Lahore, July 30, 2021 (PPI-OT): The ratings take comfort from Honda Centre’s dealership status with Honda Atlas Cars Pakistan Limited owned by Atlas Group and Honda Motor Company Limited, Japan. Honda Centre (Pvt) Limited is among the largest authorized 3S dealership for Honda Atlas Cars Pakistan Limited in Pakistan. Honda Centre has been in the auto dealership industry for over a decade now and has captured adequate market share. The sponsors have a good understanding of business and managing it well. Demand drivers of the automobile industry are highly correlated with macro-economic indicators such as GDP growth, employment, disposable income, consumer confidence and accommodative monetary policy.
An unprecedented yet challenging phase that occurred due to COVID-19 outbreak have gradually reverted. Year 2021 started with a good fortune for the entire industry as demand slate witnessed a significant uptick. Reduced interest rates helped in improving the ratio of car financing, leading to higher car sales particularly in the period 1HCY21. Similar trend is likely to continue. This time the industry witnessed a large range of different versions of cars available to the buyer as new players entered the market (KIA, MG, Hyundai), making it more competitive. Honda has sustained its position within its respective niche, along with its peers, also reflecting in its revenues and profitability.
Revenues are on a growth trajectory. To keep up with the rising competition Honda Atlas is also bringing in new car variants, including Honda City’s 6th generation. The dealership revenues reciprocates from company’s (Honda Atlas) performance against the demand. In view of the demand side, the future prospects appears promising. At the same time sustainability of ‘After sale’ segment based inflows remains imperative. Control environment may be strengthened by including independent directorship and adopting quarterly accounts.
The ratings are dependent on sustaining a steady revenue stream, credit quality of the receivables, the transaction structure and the servicer’s experience. Good corporate governance practice is considered pivotal for a growing business concern.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com