Friday, November 27, 2009
By Hina Mahgul Rind
KARACHI: Pak Suzuki is about to launch a new hatchback model car next year, disclosed Hirofumi Nagao, CEO & MD of Pak Suzuki, in an exclusive interview with The News.
He said that initially the new model will be available in petrol but later as per demand it will also be available in CNG. It will be a manual car and if the demand for automatic transmission increases we can think about automatic transmission.
Pak Suzuki’s annual production capacity on two-shift basis is 150,000 units. “We have already increased the production capacity from 50,000 units in 2003 to 150,000 in 2007 ie 300 per cent. This production capacity is sufficient to cater to Suzuki demand in Pakistan market,” he added.
The ban on five-year-old used cars will help local manufacturers to boost sales and when volumes grow the production cost will go down, thus benefiting the end user. From five years the ban is now applicable to three-year old used cars but the used car import should be completely banned or the import duty should be very high so that used car import should stop.
Sharing his experience Nagao said: “When I was in India in the 1990’s there was very high duty on imports so this helped boost the local industry. The same should be done here in Pakistan to help the local auto manufacturer.”
The import of used cars does not bring in any investment nor it creates employment on the other hand local auto manufacturers have invested heavily in the country and thousands of employees are working in plants, Hirofumi Nagao said.
The global economic recession has also affected the auto sector in Pakistan. The other major factors contributing to slowdown in auto sector are high mark-up rates which have reduced auto financing from 70 per cent to 20 per cent, weak Pak rupee that has increased the cost of imported components, increase in utility charges has caused rise in production cost and the absence of long term auto policy, different kinds of taxes and security issues.
All the said factors contributed in reduction of sales, Nagao said, “we had to reduce our production as per market demand. Here I would like to mention one more thing that to benefit the customer we never passed on the major economic recession to them, we suffered a lot and still we are suffering from this recession we have reduced our prices so much, means we are facing global recession but we are continuously benefiting the customer.”
The recent increase in price is very minimal and it will not affect the customers much as the Pak Suzuki is still bearing most of the cost and it will not affect the sales. “We see improvement in sales in the near future,” Nagao said.
He added that total investment so far made is Rs10.3 billion. We do have our expansion plan intact. We have already acquired 125 acres for building another plant.
But it all depends upon future demand, future Government policies and future country and global conditions.
He said that Pak Suzuki is pioneer in automobile business in Pakistan. We have completed 25 years in developing motorization in Pakistan. We hold more than 50 per cent market share. These successes could not be achieved without support of Suzuki Motor Corporation Japan. One of the major areas benefited through this collaboration is technology transfer. We have successfully launched many new models and have highest percentage of localization in our products. Without technology transfer this could not have been possible.
About the law and order situation he said, “we Japanese believed that Punjab side like Lahore, Rawalpindi and adjacent areas are more peaceful and safer areas as compare to Sindh specially Karachi but since I have joined last year the perception has changed I feel that Karachi is much safer than Lahore or Rawalpindi as far as law and order situation is concerned.”
Through out the world when auto industry was suffering government came forward to support and assist but here though government is there to assist but auto industry need more cooperation to over come this situation.
Hybrid cars are getting popular but it would be very costly and other important issue is how to lighten the hybrid car battery, which is very heavy in weight. But at present Pakistan is not the market for it.
Auto Industry Development Program (AIDP) is necessary. Its implementation is required and time-to-time amendments are required in AIDP.
Complete localization can only be done once the volumes increase.
We have sufficient women workforce and they are performing in all divisions like Production, Supply, HR, Finance, Marketing etc.
To benefit Pak Suzuki employees and our vendors we started in house auto financing for them but not for the general consumers. We thought about it when our sales were down but the most difficult thing is how to do the recovery i.e. is why we are hesitant to do auto financing.
Nagao added that government should support vendors and also it should allow import of parts from India it would be cheaper than the parts imported from Japan.
There is a lot of potential in Pakistan as compare to other countries and the situation can improve if provided with stable government, improve law and order situation and stability of Pak rupee along with stable economy.
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