Pak Suzuki investment in Iran – A Threat

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Pak Suzuki investmentAfter the new Automotive Development Policy (ADP) 2016-21 and its lack of incentives for existing market players and assemblers, Pak Suzuki investment of $400-500 million is expected to be moved to Iran from Pakistan to setup the new plant over there.

Pak Suzuki Motor Company Limited (PSMCL), which has over 50 per cent market share, informed the government some time back of its plan to make big investments and work on vendor development and new models.

Shafiq Ahmed Shaikh spokesperson for PSMCL said that they may shelve their investment plans in Pakistan besides rolling out new models as the ADP has nothing to offer for them. The policy was dissatisfactory for the entire automaker industry. He added that Pak Suzuki planned $1000-1500 million of investment in technology transfer with joint ventures from Japan auto sector but expressed his views about Pakistan government’s failure to understand the importance of Japanese assemblers’ investments and demanded that the government should re-analyze the policy.

After the ban being lifted on sanctions from Iran, it has become the most attractive country and many companies including leading car manufacturers are considering to set up their plants in Iran from around the world.

He also revealed that the company is re evaluating its decision of introducing Suzuki Celerio in place of Suzuki Cultus this year.

In the second week of this month, PSMCL announced its fourth quarter 2015 earnings of Rs1.8 billion as against Rs311m in the same quarter of 2014. PSMCL revenue grew by 86pc year-on-year (YoY) to Rs23.5bn in fourth quarter of 2015 as the company sold 36,712 units. The volume increased due to a taxi scheme launched in the 2014-15 budgets by the Punjab government. The company also offered a discount to Punjab government due to huge orders.

In 2015 PSMCL earning stood at Rs5.8bn versus Rs1.9bn in 2014. Revenues improved by 58pc YoY. The company sold 133,660 units in 2015, up by 72pc YoY.

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