The company hinted possible price increase in the near-term to cover recent Pakistani rupee depreciation in relation to Japanese yen and US Dollar
Indus Motor Company (IMC), local distributors of Toyota, has hinted that it will increase prices of most of its products in near future. It will follow the top auto assembler of the country, Suzuki, which announced a price rise last month.
The IMC held its analyst briefing recently where the company hinted possible price increase in the near-term to cover recent Pakistani Rupee depreciation in relation to Japanese Yen and US Dollar.
Ironically, instead of justifying previous price hike to the Engineering Development Board (EDB) of Pakistan; the IMC is planning to further increase vehicles’ prices.
It is important to mention here that EDB has sent letters and reminders to PSMC and IMC asking them to furnish the reasons behind the latest price hike. But both the companies have not responded yet.
Chief Executive Officer (CEO) of EDB, Tariq Ejaz Chaudhary said both companies have not been responded yet, the authority will wait for some more time for answers then necessary action will be taken against the both companies.
Earlier, Pak Suzuki Motor Company (PSMC), Pakistan’s top car maker by market share, announced 3 percent price rise in August 2016, translating to a price hike of between Rs 20,000 to Rs 30,000 on all its car models.
Similarly, in March this year, IMC had increased the prices of Toyota Corolla cars by Rs 20000 to Rs 65000 in account of addition of some new features that was the second time IMC had increased Toyota Corolla prices within a short span of time of six months.
After the exuberant volumetric accretion in FY16, the company further hinted towards utilizing its plant at full capacity in FY17, where the management foresees healthy demand for product portfolio. Moreover, IMC is expected to launch new models of Hilux and Fortuner in late 2016 and 2017, respectively. The company, in FY17, has planned to debottlenecking (increasing capacity) to add a further 10 cars per day to its capacity.
An analyst at JS Research, Ahmed Lakhani forecasts declining gross margins of IMC ahead, mainly in light of Pakistani Rupee depreciation against US Dollar and Japanese Yen and rising steel and other commodities prices. ‘We believe the company has sufficient clout to pass on cost increases to the end consumer’.
IMC posted earnings of Rs 11.45 billion in Fiscal Year 2015-16 (FY16), registering 26 percent yearly growth, mainly driven by exuberant volumetric growth, margin accretion in FY15 and increase in market share of its flagship corolla in the 1300cc plus category in FY16.
IMC’s segment, Hilux sales witnessed a 23 percent yearly growth on account of substantial increase in orders from the Armed forces. Gross profit margin accretion was primarily attributable to depreciation of US Dollar/Japanese Yen by 1.7 percent year on year YoY over FY16 and 26 percent decline in average steel prices over FY16.