retaining capital for potential investments and future growth opportunities.

Losses in 4QMY23

During the quarter of January-March 2023 (4QMY23), Honda Atlas Cars Limited reported a loss of Rs. 5.8 per share. This loss contrasts with the earnings of Rs. 5.7 per share in the previous quarter. The unexpected deviation primarily stemmed from higher-than-estimated operating expenses, potentially influenced by substantial foreign exchange losses incurred during the quarter.

Sales Performance

Yearly Sales Decline

Honda Atlas Cars Limited experienced a decline in sales during FY23. The company's sales fell by 12 percent, amounting to Rs. 95.08 billion, compared to Rs. 108.04 billion recorded in the corresponding period of the previous year. This decline in sales could be attributed to various factors, including market dynamics and changing consumer preferences.

Sales Performance in 4QMY23

In 4QMY23, Honda Atlas Cars Limited's topline figure stood at Rs. 22.3 billion, reflecting a 3 percent decline on a quarter-on-quarter (QoQ) basis. Despite implementing multiple price revisions during the quarter, the topline was impacted by a 6 percent decrease in volumetric sales.

Gross Profit and Margin

Honda Atlas Cars Limited reported a gross profit of Rs. 7.16 billion, demonstrating a 29.4 percent increase compared to Rs. 5.53 billion in the same period last year. The gross margin reached 12.5 percent, marking the highest margin since 1QMY18 (14.2 percent). This improvement in gross profit and margin could be attributed to various factors, such as cost management and operational efficiencies.

Distribution and Marketing Costs

During FY23, Honda Atlas Cars Limited successfully reduced its distribution and marketing costs to Rs. 902.37 million, a decrease from Rs. 1.14 billion in the previous year. This reduction in costs highlights the company's efforts to optimize its operational expenses and enhance profitability.

Other Income Increase

The financial report reveals a 15.8 percent increase in Honda Atlas Cars Limited's other income, which reached Rs. 2.32 billion during the full year, compared to Rs. 2 billion in the previous year. Notably, during 4QMY23, other income surged by 110 percent QoQ to Rs. 683 million, primarily due to attractive deposit rates.

The surge in Finance Cost

Honda Atlas Cars Limited experienced a significant surge in finance cost during FY23, soaring by a staggering 549.8 percent from Rs. 53.26 million to Rs. 346.14 million. This increase in finance cost could be attributed to various factors, including rising interest rates and borrowing expenses

Honda Atlas Cars Limited's financial performance in FY23 exhibited a decline in profit after tax and sales, coupled with an increase in finance costs. Despite these challenges, the company managed to improve its gross profit and margin while reducing distribution and marketing costs.

The surge in other income highlights Honda Atlas Cars Limited's ability to capitalize on favorable deposit rates. Going forward, the company will need to address the factors impacting its profitability and sales to sustain long-term growth.

Challenges Faced by Honda Atlas Cars Limited (HACL) in Production and Sales

Honda Atlas Cars Limited (HACL) has encountered a tumultuous year characterized by significant challenges in production and sales. The company's output witnessed a sharp decline, primarily attributed to supply chain issues arising from import restrictions imposed in Pakistan.

One of Pakistan's prominent car manufacturers, Honda, experienced an abysmal performance in the previous month, with a meager sales figure of just 207 cars. Astonishingly, the company's flagship sedan, the Honda Civic, failed to register any sales during this period.

The adverse impact on production and sales can be directly linked to the constraints faced by Honda Atlas Cars Limited in its supply chain. Import restrictions imposed by the government have hampered the availability of crucial components necessary for car manufacturing. As a result, the company faced a severe shortage of essential parts, leading to a decline in production capacity.

The shortage of key components disrupted the assembly line, hindering the timely completion of vehicles. Consequently, Honda Atlas Cars Limited faced significant challenges in meeting customer demand and fulfilling orders. The scarcity of inventory, particularly for popular models like the Honda Civic, further exacerbated the situation.

Import restrictions imposed by the government are aimed at promoting local manufacturing and reducing reliance on imported goods. However, these policies have presented unforeseen obstacles for automobile manufacturers like Honda Atlas Cars Limited. The company heavily relies on imports for crucial components and technologies, making it susceptible to disruptions caused by import restrictions.

