Karachi: Indus Motor Company (INDU) presented its financial performance and future strategy during an analyst briefing, revealing a decline in gross margins and potential disruptions in the supply chain due to geopolitical tensions. The company highlighted a downturn in gross margins, attributed to discounted sales, currency fluctuations, and changes in the sales mix.
According to JS Global, Indus Motor reported gross margins of 13.1% in the second quarter of fiscal year 2026, a decrease from 14.1% in the same quarter of the previous year and 17.1% in the first quarter of 2026. The company also noted a decline in used imported car units, with 25,507 imported in the first half of fiscal year 2026, compared to 42,125 units in the previous year.
The management expressed concerns about disruptions and delays in the import of parts due to the ongoing Middle East crisis. They anticipate logistical congestion, higher freight costs, and shipping delays to impact supply timelines, with the full effects potentially emerging in the next month. The company emphasized the importance of effective crisis management to mitigate these challenges.
The current Auto Policy, which expires in June 2026, offers incentives for hybrid vehicles, and the management hopes for a rationalization of the tax structure for other vehicle categories. Notably, some vehicles are subject to a 25% sales tax, which Indus Motor believes could be reduced to around 18% to prevent negative impacts on the sector.
Indus Motor is also preparing to introduce new models and product changes, though no timeline has been established due to ongoing uncertainties. The company operates a network of 58 dealerships across various regions, including Punjab, Sindh, KPK, Balochistan, Islamabad/Rawalpindi, and Gilgit-Baltistan.
Despite the challenges, the company expects gradual growth in local vehicle demand, supported by economic stability, steady financing rates, and controlled inflation. However, recent geopolitical tensions in the Gulf region pose a significant uncertainty.
Indus Motor advocates for a market-based Auto Policy for 2026-31, aligned with the IMF program. The management urges the government to relax auto financing limits, adjust taxes and duties, and establish proper rules for used car imports to ensure fair competition and consumer safety.
In the first half of fiscal year 2026, Indus Motor posted a profit after tax of Rs12.7 billion, marking a 28% increase year-on-year. The company maintains a positive outlook, with a BUY stance based on projected earnings and dividend yield.
The post Indus Motor Company Faces Challenges Amidst Market Fluctuations and Geopolitical Tensions appeared first on Pakistan Business News.