KARACHI: The Indus Motor Company (IMC) will operate on single shift basis i.e. 40 percent of the capacity till December 20 19, as the company expects the current tough scenario to continue during 2QFY20.

At an analyst briefing on Friday, the company management informed they remained hopeful that conditions would improve during 2HFY20 owing to further stabilization of economy, particularly exchange rate, and expected reduction in interest rate.

“Moreover, the company anticipates total industry demand to clock-in at 160-170k units during FY20 as compared to 240k units recorded during previous fiscal year,” a report issued by Pearl Securities noted.

To recall, company’s profit after tax in 1QFY20 arrived at Rs1.318 billion versus Rs3.508 billion recorded during the same quarter of last year, recording a notable decline of 62 percent.

With regards to industry demand, combined sales of new and used cars declined 49 percent to 40,279 units during the quarter. IMC’s sales clocked-in at 6,892 units during 1QFY20 as compared to 15,631 units sold during 1QFY19.

The management identified increased emphasis on documentation by the government as a primary factor adversely impacting sales volumes. Moreover, the company considers high interest rates and decline in purchasing power of customers as secondary factors in impairment of demand.

Share of auto-financing in total sales stood at around 35 percent during the quarter whereas proportion of demand from rural/urban areas stood at 60/40 percent.

“With respect to pricing, considering stability in exchange rate along with focus of the company towards supporting volumes, the management does not expect prices to be further increased during 2QFY20,” the report said.