Indus Motor Company Limited (INDU) announced that its board has approved an additional investment of Rs1.1 billion (~$3.94 million) to enhance what it called localization of production.

The company, the maker of Toyota-brand vehicles in the country, shared the development in its notice to the Pakistan Stock Exchange (PSX) on Monday.

“This is in continuation to our letter dated February 22, 2024 addressed to PSX regarding ‘Investment of Rs3 billion for additional localization of parts and components of various existing vehicles,’ which is ongoing and expected to be completed by third quarter of calendar year 2025,” read the notice.

The company announced that the Board of Directors in its meeting held on 30th August 2024, “has approved a further Investment of Rs1.1 billion to be made by the company for additional localization of parts and components of various existing vehicles, thereby making the total investment in project for additional localization to Rs4.1 billion”.

The additional investment of Rs1.1 billion is planned to be completed by first quarter of calendar year, 2026, it shared.

Indus Motor said the latest investment is part of the company’s overall plan to continuously increase localization of parts and components of vehicles manufactured locally, in order to reduce outflow of foreign exchange and promote the local auto industry, generating employment and contributing to the economy.

“The announced investment shall be made towards expenditure in plant and machinery, molds, dies, equipment and related expenses for localization of parts and components to be manufactured locally for various existing vehicles,” read the notice.

Last year, the company launched its Hybrid Electric Vehicle (HEV) Corolla Cross, which as per the company was 50% localised in terms of its value.

Back then, Indus Motor CEO Ali Asghar Jamali said after deducting government taxes, over 50% of Corolla Cross value comes from localised parts, which makes it unique among other assembled hybrids in the country.

Pakistan’s auto sector has been under pressure with the country’s slowing economic growth, spiking inflation, and high costs of borrowing denting sales of vehicles.

Analysts say it hasn’t helped that the sector – heavily reliant on imports – has moved to increase prices in tandem with dollar’s appreciation with many calling for higher localization to counter the dependency.