Honda Atlas Cars (HCAR) has faced a significant setback, experiencing an 82% decline in its profit-after-tax (PAT) in the third quarter of fiscal year 2023-24. The PAT plummeted to just Rs143.25 million, a stark contrast to the Rs810.82 million recorded in the same period the previous year. This downturn is primarily attributed to a massive 46% drop in sales, falling from Rs22.95 billion to Rs12.43 billion in the current fiscal year.
Despite the decrease in gross profits to Rs1.03 billion (a nearly 43% decline from Rs1.79 billion in the previous year’s quarter), HCAR’s gross margins actually rose to 8.3% from 7.8%. Administrative expenses increased by 24% to Rs398.4 million in 3QFY24 compared to Rs321.6 million in the corresponding period last year.
Other contributing factors to HCAR’s financial challenges include an 11% decline in other income, standing at Rs288.19 million in 3QFY24, and a substantial 40% increase in finance costs, reaching Rs443.27 million. The rise in finance costs is linked to the prevailing increase in interest rates during the period.
In terms of recent sales, Honda Atlas sold 787 units of City and Civic and 114 units of BR-V. The overall car sector in Pakistan is facing challenges, with economic stability expected to take a considerable amount of time.
The latest report from the Pakistan Automotive Manufacturers Association (PAMA) indicates a 10% month-on-month decline in car sales, with 5,816 vehicles sold last month compared to 6,475 units in November 2023. Year-on-year data shows a significant 66% drop, with only 17,012 cars sold during the corresponding period last year. This economic downturn is casting a shadow over Pakistan’s vulnerable car industry.