Honda's lane
While this is not the best quarterly profits the company has made in recent history, the average earnings for the past three quarters is almost double the average earnings for the same quarters the year before. The average volumetric increase during this time is 40 percent. There is certainly a favorable demand environment, especially with the reduction of interest rates and the resurgence of bank credit for consumer automobiles. In 1QMY26 (ending June-25), volumes surged 68 percent driven by City and civic sales (BR-V was only 7% of total volumetric sales) which led to a revenue growth of 66 percent.
Honda's cost per unit sold is down 4 percent, contributing to a slight improvement in margins. However, revenue per unit sold declined by 1 percent, suggesting a possible shift in the sales mix toward lower-priced models.This is also evident from the reduced share of BR-V compared to last year.
Certainly, the increased demand is expected to taper off in the coming quarter, particularly due to new budgetary measures such as carbon levies that have triggered upward price adjustments for most models.
With strong control over overheads (4% of revenue) and financial costs (1% of revenue), partially offset by other income (2% of revenue), what Honda needs now is sustained demand. The company's launch of a hybrid vehicle in the C-segment SUV category aligns with its domestic assembly strategy. While the model will compete with the already popular Corolla Cross, for Honda loyalists, the launch appears well-timed.
The exports meanwhile are mostly symbolic at this time. Unlike the domestic market where competition is hard to fathom, automotive exports are highly competitive with more ready and advanced exporters already in the market unwilling to give out their market share. In this case, several East Asian exports are already at a significant advantage.
While Honda claims a high degree of localization, 74 percent for the Honda City; 64 percent for the Civic, and 61percent for the hybrid HR-V, the cost of many localized parts remains sensitive to exchange rate fluctuations, as most raw materials are still imported. Other factors such as high taxation environment are also not conducive to producing an export competitive product. Honda must weigh its export aspirations against the harsh realities of highly competitive international markets. But this is as good a start as any.
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Business Recorder
4 days ago
- Business Recorder
Honda's lane
Whether Honda Atlas Cars (PSX: HCAR) becomes an exporter of Honda vehicles assembled in Pakistan still remains to be seen, a future that hinges on the cost competitiveness and demand feasibility in attractive markets. At the same time though, one cannot deny that HCAR is financially trudging out of misery. Profits in the first quarter of MY26 are up 4 times compared to the low base in 1Q last year. While this is not the best quarterly profits the company has made in recent history, the average earnings for the past three quarters is almost double the average earnings for the same quarters the year before. The average volumetric increase during this time is 40 percent. There is certainly a favorable demand environment, especially with the reduction of interest rates and the resurgence of bank credit for consumer automobiles. In 1QMY26 (ending June-25), volumes surged 68 percent driven by City and civic sales (BR-V was only 7% of total volumetric sales) which led to a revenue growth of 66 percent. Honda's cost per unit sold is down 4 percent, contributing to a slight improvement in margins. However, revenue per unit sold declined by 1 percent, suggesting a possible shift in the sales mix toward lower-priced is also evident from the reduced share of BR-V compared to last year. Certainly, the increased demand is expected to taper off in the coming quarter, particularly due to new budgetary measures such as carbon levies that have triggered upward price adjustments for most models. With strong control over overheads (4% of revenue) and financial costs (1% of revenue), partially offset by other income (2% of revenue), what Honda needs now is sustained demand. The company's launch of a hybrid vehicle in the C-segment SUV category aligns with its domestic assembly strategy. While the model will compete with the already popular Corolla Cross, for Honda loyalists, the launch appears well-timed. The exports meanwhile are mostly symbolic at this time. Unlike the domestic market where competition is hard to fathom, automotive exports are highly competitive with more ready and advanced exporters already in the market unwilling to give out their market share. In this case, several East Asian exports are already at a significant advantage. While Honda claims a high degree of localization, 74 percent for the Honda City; 64 percent for the Civic, and 61percent for the hybrid HR-V, the cost of many localized parts remains sensitive to exchange rate fluctuations, as most raw materials are still imported. Other factors such as high taxation environment are also not conducive to producing an export competitive product. Honda must weigh its export aspirations against the harsh realities of highly competitive international markets. But this is as good a start as any.
