Just a bit more technology and flair have not only transformed Toyota Corolla’s popular image of a bland sedan, but also driven the sales and profits of its Pakistani manufacturer — the Indus Motor Company.

The unaudited IMC accounts for the first half of this financial year indicate that the redesigned Corolla spiralled the automaker’s sales by a hefty 61pc to 20,729 cars from 8,085 units sold during the same period of the previous year.

The combined (CKD and CBU) sales of cars, light commercial vehicles and SUVs during the period spiked from 15,400 units to 23,081 units.

“We had exported 100 units to Sri Lanka last year and project to sell another 700 units to the

Sri Lankan government this year,” said a senior IMC executive

Consequently, the company’s market share surged from 22pc to 28pc. Its revenues climbed from Rs26.1bn to Rs39.1bn and profit-before-tax grew from Rs1.95bn to a record high of Rs4.58bn, on account of “higher sales, improved margins, increased treasury income and tighter control on fixed costs,” the directors’ report noted.

Moreover, the firm’s earnings per share (EPS) more than doubled to Rs39.99, just as it turned 25 before the end of CY14.

IMC, which added more than 450 new jobs during FY14, had seen its sales plummet 11pc to 34,470 units in the fiscal year as demand for new cars shrank.

The company had also lost 5pc of its market share because of depressed car sales owing to the run-out Corolla model.

Pakistan is ranked among the top 30 countries out of 52 across the globe where Toyota cars are manufactured, and one of 13 where the new, redesigned Corolla is being produced for local and export markets.

IMC’s Chief Operating Officer Ali Asghar Jamali told this writer that the overwhelming response for the new Corolla had generated a healthy build-up of orders and created a backlog.

“The company is operating overtime to meet the robust growth in demand. From making just 20 units a day in 1993, IMC has expanded its production to 230 units a day and is striving to increase it to 240 units,” he said.

The automaker expects to sell substantially more vehicles — both passenger cars and light commercial vehicles — this financial year, but its executives aren’t prepared to hazard a guess about the sale numbers they have in mind.

“There is always a surge in demand in the half-year to June, driven by flow of cash into the rural economy,” a senior IMC executive, who requested anonymity because he wasn’t authorised to give public comments, said.

“I cannot give you a final sales number, but we are going to significantly raise our market share this year,” he said smilingly.

“We had exported 100 units to Sri Lanka last year and project to sell another 700 units to the Sri Lankan government this year.”

IMC’s sales had grown rather slowly in the first 10 years of its operations after it had rolled out the first locally assembled Toyota Corolla car in March 1993.

“In the early years, the domestic demand for all kinds of cars was flat at 50,000 a year. In the first year, we had produced 5,000 units,” Ali Habib, chairman of IMC and the House of Habib — the majority shareholder in the joint venture with the Toyota Motor Corporation — told Dawn.

But sales grew rapidly post-2003 on the back of generous availability of auto financing, only to collapse again in 2008 owing to political uncertainty, financial crisis, energy crunch and terrorism.

“In spite of the challenges posed by the political and economic operating environment, we have done well,” he said.

“We are rolling out one car every four minutes. Imagine where the domestic car industry might have been today had the operating environment remained favourable and growth in demand consistent.”

Ali, who considers the auto industry the mother of all industries because of the value chain it creates, noted during a media briefing organised to celebrate 25 years of IMC’s incorporation that the car industry is essential for an economy that is struggling to grow bigger.

“The auto industry is one of the main drivers of economic growth, stability and technological progress, besides being a major employer and taxpayer,” he said, while noting that Pakistan is perhaps the only country where domestic manufacturing isn’t protected.

“When we import used cars, we not only waste foreign exchange but also shift jobs to the exporting countries.”

In Japan, 8.8pc of the workforce is associated with its auto industry, while 5pc of the total American labour and 7.2pc of the South Korean workforce are employed by their respective car industries.

Similarly, the Japanese auto industry contributes 9.5pc to the country’s total taxes, whereas 13pc of state taxes and 2pc of federal taxes in the US come from automakers. In India, the auto industry pays 8pc of its total taxes, while Pakistani car assemblers contribute 4pc to the country’s taxes.

The IMC chairman said domestic automakers cannot increase production to meet temporary demand spurts (as being experienced by the IMC), nor can they reduce prices or export their cars unless the domestic market attains a ‘sustainable’ sales level.

In Ali’s view, the sustainable demand level for Pakistan is around 0.5-0.6m units a year. “If we achieve this threshold, we can attract more automakers, achieve greater localisation, give a wide range of engine size choices to the customers and export our cars.

“But getting that kind of demand isn’t impossible for a country like Pakistan unless the government quickly firms up the new auto policy and decides how it wishes to pursue growth: through manufacturing or trading.”

He said countries like India and Thailand had restricted the import of used cars and were using tariff and non-tariff barriers to ensure that domestic production is not hurt irretrievably.

“No auto manufacturing country permits liberal import of used cars as Pakistan. The government will do well to tighten this policy if the domestic auto industry is to flourish.”

Published in Dawn, Economic & Business, April 13th, 2015

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