INDU plans to launch first locally-assembled Corolla Cross HEV in 2023

May 26, 2022 (MLN): Indus Motor Company (INDU) is planning to launch its first locally assembled Hybrid Electric Vehicle (HEV) SUV, Corolla Cross in 2023 that will have the same localization level as Corolla and Yaris, the management of the company said in a corporate briefing today.

Given the incentives provided under the new auto policy 2021-26, the company has already invested half of $100mn for HEV with the remaining 50% committed, a report by Al Habib Capital highlighted.

Meanwhile, the management believes that FY23 would be a tough year for the auto industry as a decline of 25-30% is expected in auto sales in the backdrop of higher interest rates coupled with stringent rules of auto financing.

Moreover, political uncertainty, elevated commodity prices, higher freight cost, and PKR devaluation will remain a key risk for this sector.

It is prudent to highlight that 25-27% of INDU sales are done through auto financing facilities from banks which would be impacted by recent SBP amendments in auto financing tenure.

To note, during 9MFY22, the company’s profitability went up by 82% YoY to Rs15.29 billion, mainly on the back of higher CKD and CBU sales volume and an increase in other income due to higher fund size on account of an increase in customer advances.

According to management, current price levels are not sustainable and the company has stopped booking further orders until the economic certainty prevails, the key takeaways covered by Foundation Securities said.

The company will begin booking once they have a clear picture of the situation with the likely price increase required to sustain their margins.

While commenting on the recent ban on CBU imports, management has said it will decline their overall margins due to higher trading margins but they will bear the cost on the larger interest of the country, Asad Ali at Al Habib Capital noted.

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