Pak Suzuki Motor backs liberalised trade with India
MD believes it will be a win-win situation for both assemblers and parts makers.
The cost of production in Pakistan is higher if compared to India primarily because of the smaller market size. PHOTO: FILE
KARACHI:
The biggest car producer of Pakistan – the Pak Suzuki Motor Company, an affiliate of Suzuki Motor Corporation, Japan – has put its weight behind opening up trade between Pakistan and India in the automobile sector, stressing that the domestic industry will flourish if Islamabad allows import of car parts from Delhi.
“Not just Pak Suzuki, but the entire auto industry of Pakistan will benefit if the country opens up trade with India,” Managing Director of Pak Suzuki Motor Company Hirofumi Nagao told The Express Tribune early last week.
Nagao is very optimistic that the new government, led by Nawaz Sharif, will take swift steps to increase the growth of the auto industry.
“Indian auto part makers are not only willing to trade with Pakistan, but are also ready to transfer the latest technology to their counterparts here. This will be a win-win situation for both auto parts makers and carmakers in Pakistan,” he said, when told that some Pakistani auto part makers are apprehensive of trade with India.
Pak Suzuki wants to import Suzuki Alto engines, from India because their cost of import will be much less than what it costs to import them from Japan. Indian auto components, especially engines, are of international quality and are compliant with global emission standards like Euro III and Euro IV, he said.
“Many a time we put forward this particular requirement to the previous government in Pakistan, but we failed to convince it. Now that the new government is taking over, we are confident that we will be able to move ahead and import engines from India,” he added.
Pak Suzuki discontinued production of the Suzuki Alto from July 1, 2012 after the government made compliance with Euro II emission standards compulsory for all car producers in the country. The company says the discontinuation of the Alto has badly affected businesses of its regular vendors, who have reported a decline of over 50% in annual sales.
“We will be able to replace the Suzuki Mehran with newer models if we import engines and other components from India. But this is only possible if the two countries move forward and liberalise trade,” said Nagao.
The cost of production in Pakistan is higher if compared to India primarily because of the smaller market size. With a vast market and big economies of scale, India has an edge over Pakistan. Therefore, Pakistan’s auto industry needs to increase its volumes and achieve economies of scale to reduce car prices, he explained.
“We think Indian auto experts can be very helpful, because they understand Pakistani workers and society much better than experts from other countries,” he said.
Pak Suzuki is the biggest player in Pakistan’s four-wheeler market, with over 60% market share.
With a rise in sales and other positive developments, profits of the local auto industry are on a continuous surge.
The auto-assembly sector is now on a recovery path, as net sales grew 52% quarter-on-quarter from January to March 2013, taking revenues to Rs42.8 billion.
The growth in revenue emanated from a massive 44% QoQ growth in sales volume of the assemblers, InvestCap Research reported last Wednesday.
One of the biggest boosts to the auto industry was the government’s decision in December 2012 to reduce the age limit for import of used cars from five to three years. Other major reason is continuous depreciation of Japanese yen against Pak rupee, making import of car parts cheaper for the assemblers.
Published in The Express Tribune, May 27th, 2013.
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The biggest car producer of Pakistan – the Pak Suzuki Motor Company, an affiliate of Suzuki Motor Corporation, Japan – has put its weight behind opening up trade between Pakistan and India in the automobile sector, stressing that the domestic industry will flourish if Islamabad allows import of car parts from Delhi.
“Not just Pak Suzuki, but the entire auto industry of Pakistan will benefit if the country opens up trade with India,” Managing Director of Pak Suzuki Motor Company Hirofumi Nagao told The Express Tribune early last week.
Nagao is very optimistic that the new government, led by Nawaz Sharif, will take swift steps to increase the growth of the auto industry.
“Indian auto part makers are not only willing to trade with Pakistan, but are also ready to transfer the latest technology to their counterparts here. This will be a win-win situation for both auto parts makers and carmakers in Pakistan,” he said, when told that some Pakistani auto part makers are apprehensive of trade with India.
Pak Suzuki wants to import Suzuki Alto engines, from India because their cost of import will be much less than what it costs to import them from Japan. Indian auto components, especially engines, are of international quality and are compliant with global emission standards like Euro III and Euro IV, he said.
“Many a time we put forward this particular requirement to the previous government in Pakistan, but we failed to convince it. Now that the new government is taking over, we are confident that we will be able to move ahead and import engines from India,” he added.
Pak Suzuki discontinued production of the Suzuki Alto from July 1, 2012 after the government made compliance with Euro II emission standards compulsory for all car producers in the country. The company says the discontinuation of the Alto has badly affected businesses of its regular vendors, who have reported a decline of over 50% in annual sales.
“We will be able to replace the Suzuki Mehran with newer models if we import engines and other components from India. But this is only possible if the two countries move forward and liberalise trade,” said Nagao.
The cost of production in Pakistan is higher if compared to India primarily because of the smaller market size. With a vast market and big economies of scale, India has an edge over Pakistan. Therefore, Pakistan’s auto industry needs to increase its volumes and achieve economies of scale to reduce car prices, he explained.
“We think Indian auto experts can be very helpful, because they understand Pakistani workers and society much better than experts from other countries,” he said.
Pak Suzuki is the biggest player in Pakistan’s four-wheeler market, with over 60% market share.
With a rise in sales and other positive developments, profits of the local auto industry are on a continuous surge.
The auto-assembly sector is now on a recovery path, as net sales grew 52% quarter-on-quarter from January to March 2013, taking revenues to Rs42.8 billion.
The growth in revenue emanated from a massive 44% QoQ growth in sales volume of the assemblers, InvestCap Research reported last Wednesday.
One of the biggest boosts to the auto industry was the government’s decision in December 2012 to reduce the age limit for import of used cars from five to three years. Other major reason is continuous depreciation of Japanese yen against Pak rupee, making import of car parts cheaper for the assemblers.
Published in The Express Tribune, May 27th, 2013.
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