Pakistan's largest motorcycle assembler is set to significantly expand its production capacity, signalling renewed momentum in the two-wheeler market.

Atlas Honda Limited has approved a capital expenditure of Rs5.3bn (around $20m) for the next financial year, according to a notice submitted to the Pakistan Stock Exchange. The investment will be directed towards enhancing capacity, automation and productivity.

As a result of the expansion, the company's annual production capacity is expected to rise to two million units, representing a substantial increase in output capability.

The firm, a joint venture between Atlas Group and Honda Motor Company, is engaged in the manufacturing and marketing of motorcycles and spare parts. It operates as a subsidiary of Shirazi Investments, which holds a majority stake.

Market analysts suggest the expansion could support future earnings growth, with the planned increase in capacity estimated at around 39%.

The move highlights growing confidence in the domestic motorcycle market, as manufacturers invest to meet rising demand and improve operational efficiency.