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Honda’s annual sales fail to meet expectations

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News Analysis |

In a rather disappointing but still profitable result card for Honda Atlas Cars Ltd (HACL), the sales soared by 57.5 percent to Rs. 65.7 billion during April to December 2017, from Rs. 41.7bn in the same period of 2016.

However, sales in October-December 2017 surged by 38.7 percent to Rs. 21.8bn from Rs. 15.7bn in the corresponding period in 2016.

Profit after tax in April-December 2017 stood at 5.12bn as compared to Rs. 4bn in corresponding period 2016. The company reported Rs.1.4bn profit after tax in October-December 2017 as against Rs. 1.5bn in the same period 2016, indicating a slight fall in third quarter. During nine months of the marketing year 2018, the earnings per share (EPS) rose to Rs. 35.9 against Rs. 28.12 a year ago.

Honda Civic’s VTI CVT price increases to Rs. 2.399 million, the Civic VT SR CVT is now worth Rs. 2.549 million. For the time being, the price of Honda BR-V CVT remains unchanged at Rs. 2.229 million.

Sales of Honda Civic, City and BRV have been going brisk owing to a rise in demand. The company’s other operating income in the first nine months of the marketing year 2019 rose to Rs. 1.4bn. In the third quarter of the marketing year 2018, the HACL reported other operating income of Rs. 460m compared to Rs. 312m in corresponding period in 2016.

Although, revenues were up 39 percent, gross profits only rose by 4 percent as gross margins shrunk by 3.46 percentage points to 10.45 percent. A car analyst attributed this to increasing steel prices. Margins were hampered by discounts given by the company on its BRV variants to its dealers.

Read more: Honda: “PSO, Shell, Total sell sub-par fuel”

The rupee’s fall against the dollar and the yen did not have any significant impact on the company’s profitability due to the nature of supplier contracts.

The company had raised prices of its variants with effect from January 2018 by 2 percent to pass on the impact of devaluation and other cost to the consumers.

The new price of City 1.5L (MT) would be Rs. 1.659 million, and City 1.5L’s rate (AT) jumps to Rs. 1.799 million. The new price of 1.5L Aspire (MT) increases to Rs. 1.789 million and the price of 1.5L Aspire (AT) is now Rs. 1.929 million.

Last month, Honda Atlas Cars, following suit with Suzuki and Toyota Pakistan, raised prices of its cars by up to Rs. 60,000. The company increased the price of its Honda City 1.3L variant by Rs. 50,000, City 1.5L became expensive by Rs. 60,000, while Civic’s retail tag also got heavier by Rs. 50,000.

Honda’s move came after Indus Motor hiked prices of its vehicles in December, while Pak Suzuki took the step on the first day of 2018.

Read more: Honda follows Suzuki by introducing huge price hike

The increase means City 1.3L (manual transmission or MT) is now priced at Rs. 1.599 million, while its automatic transmission variant carries a tag of Rs. 1.739 million.

The new price of City 1.5L (MT) would be Rs. 1.659 million, and City 1.5L’s rate (AT) jumps to Rs. 1.799 million. The new price of 1.5L Aspire (MT) increases to Rs. 1.789 million and the price of 1.5L Aspire (AT) is now Rs. 1.929 million.

Honda Civic’s VTI CVT price increases to Rs. 2.399 million, the Civic VT SR CVT is now worth Rs. 2.549 million. For the time being, the price of Honda BR-V CVT remains unchanged at Rs. 2.229 million.

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1 COMMENT

  1. Honda is indeed a good choice when we look for luxury cars. sales and profits are something which matters for the company not for the customers. we are gonna buy it till it provide the fuel efficient and luxurious drive

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