Ghandhara Automobile Ltd. Eyes Recovery with Hybrid SUV Launch

Karachi, Ghandhara Automobile Ltd. (GAL), known for assembling and selling commercial vehicles and passenger cars, plans to launch a hybrid version of the Chery Tiggo SUV in the second half of 2024. This initiative is part of GAL's strategy to reclaim market share lost to competitors' hybrid models and to capitalize on growing demand for environmentally friendly vehicles.

According to AKD Securities Limited, GAL has seen a significant improvement in sales volumes, aided by a stable exchange rate, which contributed to a 61% quarterly increase in topline revenue during the third quarter of FY24. This is a notable recovery from a challenging period characterized by economic downturns, high interest rates, and record inflation which severely impacted the auto industry last year, resulting in a 55% revenue decline over the first nine months of FY24. Additionally, sector-specific challenges such as import restrictions and quota limitations further strained the industry.

The government's recent implementation of an axle load limit, which reduces the maximum load that trucks can carry to 50-70% of their previous capacity, is expected to boost demand for trucks as the freight industry adapts to these new regulations. With around 90% of freight in the country transported by road, the demand for road freight transport is naturally increasing.

The introduction of the Chery Tiggo SUVs in FY22 was initially successful, with total sales reaching 1,272 units in FY23. Despite a setback following the launch of the Haval HEV, which cut into GAL's market share, the upcoming launch of the hybrid Chery Tiggo aims to address this competitive challenge. The new model is expected to be a Plug-in Hybrid Electric Vehicle (PHEV), mirroring those available in the Chinese market. GAL is also expanding its dealership network, now boasting 26 3S dealerships.

However, risks such as delays in the hybrid SUV launch, lower-than-expected acceptance of the new model, continued high interest rates, and potential supply chain disruptions could impact the company's recovery and growth prospects.