KARACHI: Indus Motor Company (INDU) reported a 14.5 per cent gross margin in FY25, up from 12.7 per cent in FY24, mainly due to lower input material costs driven by favorable exchange rates, cost optimization initiatives, and increased localization, according to a corporate briefing held on Thursday.
The briefing, attended by analysts, was followed by a report from Topline Securities, summarising the company’s financial performance and outlook.
In addition to improved margins, returns on deposits and investments continued to contribute significantly to overall profitability.
The Yaris facelift, launched in July 2024, was well-received and added positively to earnings.
While floods have slowed down auto sales, the full impact is expected over the next 3–4 months, management noted. Without this disruption, the total car market — including used car imports — was projected to cross 300,000 units. However, actual market size stood at 223,799 units in FY25.
Management highlighted a 40 per cent growth in the overall auto market (new and used), led primarily by Completely Knocked Down (CKD) units. New CKD volumes rose 49 per cent YoY to 179,424 units in FY25.
Toyota sales increased 61 per cent YoY, from 20,775 units in FY24 to 33,393 units in FY25.
In the used imported car segment, 42,125 units were brought in during FY25, a 9 per cent increase from 38,560 units in FY24.
Management expressed concerns regarding the National Tariff Policy, under which the government plans to standardize overall tariffs at 15 per cent over the next five years. They warned that this could widen the cost gap between CKD and CBU units, making local assembly unviable and potentially shifting demand toward imports. However, discussions with the government are ongoing and some positive developments are anticipated.
Localization remains a key focus: the passenger car segment (Corolla, Yaris, Cross) has achieved over 60 per cent localization, while the IMV segment (Toyota Hilux and others) is at 40–45 per cent, largely due to volume disparities.
According to Topline, market trends are shifting from sedans to SUVs, particularly in the C, D, and E segments.
Indus Motor is also in talks with its parent company regarding new model launches, and the management expressed confidence in navigating increasing competition.
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While the auto market continues to grow, management believes existing players may not match industry growth rates due to new entrants. However, absolute volumes are expected to increase even if market share declines.
On a global note, Daihatsu, as part of its strategic restructuring, has scaled back operations to just three global locations, a strategy that remains unchanged, management confirmed.