Wagon R's production has continuously declined with the company’s spokesperson attributing the rise in import of smaller used cars as a market grabber in the segment. PHOTO: paksuzuki.com.pk
There is a desperate need for an economical car and the market feels it. This is the reason why Pak Suzuki’s Wagon R managed a reasonable response in the first couple of months after its launch. However, a little over eight months, the model has become a chink in the company’s armour.
Its production has continuously declined with the company’s spokesperson attributing the rise in import of smaller used cars as a market grabber in the segment.
“We believe the sharp decline in Wagon R sales is the result of the increased import of small used cars in the country,” Pak Suzuki spokesperson said firmly. “Our plans, investments have all been disrupted by the import of used cars.
“We have been requesting the government to control the import of used cars. Otherwise, the local industry will continue to feel the brunt,” he said.
“We feel that we have not been taken into confidence on the new auto policy. We expected that the government will take all stakeholders on board just like the first auto policy which was presented by the previous government,” he added. Since the discontinuation of Suzuki Alto and Daihatsu Cuore on June 30, 2012, Wagon R was the first locally assembled car in the 1,000cc-or-below engine category.
The car, a much-awaited model, was expected to ignite interest among majority buyers who have been waiting for a vehicle in the smaller engine segment.
Wagon R sales from April to June 2014 jumped sharply to 2,208 units. However, July 2014 onwards, its sales plunged severely. From 714 units in July, production dropped to 579 in August, 427 units in September, 88 in October, and to a meagre 17 in November.
“We agree with the management of Pak Suzuki that the sudden drop in the sales of Wagon R is a direct result of used imported cars,” a leading automobile’s part maker told The Express Tribune on the condition of anonymity. “Unfortunately, this plunge in sales can create serious problems for the company.”
“Local auto parts makers are the victim of disagreements between two major players: the government and the carmakers. Since the auto parts makers are dependent on the local car making industry, they want to see growth in the sales of locally manufactured cars,” he argued.
According to the company spokesperson, Pak Suzuki has recently revised the prices of all its models including Wagon R. In its cheapest variant, the price was revised downwards by Rs50,000 to Rs849,000 (-5.6%). In the other variant, prices were slashed Rs90,000, bringing one down to Rs959,000 (-8.56%) and another to Rs999,000 (-8.25%).
“While the favorable rupee parity with Japanese yen played a role in reduction in prices, we believe depressed sales of Wagon-R prompted cut in prices by the management,” JS Research reported in its recent report. Despite the current dismal situation, some analysts are still upbeat about Wagon R.
“It is true that Wagon R sales have unexpectedly dropped in the last four months, but this is not at all a lost case for Pak Suzuki,” Global Research analyst Imran Ahmed Patel told The Express Tribune.
Every model takes time to gain the acceptability of customers. Suzuki Swift also saw this same problem when it was launched but then it regained its lost ground gradually. “There is a demand for Wagon R but since it is a different car, its sales will gradually pick up pace in the next year,” said Patel.
The recent price cut in Wagon R prices will also play an important role in higher sales in coming months, he added.
Published in The Express Tribune, January 8th, 2015.
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''We have been requesting the government to control the import of used cars. Otherwise, the local industry will continue to feel the brunt'', build quality cars with reliability and accessories imported cars provide to stay in the market instead of asking govt to cut down the imports that I am sure involves bribes on a higher level.
I think, there is a long way to go to develop auto industry, which is capable of catering to the need of customers at competitive prices. The government must create an enabling environment, not by paying huge subsidies, but by creating a level playing filed for all stakeholders. A well-thought auto policy must be in place, which should remain unchanged at least for five to seven years (a period good enough for making investment decision related to auto sector). At the same time the government must strengthen the regulatory bodies, which can ensure the implementation of government polices in letter and spirit. On the other hand, auto sector is also need to revisit their priorities. The most popular used cars in the market are ranging from 660cc to 1000cc (small cars), with good technology. How our automakers have responded to the challenge. They could upgrade their Alto and Coure, but decided to phase them out. During the same time, Toyota introduced Fortuner (a high end vehicle). It shows, priorities are misplaced. I think, automakers must focus on making small cars, which can compete with their imported models, instead of looking at the government support all the time.
