Suzuki links plan to replace Cultus, Mehran with incentives

Suggests curbs on used car imports, hefty cut in duties on auto parts

ISLAMABAD:

Suzuki Motor Corporation, which is shaping a plan to introduce two new car models in the Pakistan market and replacing the Mehran and Cultus variants, has pressed the case for incentives for existing industry players in the proposed new auto policy including a restriction on import of used cars and a major cut in import duties.

In a letter sent to the Ministry of Industries and Production, Suzuki Motor Corporation said it planned to introduce four new vehicle models including the replacements of Mehran and Cultus in the next five years with an investment of $110 million.



The company, which produces cars in Pakistan under the joint venture Pak Suzuki Motor Company (PSMC), has acquired 77 acres of land for a new plant, which will require an investment of around $350 million.

However, the capital injection has been linked with the offer of some incentives in the new auto policy.

Suzuki suggested that there should be 10% import duty on auto parts and components including Amax quality parts and on parts for cars of over 1,000cc engine capacity 25% duty should be applicable.

It said the government should restrict the import of all used cars in a bid to stop misuse by traders of the facility provided to overseas Pakistanis. This, the company believes, will help promote and increase the production and sale of vehicles, particularly new models, as well as encourage auto part manufacturers to come to Pakistan.

Suzuki was of the view that the current 32.5% import duty on normal parts and 50% on Amax parts inflated the cost of purchase compared to other countries. “Unnecessarily higher import duties result in a rise in cost and prices of locally produced cars; it also results in lower sale of cars in the country.”

“Also it is difficult to localise Amax parts as new technology is required which is not available in Pakistan,” Kinji Saito, Managing Officer of Suzuki Motor Corporation and chairman of PSMC, said in the letter addressed to Industries and Production Minister Ghulam Murtaza Khan Jatoi.



Saito suggested preferential incentives for manufacturing small cars as these made a vital contribution to saving energy, creating a better environment and restricting foreign currency outflow.

“In relation to human resource, we will continue training courses for employees of Pak Suzuki in Japan and development of mechanics for the dealership tied up with the Aman Institute of Vocational Training,” he said.

“We are also going to cooperate with the Small and Medium Enterprises Development Authority in enhancing the level of vending industry in Pakistan through a four-year technical transfer project,” which will be implemented by the Japanese International Cooperation Agency (Jica).

Published in The Express Tribune, December 20^th, 2015.

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