Ghandhara Nissan, which used to assemble Nissan Sunny in Pakistan, is aggressively moving forward to enter the market with a sports utility vehicle (SUV) reportedly in the 1,600cc engine category.
Although company officials acknowledge they are working on a re-launch, they were less than forthcoming with details over the model under consideration. They added that the assembly will begin in late 2016 after the network of parts’ suppliers and dealerships has been established.
The urgency does not, however, stem from a need to tap the market dominated by three players and a flood of imports. Ghandhara Nissan Limited (GHNL) is especially hurried into utilising the existing car assembly line at its Port Qasim factory after its contract to make Land Rover’s Defender ends in about a month.
Ghandhara, controlled by the Kuli Khan Khattak family that also owns General Tyres, produced 2,573 Nissan Sunny cars between 1996 and 2004. However, by and large, it remained a marginal player despite initial ripples its entry created in the market.
It soon ran into financial troubles because of its high exposure to leasing companies, which were costly lenders compared to commercial banks and demanded rentals on a monthly basis.’
GHNL’s ride thereon remained bumpy and the company continued to book losses for years.
“We are in talks with Nissan and looking at various opportunities,” said Saleem Baig, the company’s chief financial officer. “But let me stress here that nothing has been firmed up as yet.”
He said the plan to start assembling would take at least a year to materialise.
However, its share price has been quick to jump. From opening at Rs52.46 on January 1, 2015, the share closed at Rs190.23 on November 26, an increase of 263% in less than a year. The corresponding increase in the benchmark-100 index has amounted to just 2.95%.
Chief Executive Officer Ahmad Kuli Khan, along with other senior management, has been busy in meeting Nissan and Renault executives in recent months.
French company Renault and Japanese Nissan have been global partners since 1999, often entering new markets together.
Industry officials who spoke to The Express Tribune say Ghandhara might also consider coming out with Datsun Go, which has been introduced in India.
Dewan Farooque Motors Limited (DFML), a troubled car assembler, which used to make Hyundai and KIA cars in Pakistan, has also been in talks with Renault for over a year, industry people say.
“Ghandhara is actually trying to outdo Dewan, which was in pretty advance stages of negotiations with Renault,” said an official. “But Dewan has been bogged down by its debt problems and uncooperative behavior of bankers.”
Ghandara’s assembly has capacity to produce 6,000 vehicles but since discontinuing the assembly of Nissan Sunny, it has relied on other variants to meet the fixed cost.
The assembly line had been contracted out to Sigma Motors, a venture of Hascol Petroleum Chairman Mumtaz Hasan Khan. Sigma Motors was using it to assemble Land Rover’s Defender.
“Our contract has ended,” said Khan. “We were making Defenders for the Pakistan Army and a few vehicles for other customers. Now the last batch is coming off the line in about a month’s time.”
He did not share many reasons for ending the local assembly of Defender, but praised Ghandhara’s management. “They are very nice people to work with.”
In recent years, Ghandhara has mostly relied on a subsidiary, which makes Dongfeng trucks, to shore up its revenues.
While opinions differ on the reasons for Nissan’s failure to penetrate the Pakistani market, many people point at Ghandhara’s lackluster approach to creating a proper dealership.
“No carmaker is going to survive without a dealership that doesn’t offer proper after sales service. Nissan won’t do well if customers don’t find its parts,” said an official of Pakwheels.com.
Asked to comment on Ghandhara’s apparent failure on dealership front, its CFO Baig said: “No point in discussing the past. What is done is done. We will come with complete planning.”
Published in The Express Tribune, November 27th, 2015.