EUR 50.00 For Business Accounts Only

Topline Flash Note: Honda Atlas Cars (HCAR): Analyst briefing takeaways

• Honda Car’s (HCAR) management expects car sales to continue their rising trend in FY21 on the back of improved economic activity coupled with lower interest rates.
• However, the company does not intend to move to second shift production in the near term to meet high demand, as they plan to optimally manage production levels to meet demand.
• Auto financing contributes 20-30% of total car sales for HCAR, however current scenario of low interest rates is likely to increase this ratio beyond 30%.
• After the launch of Kia Sportage and Hyundai Tucson, the management believes competition for HCAR will not be augmented much, as both these models are in SUV segment and have higher prices as compared to HCAR sedan models. However, the recently launched Yaris, has given tough competition to the City model.
• The management did not share details regarding the anticipated launch of new City model. 
• In the combined sales of Civic and City, Civic sales contribute ~60% and City contributes ~40%.
• HCAR sales to urban segment is ~60% and for rural segment is ~40%.
• In terms of auto parts, localization levels for Civic is 60%, for City is 70% and for BRV is 40%. However, in terms of absolute amount (PKR) the localization level is around 25% to 30%. HCAR prefers to use local auto parts as compared to foreign components which meet their quality criteria. The company intends to further increase its localization levels using local auto parts given they meet the required quality standards.
• The management further commented that to achieve optimal gross margins, there can be further hikes in car prices.

The total taxes on invoice price of car ranges from 33% to 35%.