Recently, Atlas Honda announced that they will further be expanding. This decision is mainly made due to immense growth in their profits particularly for the year ending on March 2018. This growth is approximately 25% more as compared to previous year. Last year the company posted an approximate profit of PKR.3.75 billion. Whereas this year Atlas Honda made a profit estimated around PKR.4.66 billion. There is no doubt that Atlas Honda is one of the leading manufacturers of motorcycles in the region. Moreover, their expansion where at one point will be beneficial for the country. On the other hand, it will be disastrous for small-medium motorcycle assemblers and manufacturers in the region.
Needless to say, Atlas Honda sale previously was at PKR.64.53 billion. This year the company enjoyed quite a growth in their sales. Now being PKR.77.47 billion, this means that the company sale hiked to almost 20%. When we calculate the given figures, it turns out that the gross profit went up to PKR.8.29 billion. The gross profit for Atlas Honda last year was PKR.6.77billion.
Atlas Honda managed to sell approximately 990,250 motorcycle units last year. Needless to say, that company sale went up by 12.85% this year. Due to which the company sold around 1,117,260 units of motorcycle this year.
Critics believe that there is a huge demand for motorbikes and is anticipated to be more in coming years. The main reason behind this is the need for the cheap mode of transportation. The public transports are horrible and cities are designed in such a manner that everything is scattered. Therefore, one cannot simply walk around the city as a result desperate need of transport. Nevertheless, not only Atlas Honda bikes but even the demand for imported bikes have hiked up. Furthermore, this demand is just going to increase in near future and can not be predicted to halt anywhere soon.
Atlas Honda holds in the market is quite strong. A brand which is not only preferred by brand but consumers consider it reliable. As a result, the share of popular Honda 70cc bike in the market is quite high covering almost 45% of sales. Not only this, Atlas Honda bikes which offer displacement of 125cc cover almost 40% of market share. This roughly means that more or less half of the market share is in the hands of Atlas Honda.
Therefore, in order to meet the increasing demand. The expansion plan was put forward. In two years, the plant capacity will be increased allowing them to produce up to 1.5million motorcycles per year. The total cost of this expansion will be $15 million.