Pak Suzuki says no launch of new model for 2 years

Company spokesperson says govt’s word awaited on tax incentives, dismisses talk of Mehran being replaced with Alto

KARACHI: Pakistan Suzuki Motor Company (PSMC) - the largest car maker in Pakistan - will not launch any new model in the next two years, a spokesman of the company said, adding that the investment, if any, was contingent on the government offering the same incentives it was offering to new entrants in the Automotive Development Policy 2016-21.

“We have neither given a launch date nor have any plan for our vendors to localise parts for models,” a Pak-Suzuki spokesperson told The Express Tribune.

The spokesperson made the statement after a media report quoted officials of the Senate Standing Committee on Industries and Production saying that Suzuki had, in its presentation to the delegation, unveiled its future plans.

The report said that the company had announced its plan to start localising production of its 660cc engine Suzuki Alto by 2018, the model that would replace the 800cc, and worn out, Suzuki Mehran.

It is pertinent to mention here that The Express Tribune announced the company’s intention to launch ‘the mentioned’ two new variants in the local market last year; the announcement was made by the Suzuki Global Head during a meeting with the Minister for Industries.

In 2015, the company also revealed details that the two new models would take up around $110 million of the total investment of $430 million, planned by the company. The rest would be spent in setting up the manufacturing plant for spare parts. However, at the time, the company had specifically stated that the investment was conditioned on incentives.

“There is no change in our official policy. We are still waiting for a reply from the government on the written proposal we submitted to it a  few months ago,” added the official.

Meanwhile, replying to a question over stock market participants having already ‘factored in’ the launch of the new model, taking its price higher, he said it was quite “impossible to launch Suzuki Celerio by March 2017”.

Suzuki, listed on the Pakistan Stock Exchange as PSMC, was trading at Rs390.97 per share at the start of July. It has now gone up to Rs577.76 per share, increasing by over 47%, outperforming the KSE-100 index that has increased by just 8.75% during the same time.

“The new models were planned along with the new Greenfield plant the company wanted to set up with over $430 million investment, but since we did not get the incentive in the new auto policy; we have not finalised anything,” explained the official.

Celerio is a 1,000cc engine car that market observers say Pak Suzuki plans to replace with Suzuki Cultus.

The Suzuki Motor Company Global Head Kinji Saito met Federal Minister for Industries and Production Ghulam Murtaza Khan Jatoi in December last year, where he, along with Suzuki’s other top officials, urged the government to offer the same incentives it was offering to new entrants.

The government, however, has not offered any major incentives to the existing top three carmakers as it hopes to attract new automobile manufacturers,.

The new policy was approved after a hiatus of almost two and a half years and offered tax incentives to new entrants to help them establish manufacturing units and compete with the three well-entrenched assemblers.

Published in The Express Tribune, October 23^rd, 2016.

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