Atlas Honda Targeting Iran and Iraq Markets for Export Growth
Atlas Honda Limited (ATLH) has established itself as a renowned and leading motorcycle manufacturer in Pakistan over the decades. Born out of a successful joint venture between the Atlas Group and Honda Motor Co. Ltd. of Japan in 1962, the company has continually evolved to cater to the diverse needs of the Pakistani market. With a focus on providing high-quality, reliable, and fuel-efficient motorcycles, ATLH has garnered a strong and loyal customer base across both urban centers and rural areas. As the economic condition is changing in pakistan the automobile manufacturers are looking for alternative ways to earn money one of which is exporting the products to other countries as the labor in pakistan is clearly cheaper than many other developed countries.
Atlas Honda Limited (ATLH) a prominent and well-established motorcycle manufacturer in the local market has Recently set an ambitious export target of $25 million for MY24. To update its valued investors on the company’s financial performance, Atlas Honda conducted a corporate briefing, during which it unveiled its strategic plan to tap into the promising markets of Iran and Iraq.
Ismail Iqbal Securities (IISL) reported that the management confidently stated, “The company has received an export order which will contribute approximately $25 million to our revenue in MY24.” This announcement comes as no surprise to industry analysts, as both Iran and Iraq have been identified as potential growth markets for Atlas Honda. The company has already achieved success in penetrating both regions, positioning it favorably to further expand its presence.
Reflecting on its performance in MY24, Atlas Honda’s management revealed that they successfully sold 1.1 million units in the preceding year (MY23), which represented a slight decline from the 1.3 million units sold the year before. For the upcoming MY24, Atlas Honda projects to sell approximately 1 million units, with the industry volume expected to range between 1.3 to 1.5 million units.
While the domestic market poses its own set of challenges, particularly due to inflationary pressures impacting urban demand, Atlas Honda remains steadfast and confident in its ability to navigate the fluctuations. The management highlighted that two-thirds of the domestic demand, primarily comprising rural and remittance customers, remains robust.
One of the factors bolstering Atlas Honda’s resilience is its impressive localization rates for various motorcycle models. According to the management, the popular CD70 bike boasts an impressive localization rate of 94.4%, while the CG125 and Pridor models stand at 92% and 84.3%, respectively. Additionally, the company enjoys an advantage in securing a steady supply of raw materials, as they have a sufficient stock that can last up to four months without facing any hindrance in the import process.
An unexpected opportunity for Atlas Honda arose from the exit of 80% of Chinese bike makers from the industry. These manufacturers struggled to cope with the prevailing economic challenges and import embargoes, allowing Atlas Honda to fortify its position in the market and capture a larger market share.
Addressing the potential of electric motorcycles, Atlas Honda’s management noted that widespread adoption may take several years to become a reality. Contrary to popular belief, the obstacle lies not in pricing but in a global shortage of lithium, a critical component in electric vehicle batteries. The surging demand for lithium brought about by the rise of electric cars has impacted the availability of resources for electric motorcycles as well.
As Atlas Honda strives to achieve its ambitious export target and sustain its growth in the local market, the company remains well-equipped to capitalize on its localized manufacturing processes and stable supply chain for raw materials. With a keen focus on exploring growth opportunities in Iran and Iraq, Atlas Honda is poised to make significant strides in the motorcycle industry, further solidifying its position as a leading player in the region and beyond.
