Karachi: Honda Atlas Cars (HCAR) recently conducted a corporate briefing to discuss its fiscal year 2026 performance and its outlook on operational dynamics. The company anticipates a 25% year-over-year increase in industry sales next year and remains hopeful about maintaining or enhancing its market share.

According to JS Global, HCAR management noted that the new Auto Policy has yet to be finalized. Although some changes in the tariff structure were introduced in the recent budget, more details are expected once the policy is formally announced. The current customs duty on certain hybrid vehicle components might increase from 4% to 5%, pending finalization. For completely knocked down (CKD) vehicles, duties on non-localized and localized parts remain at 30% and 46%, respectively. The duty structure on completely built units (CBUs) has been adjusted to between 30% and 50%, depending on the engine category.

Gross margins for HCAR have been under pressure during the fiscal year, mainly due to the depreciation of the Thai Baht against the US Dollar, which raised import costs. The company has not fully transferred these increased costs to customers. HCAR's gross profit margins lag behind the industry average because of a higher sales contribution from Honda City, priced to remain within the 18% GST bracket.

The Honda City is priced at approximately Rs4.9 million, just under the Rs5.0 million threshold, which allows it to benefit from a lower 18% sales tax rate, as opposed to a 25% rate for vehicles priced above the threshold. The Honda City currently accounts for about 70% of HCAR's total sales, with the Civic and HR-V contributing around 15% each. The 1.2L variant of the Honda City represents about 85% of its sales, with the 1.5L variant making up the rest.

The HR-V has achieved a localization level of 61%, with internal combustion engine (ICE) variants comprising around 55% of sales and hybrid variants making up the remaining 45%. The company has discontinued the BR-V in line with its product strategy.

HCAR is operating at roughly 52% capacity utilization, with management expecting improvements in the medium term due to new model launches and increased production volumes. Used car imports have seen a sharp decline over the past few months following the discontinuation of the personal baggage scheme and the imposition of new conditions, such as a ban on the transfer of ownership within the first year of import. While the government has proposed allowing the commercial import of used vehicles, management believes the policy framework is still in development, necessitating further clarity before assessing its impact on the industry.

HCAR is committed to introducing its hybrid technology, which it considers superior to that of competitors, and is currently absorbing costs to support this strategic transition. The company sold about 2,700 units in April 2026, including approximately 2,000 Honda City units, 300 Civic units, and 400 HR-V units.