Business Recorder
6 days ago
- Business Recorder
Trump strikes trade deal with Japan to cut tariffs
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Business Recorder
22-07-2025
- Business Recorder
Index declines on volatile trade
KARACHI: Pakistan Stock Exchange (PSX) opened the new week on a volatile note. Monday's downturn was largely attributed to investor profit-taking ahead of July-end, as well as cautious sentiment following a record-breaking run. The benchmark KSE-100 Index declined by 379.78 points, or 0.27 percent, to close at 138,217.58 points as compare to the previous session close of 138,597.36 points. The index moved within a narrow range, hitting an intraday high of 139,201 points and a low of 138,150 points. On Monday, BRIndex100 closed at 14,139.60 points which was 59.97 points or 0.42 percent lower than previous close with the total volume was 471.707 million. While BRIndex30 closed at 39,326.96 points which was 184.91 points or 0.47 percent lower than previous close with the total volume remain 203.005 million shares. According to Topline Securities, the market remained range-bound throughout the session as investors adjusted portfolios ahead of futures settlement. Major drag on the index came from Fauji Fertilizer Company (FFC), United Bank Limited (UBL), Oil and Gas Development Company (OGDC), Systems Limited (SYS), and Hub Power Company (HUBC), collectively shaving off 438 points. However, support came from Habib Bank Limited (HBL), Engro Fertilizers (EFERT), and Pakistan Aluminium Beverage Cans (PABC), which together contributed 152 points. Market activity on Monday remained solid but showed a slight retreat from the prior session. The ready market recorded a total trading volume of 608 million shares, marginally down from 609 million previously. However, traded value declined more noticeably to Rs 23.5 billion, compared to Rs 31.6 billion on Friday, reflecting reduced participation in high-value blue-chip counters. Among the volume leaders, Prud Modaraba First topped the chart with 58.7 million shares, closing at Rs. 4.98. It was followed by K-Electric Limited, which traded 53.1 million shares and settled at Rs. 5.43, and Pak International Bulk Terminal (PIBTL) with 51.7 million shares, closing at Rs. 10.06. In terms of price gains, high-end consumer stocks led the board. Unilever Pakistan Foods surged by Rs 988, ending at Rs 25,498, while Nestlé Pakistan climbed Rs 86.97 to close at Rs 7,400. Conversely, some major scrips witnessed steep losses. PIA Holding Company Limited-B plunged by Rs 3,446, closing at Rs 31,015.32, making it the biggest loser of the day. Bata Pakistan also recorded a notable drop, shedding Rs 35.44 to close at Rs 1,650.89. Market capitalization also saw a modest decline, slipping to Rs 16.505 trillion from Rs 16.517 trillion in the previous session. The Rs. 12 billion decrease reflects valuation erosion across key blue-chip stocks and indicates the impact of profit-booking on investor equity wealth. Out of 479 active companies in the ready market, 245 closed lower, 193 advanced, and 41 remained unchanged—highlighting the breadth of the pullback. BR Automobile Assembler Index closed at 22,576.44 points with a net positive change of 195.12 points or a percentage change of 0.87 and a total turnover remains 5.628 million. BR Cement Index ended at 10,685.87 points with a net negative change of 19.41 points or a percentage change of 0.18 and a total turnover of 20.83 million shares. BR Commercial Banks Index saw a dip of 76.76 points or 0.19 percent and finished at 40,594.21 points with a total turnover of 52.65 million shares changing hand. BR Power Generation and Distribution Index also dipped 168.72 or 0.78 percent and closed at 21,433.61 points and a total turnover remains 56.55 million shares. BR Oil and Gas Index closed at 11,892.62 points with a net negative change of 37.42 points or a percentage change of 0.31 percent and a total turnover was 17.08 million shares. BR Technology & Communication Index closed at 2,991.39 points with a net negative change of 29.52 points or a percentage change of 0.98 and a total turnover of 44 million shares. In his post session comments, Ahsan Mehanti of Arif Habib Corporation noted that Stocks closed under pressure amid geo political uncertainty and concerns over surging inflation to impact SBP policy announcement next week. He further noted that Rupee instability, and concerns over external debt repayments due in FY26 played catalyst role in bearish activity at PSX. While JS Global expects that the market will consolidate around current levels, with sentiment largely dependent on upcoming corporate results, macroeconomic indicators, and clarity regarding foreign investment flows. Copyright Business Recorder, 2025
