Indus Motor to start exporting with 50 Corolla Cross cars

Pakistan's Indus Motor Company (INDU) has started exporting vehicles and plans to export around 50 Toyota Cross vehicles assembled in the country in fiscal year 2024-25, the company management announced at an analyst briefing on Wednesday.

“Exports have started, but this is not profitable initially. It takes time for exports to become profitable, and we will continue on this path nonetheless,” CEO Ali Asghar Jamali said.

The company launched the much-anticipated Toyota Corolla Cross, featuring the highest localized content for a hybrid vehicle in Pakistan's entire auto market, in December 2023. The launch contributed significantly to the company's positive results.

Corolla, Yaris and Cross models have a localization rate of 50-65%, according to the company management.

The company also announced a recent price decrease for the Corolla Cross — available only while quantities last — as part of a one-year anniversary offer. The management expects this promotion to reach the threshold booking size in next 15-20 days.

The management is expecting a fall in interest rates and inflation and thus, expects car sales volumes to increase. However, this outlook is highly dependent on political stability and other macroeconomic factors.

Auto financing contribution to sales has decreased from 30% to around 13-14%, but the declining interest rates and improved auto financing conditions are likely to positively impact the overall auto market.

Indus is currently prioritizing hybrid vehicles until the necessary structural changes are in place to ensure a smoother transition for customers to electric vehicles. The hybrid segment in the auto sector is expected to experience growth in the coming year.

Indus' production capacity has reached 75,000 units. However, it is operating much lower than capacity due to market saturation.

The company board has approved an additional PKR 1.1 billion, bringing the total to PKR 4.1 billion, to further localize parts and components for existing vehicles. This initiative is aimed at reducing production costs and lowering the import bill.

The CEO said used imported car sales increased to 38,561 units in FY24 compared to the FY23 total of 6,595 units, a 485% increase. The significant increase in used import cars is due to relaxation in duties and taxes by the government.

INDU announced earnings of PKR 5.7 billion (EPS of PKR 72.08) in FY24.