To address these challenges, Honda Atlas Cars Limited is actively working to diversify its supply chain and explore local sourcing alternatives. By collaborating with local suppliers and manufacturers, the company aims to mitigate the impact of import restrictions and ensure a steady flow of components.

Furthermore, Honda Atlas Cars Limited is actively engaging with relevant authorities to address the import restrictions issue and seek feasible solutions. The company recognizes the importance of maintaining a consistent production and sales cycle to meet customer demands and sustain its position in the market

Honda Atlas Cars Limited faced a challenging year in terms of production and sales. Supply chain issues resulting from import restrictions significantly impacted the company's output and led to a decline in sales. However, the company is actively working on diversifying its supply chain and exploring local sourcing options to overcome these challenges. With concerted efforts and collaborative measures, Honda Atlas Cars Limited aims to restore its production capacity and cater to the market's demands effectively.

New Honda Car Models and Prices in Pakistan

Honda offers a range of new car models in Pakistan, catering to different preferences and needs. Here are the current new car models available at Honda dealerships in Pakistan, along with their prices:

  1. Honda City:
    • Price Range: PKR 48.0 - 59.8 lacs
  2. Honda BR-V:
    • Price: PKR 65.3 lacs
  3. Honda HR-V:
    • Price Range: PKR 79.0 - 82.0 lacs
  4. Honda Civic:
    • Price Range: PKR 86.0 lacs - 1.02 crore
  5. Honda CR-V:
    • Price: PKR 1.07 crore
  6. Honda Accord:
    • Price: PKR 1.55 crore

These prices are ex-factory prices and may vary based on factors such as optional features and customization.

Used Honda Cars in Pakistan

In addition to new cars, Honda cars are also widely available in the used car market in Pakistan. The prices of used Honda cars can vary depending on factors such as model, condition, mileage, and year of manufacture. Here are the price ranges for used Honda cars in Pakistan:

  1. Used Honda Civic:
    • Price Range: PKR 230,000 - 25,000,000
  2. Used Honda Accord:
    • Price Range: PKR 25,000,000

These price ranges provide an overview of the used Honda car market in Pakistan, but individual listings may differ.

Overview of Honda in Pakistan

Honda Atlas Cars, a joint venture between the Atlas Group and Honda, is the authorized manufacturer and distributor of Honda cars in Pakistan. The company was incorporated in 1992 and has since played a significant role in the Pakistani automobile industry. Honda cars are known for their innovative technology, performance, and reliability.

Honda vehicles incorporate advanced features such as lane departure warning, lane keeping assist system, road departure mitigation, adaptive cruise control, and forward collision warning, among others. These technologies enhance safety and offer a comfortable driving experience. Additionally, Honda has made strides in the hybrid car segment, with models like Honda Accord, Honda Fit, Honda Civic, Honda CR-Z, and Honda Vezel gaining popularity in Pakistan.

Among the various Honda models available in Pakistan, Honda Civic has been particularly well-received. The Honda City also holds a significant market share, while imported models like the Honda Vezel have gained traction among consumers. However, older models like Honda Accord CL7 and CL9, though once popular, are now harder to find in good condition.

Honda cars enjoy a widespread presence in Pakistan, with numerous authorized dealerships and financing options available. Banks often provide car financing services to make Honda vehicles more accessible to customers.

Honda cars in Pakistan offer a combination of technological innovation, performance, and value for money. With a range of models to choose from, both new and used, Honda provides options for diverse car enthusiasts in Pakistan. Whether you're looking for a stylish sedan like the Honda Civic or a versatile SUV like the Honda CR-V, Honda cars continue to make their mark in the Pakistani automotive market.

Umme Muhammad
Umme Muhammad
Umme Muhammad is a skilled writer specializing in technology, lifestyle, trending news, and education. With a passion for exploring the latest advancements, Umme delivers insightful and engaging content. Her versatile writing covers various topics, including gadgets, software, fashion, travel, health, and wellness. Umme's expertise also extends to curating trending news stories, keeping readers informed about global events.

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