Home Business Honda, Suzuki lose 50 percent profits

Honda, Suzuki lose 50 percent profits

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News Desk |

On Tuesday, 31st July 2018, Honda Atlas, the Pakistani Honda franchise, posted its profit for the quarter that ended in June 2018. According to the data shared by the company with PSX, the profits of the company have dropped by a staggering  50% in a year-on-year analysis with the same period of the corresponding year.

Honda’s has scrambled PKR 1.050 billion profit in the last quarter whereas in the corresponding Y-o-Y analysis, in the same period of the previous year, Honda had made PKR 2.086 billion. However, despite the stump with an overall decrease in the profits, the sales revenue in the last quarter of this Financial Year 2018-19 rose by 13% with total 10,736 units sold.

Hardly two months prior, the company had raised prices in the range of Rs 10,000-Rs 20,000 in a balancing act against the depreciating rupee.

This took place in the face of three price hikes that the company administered in this Financial year alone. Moreover, Honda Pakistan also revealed, in the notice sent to the PSX, that there is a 13% increase in sales volume which was led by Civic and City car models with 21% growth. Earnings per share (EPS) in the quarter April-June was PKR 7.4, while the EPS in the same time period of the previous year was PKR 14.6, various publications reported.

Read more: Honda follows Suzuki by introducing huge price hike

Experts are of the opinion (so is Honda) that the overall decline in the gross margin is owing to the devaluation of the rupee against the dollar and the higher cost of raw materials. Honda has cited the same reasons for every price hike that it has imposed on its franchise in the FY 18-19.

In March this year, Honda Atlas Cars Ltd (HACL), following the trend against its only two existing competitors Suzuki and Toyota, raised the prices of Honda Civic and City by Rs100,000 and BRV by Rs20,000 following a devaluation of the rupee against the dollar. It had raised prices in January by Rs 50,000-60,000, resulting in public outrage, GVS reported earlier.

Honda’s has scrambled PKR 1.050 billion profit in the last quarter whereas in the corresponding Y-o-Y analysis, in the same period of the previous year, Honda had made PKR 2.086 billion.

This was, of course, not a first increase in the prices of these vehicles. The trio (Honda, Toyota, and Suzuki) have been increasing prices in this fashion for the past few months and in the very first quarter; there have been multiple increments per brand. Pak Suzuki had earlier raised the price in January by Rs 10,000-20,000 and by another Rs 20,000-50,000 this month, GVS earlier reported.

Pak Suzuki Motor Company (PSMC) has jacked up the already raised prices of its variants by up to Rs 50,000, effective from March 1st, 2018, which marks the second time the automaker has revised rates in an upward trajectory this year alone, before even hitting the second quarter. Hardly two months prior, the company had raised prices in the range of Rs 10,000-Rs 20,000 in a balancing act against the depreciating rupee.

Read more: Pakistan rejects Toyota, Honda and Suzuki after decades

Additionally, experts are of the opinion that the other reason the profits nosedived, is the tax rate of 44% as super-tax was booked during the quarter. Almost as if in correspondence, Pak Suzuki has also posted its profit for the last quarter and its net profit is down by a massive 43% to PKR 394 million.


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1 COMMENT

  1. I sincerely hope Honda and Toyota are replaced by a company that makes affordable quality cars at economical prices. These pathetic japo companies are robbing people in Pakistan, Even their basic model cars are above 1.7 million. While Suzuki cars are affordable by the masses, they suffer from quality issues. My advice to the sick management at these Jpao Paki companies is to shape up or ship out.

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