PS Press Release
Mir Hazar Khan Bijarani, Federal Minister for Industries along with Dr. Ayatullah Durrani, Minister of State for Industries and Production, Mr. Masaharu Sato, Consul General of Japan, Mr. Hirofumi Nagao, MD & CEO Pak Suzuki Motor Company Limited and Mr. Shafiq Ahmad Shaikh Head of Public Relations inaugurated 750,000<sup>th</sup> 800cc Vehicle and Launched Pak Suzuki’s Cargo van.
On this historic occasion he said that he is pleased to be here on the auspicious occasion of rolling off of 750,000<sup>th</sup> Suzuki 800 c.c. vehicle and launching ceremony of Suzuki cargo van.
He congratulated the management and the workers of Pak Suzuki motor company on achieving this milestone and hope that Pak Suzuki will continue to introduce new models and enhance production.
He further said that Pak Suzuki motor company is pioneer in Manufacturing Automobile and has setup modern vehicle manufacturing facilities in Pakistan which I got a chance to witness today.
Suzuki is a well known name amongst the people of Pakistan as Suzuki products serve majority of Pakistani customers and has become a household name. I sincerely wish Pak Suzuki will maintain their leadership in Pakistani market.
He told that today he observed the modern manufacturing facilities of Pak Suzuki and was impressed to see the state of the art processes and in-house manufacturing of sheet metal body component and plastic parts.
I was also told that Pak Suzuki has highest local content in the industry and Suzuki Mehran leads with a local content of 72%. He appreciated the efforts of Pak Suzuki and Suzuki engineers for their hard work and commitment towards indigenization of Suzuki vehicles.
He informed that he is very pleased to learn that Pak Suzuki is also exporting Suzuki Ravi pickups, Liana and components to Bangladesh and Europe thus earning precious and much needed foreign exchange for the country.
He said that his government will support Pak Suzuki to enhance the exports. The automobile industry is considered to be the mother of all industries as it involves almost all technologies including sheet metal plastic, rubber, electrical and glass etc.
In Pakistan the automobile industry is also playing a vital role as it contributes 2.8% to the GDP. It is also one of the major contributors to the national ex-chequer as the second largest in the large scale manufacturing. It also has a share of 15% in the industrial sector.
The government of Pakistan appreciates the importance of the automobile industry and has introduced various programs including Auto Industry Development Program to facilitate further growth to this industry.
The industry had phenomenal growth during the period 2002-2007; however the industry had declined in sales due to unfavorable economic conditions till the end of last year. It is heartening that due to aggressive government policies, sales of automobile started growing since January this year.
There is significant potential in the growth of Automobile sector in Pakistan as Motorization level in Pakistan is still 8 cars per 1000 persons as against 273 in Malaysia, 128 in China, 133 in Iran and 21 in Indonesia. In the end he again congratulated Pak Suzuki on this occasion and appreciate its contribution to the economy of Pakistan and providing low cost transportation to the people of Pakistan.
Mr. Hirofumi Nagao, MD & CEO Pak Suzuki said that It is indeed a great honor for him to welcome all guests today on the occasion of Rolling off of 750,000<sup>th</sup> 800cc Suzuki vehicle at our plant and Launching ceremony of Suzuki Cargo Van. Suzuki vehicles’ presence in Pakistan dates back to the decade of 70s when Suzuki started its first overseas production.
This gives Pakistan a unique position in Suzuki Motor Corporation’s history. Since then Suzuki vehicles have become a recognized name in Pakistan, been keeping top market share more than 3 decades and today enjoy more than 50% market share.
He further told that Pak Suzuki Motor Company Limited was established as a Joint Venture between Suzuki Motor Corporation Japan and Pakistan Automobile Corporation which was owned by the Government of Pakistan at 100% in August 1983 and started production in 1984. Last year we celebrated 25 years of operation. The 800cc vehicles are our main products having a local content ranging from 62% in Bolan Van to 72% in Mehran Car.
He briefed that the newly introduced Suzuki Cargo van provides an addition to our product line for customers to carry medium size cargo in enclosed space to save it from rain and other adverse atmospheric effects at most economic cost.
The Automobile market in Pakistan, in the decade of 1990s remained around 40,000 vehicles. Since the year 2000 the market witnessed significant growth due to stable economic conditions and easy availability of Leasing and Financing at attractive rates of 8 to 9%. In line with the market demand we expanded our production capacity in phases from 50,000 units in year 2000 to 150,000 units in the year 2007.