Its not the reason of auto policy, its the reason that the car is pathetic and had been burning by backside after a 3hr journey in it. The standard needs to be improved and price must be reduced.
Well Pakistan is a heaven for Automobile manufacturers. Honda, Toyota and Suzuki have formed an oligopoly. Suzuki has no locally assembled vehicle of capacity in excess of 1300 cc while Honda and Toyota has no vehicle with capacity less than 1300 cc. While all three have multiple models of ranges which Pakisanis are importing and using. Every country / company has a right to do the best for its people / shareholders, it's the regulators and government which is dead. You guys are going to hear good news about genetically modified seeds in some time. Brace yourselves, winter is coming.
I feel sorry for the 714 owners of this ugly good for nothing car. I really wish Pakistan gets better cars from all different brands and get rid of the likes of obsolete Suzuki Mehrans!
@ashraf:
You forgot to mention that the value of the Indian rupee is higher than Pakistani rupee. Infact, through conversion, I think the Pakistani version car is cheaper.
However, that does not change the fact the Pakistani industry has been slow to react to consumer needs and has relied on the monopoly of the local industry more.
Suzuki should target 1300cc market rather & needs desperately to make solid car in this segment. My only question to this information is that If Wagon R is flopped because of import, Why other local brands are stepping up their share with same circumstances?
I think Pakistan did not have to manufacture cars locally. Instead, we should have focused on encouraging parts manufacturing under license from global players to build local capacity. Once that was achieved, our private sector could have been encouraged to either enter into joint ventures with foreign auto manufacturers or launch a brand of their own. All this while government should have allowed the import of foreign vehicles to meet the demand. Only manufacturing of trucks/buses should have been actively promoted in this industry.
But that was 'should have been'; what can be done now to save the customers from substandard, exorbitantly priced, local contraptions--is the question.
First of all, it made no sense for Pak Suzuki to introduce Wagon R which in price is the same as the cultus. Why would any one buy a Wagon R which is much smaller than cultus and has the same price approximately.
What Pak Suzuki should have launched would be the Suzuki Splash which is the size of the out-going Alto and has the 1L engine and the price would have been around 7 Lacks. That would have made sense.
@A Peshawary:
Exactly .
The local car manufacturer haven't even obliged to move beyond 30 % local part whereas they were required to move to 90% local part after 5 years.. It has been 35 years now. Stop crying foul and get your act together
The standard of Pak Suzuki should also improve to compete with the imported cars. They should used material compatible to imported cars: as the technology is the same that of exporters.
They must offer better choice to customers in price, durability and fuel consumption to attract customers. The local producers should be competitive instead of looking to government. The customers have better choice of durable, comfortable and economical imported cars and are willing to pay a little higher prices; Why should the government deny them of better choice. Why should government protect non-competitive producer on the cost customers choice.
A Peshawary.
local manufacturers are biggest robbers and criminals.they cartalize industry, negate competition and black market the world's outdated technology making howl and cry. their prices are world's most expensive and product is world's cheapest. govt should immediately lift ban on imports of new and old cars to give lesson and some relief to consumers.
During my visit of India.I shocked to know that how Automobile industries in Pakistan manipulating Pakistani nation on the name of local industry. Wagon R superior model is available about Indian Rs 400000 equivalent to about Pak Rs 640000 and quality of their vehicle is far better then us . A 07 seater Maruti suzuki resemblance to Suzuki APV is available IND RS 700000 . What is fault of a common man who want to get car which is a essential requirement of a common family. As reasonable public transport is available It is suggested no need to any protection for local industry on on sacrifice of common man . there must be balances of imported car and local assembled and preference should be given to common man