PSMC plans to enter Hybrid, Electric vehicle

May 26, 2022 (MLN): Considering the immense potential for the business opportunities in the Electric Vehicle (EV), Pak Suzuki Motor Company (PSMC) is planning to enter the category of Hybrid and EV, the management of the company informed while holding a corporate briefing session on Wednesday.

Amid higher car prices, an increase in interest rates, and a reduction in consumer finance tenure, the management is expecting a decline of 5-10% in volumetric sales in FY23. The notable share of total sales (35%) belongs to consumer financing.

On the issue of the global shortage of semiconductors and chips which has impacted automobile industries across the globe, the management underlined, “At this stage, PSMC is not affected significantly from this scarcity,” briefing takeaways covered by Topline Securities noted.

The company highlighted that the late delivery charges incurred in 1Q2022 were not a one-off cost and will continue to impact going forward but at a slower pace. However, the company is trying to manage the supply chain to make timely deliveries.

Apprising the investors pertaining to the newly launched Swift, the management informed that the particular variant got a positive response as the company received orders of 6,500 cars in two months vs an expectation of 1,500 units in one month.

Meanwhile, the localization for Swift has reached 35%, Cultus 51%, Wagon-R 60%, Alto 62%, Bolan 72%, and Ravi 68%.

With regards to the recently imposed ban on imports, the management was of the view that restrictions on CBU import will not have a significant impact on the company’s profitability while any restriction on CKD import will affect profitability.

To note, the company has incurred a net loss of Rs460.22 million (LPS: Rs5.59) in 1QCY22 on the back of currency devaluation, higher inflation, and shortages of shipping containers that led to an increase in freight costs as the company still uses air freight.

However, it is anticipated that this impact will reduce in the upcoming months.

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