In 2007 we produced 121,000 units and sold 124,000 units. However, in the latter part of year 2007, the market declined sharply due to global recession, unstable economic and political situation, higher interest rates for Leasing and Financing reaching to 21 to 22% and significant depreciation of Pak Rupee against Japanese Yen and US Dollar to the tune of 63% and 41% respectively.
Pak Suzuki was hardest hit in this situation as our production and sales during 2009 declined to 51,000 and 52,000 units respectively. The overall Automobile Market in 2008 – 2009 for Cars and Light Commercial vehicle declined about 50% as compared to previous year, however the Sales of 1000cc & below vehicles reduced by 63% as against 24% for 1300cc & above ones.
The category of 1000cc & below suffered badly because, the customer for theses vehicles is from middle income group who could no more afford these vehicles due to increase in prices resulting from higher input costs, substantial depreciation of Pak Rupee and high rates of financing. On the other hand higher capacity vehicles are purchased by people who can buy the cars even at higher prices.
He said that e seek your Government’s support to 800cc vehicles which achieved the highest local content and demanded by middle income group of Pakistan in the form of:
- Reduction in custom duty to 20%.
- Reduction in interest rates on Auto Financing
- Removal of Withholding Tax at Registration stage.
He said that we at Pak Suzuki are striving hard not to pass on the total impact of our cost increase due to increase in input costs and depreciation of Pak Rupee as we are conscious that increase in prices will have negative effect on sales.
This has resulted in our profitability badly which shrunk from Rs2.8 billion in 2007 to Rs255 million last year which is only 9% of Rs2.8 billion. He informed that Pak Suzuki is also exporting Suzuki Pickups and Suzuki Liana cars to Bangladesh and components to Europe and Japan. Our last year exports amounted to U.S $ 1.7 million.
We are striving hard to increase our exports through market penetration and exploring new avenues, but we find it difficult to compete in international market due to high selling prices which is as a result of high input cost and some indirect taxes for which drawback is not available. Therefore he requested to the Minister for seeking your support for provision of 10% R&D allowance as it is available for export of Motorcycles. Also freight subsidy of 50% will make us competitive.
He further asked that the Automobile industry has great potential for growth as motorization level in Pakistan is still around 8 vehicles per 1,000 persons and substantial room exists for its increase, the only thing required is favorable economic conditions and Government policies. We are confident that with your guidance and support, the Automobile industry of Pakistan will achieve recognition in Global market.
Dr. Ayatullah Durrani, Minister of State for Industries and Production said that it is indeed pleasure for him to be present on the occasion of rolling of 750,000<sup>th</sup> Suzuki 800 cc vehicle and launching ceremony of Suzuki Cargo Van. He felicitated Pak Suzuki team on this great achievement. He further said that he recalled that first Suzuki 800 vehicle was introduced in Pakistan in 1984 called Suzuki FX, since then Suzuki has introduced many models to cater to the needs of Pakistani people and today every alternate car owner has Suzuki, particularly Suzuki pick up is nick named as “Suzuki” and all pickups with other brand names are also called Suzuki. Suzuki has also provided affordable and economical transportation to middle class people of Pakistan.
He further told that Pak Suzuki is not only manufacturing Vehicles but highest local value addition. Pak Suzuki is providing jobs to people of Pakistan by way of manufacturing of parts through vendors and marketing and after sales service as a forward linkage. He said that he is sure that Pak Suzuki will continue its efforts for further localization of components.
He said that he is very much impressed that Pak Suzuki is maintaining a high level of production facilities and technology. Pak Suzuki plant has integrated assembling facilities as well as manufacturing of sheet metal and Plastic components which places it ahead of other Automobile manufacturers. He asked that he acknowledging the efforts Pak Suzuki management and workers for maintaining such a high standard.
He briefed that the Government of Pakistan recognizes the role of the automobile industry of Pakistan as a major growth driver and its contribution for the economy of Pakistan and will support this industry to enable it to develop and play an important role globally. In the end he again congratulated Pak Suzuki Management and Workers on today’s event and hope that Pak Suzuki will continue its journey towards its prosperity and for betterment of Pakistan as a whole.
Mr. Masaharu Sato, Consul General of Japan also appreciated Pak Suzuki Management and Employees of Pak Suzuki on the achievements of great milestones.