Indus Motor warns Middle East crisis could delay imported parts, squeeze inventories

Indus Motor Company Limited has warned that disruptions linked to the Middle East crisis could begin to spill into local auto supply chains through higher freight costs, shipping delays and risks to energy imports.

During an analyst briefing, attended by AKD Securities, to discuss its half-year financial results for fiscal year 2026, the company’s management said the ongoing regional conflict could complicate logistics and increase shipping expenses. The closure of the Strait of Hormuz could raise freight costs, which may affect margins for the automobile manufacturer.

The company reported revenue of Rs119.2 billion for the first half of FY26, compared with Rs84.9 billion in the same period last year, reflecting a 40 percent year-on-year increase. The growth was primarily driven by a surge in sales volumes, which rose 63 percent to 20,754 units during the period from 12,749 units a year earlier.

Gross margins also improved, rising to 15.2 percent in the first half of FY26 from 13.8 percent in the corresponding period last year, supported by stable exchange rates and higher sales volumes.

The company said imported vehicles across the industry reached 25,507 units in the first half of FY26. For comparison, total imported units during FY25 stood at 42,125.

Regarding the upcoming auto policy, Indus Motor management expects existing incentives for electric and hybrid vehicles to expire by June 2026. However, it anticipates that the current 25 percent sales tax slab may be reduced to 18 percent in the next policy framework.

The company also urged the government to ease the Rs3 million auto financing cap and revise price-related taxes to improve consumer affordability in the local market.

The company further called for clarity on the policy introduced in September 2025, allowing the commercial import of used vehicles up to five years old, stressing the need for clearly defined technical standards for such imports.

Looking ahead, the company expects demand for locally assembled vehicles to gradually increase, supported by improving economic conditions, stable financing rates and controlled inflation.

Within its product portfolio, Toyota Yaris GLI-CVT 1.3 remained the company’s top-selling model during the period.

Despite increasing competition from Korean and Chinese brands in the Rs5 million to Rs10 million price segment, management expressed confidence in maintaining its market position and said there are no immediate plans to introduce a new model in that category.