Honda’s Car Sales Will Rise With More Price Hikes: Report

To put it politely, 2020 has been an eventful year for the entire world, thanks to a certain global pandemic and the lockdown that came with it. However, mercifully, with the daily cases now down by a significant degree in Pakistan, the economy is finally starting to regain some of its lost momentum.

The list of industries and companies that suffered because of the virus would be virtually unending, but the one thing we know for sure is that the auto sector of Pakistan has taken a severe hit because of the lockdowns. The companies had to keep their operations shut down for over a month, which resulted in huge losses and a massive decline in production and sales of all companies.

However, with the resumption of production and marketing operations, the industry is starting to gradually pick up the pieces. Following the resumption, some interesting statistics have been reported by Topline Securities pertaining to Honda Atlas’s car sales. Here are some of the interesting insights shared by the sources:

Rising Sales With an Efficient Schedule

The lockdown and the spread of the virus have finally slowed enough for the people to step out and purchase cars once again. Given that fact, Honda Atlas has a reason to believe that car sales shall continue to rise in Financial Year (FY) 2021, thanks to lower interest rates and resumption of the economic activities.

Reportedly, Honda has no plans of recommencing the 2nd shift production in the near future. Honda plans to meet the piled up demand by managing the production volume in an optimal fashion to meet the demand for more vehicles.

Contribution to the Economy & No Threats From Newcomers

As of right now, auto financing contributes 20%-30% of total car sales to Honda. However, with the low-interest rates, Honda foresees the percentage going beyond 30%.

Reportedly, the arrival of the Hyundai Tucson and the Kia Sportage doesn’t phase Honda, as the newly popularized cars are crossover SUVs and are not as efficient or as cheap as the sedans sold by Honda. However, Honda does have its eyes on the new Toyota Yaris, as it could give the Honda City a run for its money.

No New City on The Horizon

Reportedly, when asked about if and when the new City would arrive in Pakistan, Honda gave no response to the question.

An interesting insight, as per the report, was that out of the combined sales figure of both the City and the Civic, the City makes up for almost 40% and the Civic contributes almost 60%.

As per the report, about 60% of people from urban areas prefer Honda’s while about 40% of the people from rural areas prefer Honda.

Part Localization & Price Hikes

As per the reports, Civic’s parts are 60% localized, City’s parts are 70% localized and BR-V’s parts are 40% localized. However, in terms of absolute amount, the reports clarify that the localization percentage is 25%-30%. The report also states that the company prefers maximum localization of parts and is trying to further localize them to meet the quality parameters.

The report states that in order for the company to further optimize its gross margins, Honda Atlas might most probably announce more price hikes in the future.

Tax Percentage

The taxes on the invoice prices of the cars range from 33% to 35%.

Honda Atlas Cars look to not have anything new planned for the Pakistani market except for the same old cars and same old price hikes. With the new cars arriving and others on the way, it would be in the company’s best interest to offer something of value soon.