Sazgar unveils Rs11.5b plan to double output by 2026

Sazgar Engineering Works Limited (SAZEW), one of Pakistan's leading triwheel and tractor manufacturers, has announced a Rs11.5 billion expansion plan to more than double its vehicle production capacity by March 2026, with special focus on hybrid and electric vehicles.

According to Insight Securities, Sazgar intends to raise its daily production from roughly 40 vehicles to as many as 100 units within the next 18 months. The expansion will focus heavily on hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs). While the plan positions the company as a pioneer in Pakistan's shift to clean mobility, analysts caution that execution risks, volatile market dynamics, and uncertain government policy remain significant hurdles.

Central to Sazgar's strategy is the anticipated rollout of the government's New Energy Vehicle (NEV) policy. Analysts note that profitability projections hinge on incentives such as reduced customs duties on imported components, tax relief, and support for localisation of parts. If these incentives materialise, earnings per share could climb considerably.

Sazgar's strategy is its focus on plug-in hybrid electric vehicles (PHEVs), which the company sees as a practical bridge for Pakistani consumers hesitant to fully shift to EVs amid the lack of charging infrastructure. The Haval H6 PHEV is the flagship of this transition, offering up to 100 kilometres of pure electric driving, enough to cover most urban commutes, while retaining a petrol engine for longer journeys. This dual advantage addresses range anxiety while delivering substantial fuel savings. Importantly, the minimal price gap between HEV and PHEV models is expected to tilt consumer preference in favour of PHEVs.

Sazgar has already introduced the fully electric Ora and the Tank-500 PHEV, while plans are underway to locally assemble new models, including the Canon Alpha pickup truck, which will also feature PHEV technology. By broadening its product lineup to cover premium SUVs, mass-market hybrids, and electric vehicles, the company aims to capture multiple consumer segments as preferences evolve under the forthcoming New Energy Vehicle (NEV) policy, noted Insight Securities.

Despite this aggressive growth push, challenges remain. The expiry of Greenfield incentives in June 2026 is expected to pressure margins in the near term. However, analysts believe profitability will be supported by higher volumes, new product launches, and incentives expected under the NEV policy for both EVs and PHEVs.

Key risks loom over the investment case. These include potential currency depreciation that could inflate costs of imported parts, weaker-than-expected consumer demand amid economic headwinds, sudden spikes in raw material prices, intensified competition from other automakers entering the hybrid and EV space, and changes in the regulatory framework. Analysts have also pointed out that in their base case, they assume normalised customs duty on non-PHEV parts post-FY26, given that the government has yet to formally disclose its full incentive structure under the NEV policy. If additional duty relief is offered, however, Sazgar's margins could improve even further.

Sazgar's forward-looking approach has consistently kept it ahead of its peers. After pioneering the launch of Pakistan's first locally assembled hybrid SUV, the company quickly expanded into EVs and is now aggressively marketing its PHEV models. With most urban commuters in Pakistan travelling less than 100 km a day, Sazgar's PHEVs are well-suited to local conditions, offering consumers better efficiency, reduced fuel costs, and advanced features without the limitations of range dependency on charging networks.

While Sazgar has the first-mover advantage in locally assembling hybrids, it faces increasing competition from global brands such as MG, Hyundai, and Kia, all of which are eyeing Pakistan's nascent EV market. As the NEV policy takes shape, analysts expect new entrants to intensify competition, putting pressure on prices, marketing, and consumer choice.