Toyota Indus Motor Company (IMC) has made depressing revelations in its latest corporate briefing. The automaker is only working at 40-45% production capacity as State Bank limits car kit imports.
The company mentioned a list of causes for the diminished production. Citing that decline, the automaker also feared a decline of 40% in volumetric sales in FY2023.
It added that soaring car prices, an increase in interest rates, sanctions on car financing, supply chain challenges, and restrictions on complete knockdown kits (CKD) imports are also major contributing factors to the diminishing demand.
According to Arif Habib Limited (AHL), Toyota IMC recorded a 31% YoY increase in sales by selling 75,611 units in FY2022 compared to 57,731 units same time last year.
Regarding the recently announced refund policy, IMC management informed analysts that between 800 and 1,000 customers have canceled their reservations and received a refund with a markup. According to the annual report, advances and loans from customers and dealers increased to Rs. 112 billion in FY22 from Rs. 51 billion in FY21.
Due to local currency depreciation and imposition of a super tax, net sales in FY 21 increased by 54% to Rs. 276 billion from Rs. 179 billion, while profit after tax increased by only 23%, to Rs. 15.8 billion from Rs. 12.8 billion.
Toyota IMC is likely to witness a decline in its earnings in the coming days due to production pauses. The company is still observing non-production days (NPDs) due to a new mechanism that requires CKD import approval from the State Bank of Pakistan (SBP).
The company states that this has created hurdles in importing knockdown kits, causing inventory problems for them.