According to a report in HTAuto, Suzuki Motors plans to take full control of its Pakistan operations and delist Pak Suzuki Motor Company shares from the Pakistan Stock Exchange. This was done in the context of Pakistan’s economy experiencing a difficult external environment and large fiscal and external deficits.
Pak Suzuki assembles Suzuki cars and motorcycles in Pakistan and posted losses in 2019, 2020 and 2022. The company cited financial losses as one of the main reasons for delisting. Elaborating on the situation in Pakistan, Director Pak Suzuki’s statement said, “Due to the difficult external environment, catastrophic floods, and policy failures, the fiscal year 2022-23 will see huge fiscal and external deficits, rising inflation, and preparedness. “This has led to the erosion of deposit buffers.”
What is hitting the automotive industry in Pakistan?
Simply put, almost everything. Pakistan is experiencing one of the most difficult economic times in its history, and the country’s automotive sector is not immune to the turmoil. Pak Suzuki’s 2023 Semi-Annual Report reveals the current state of the Pak Automotive industry.
A report released in June said that the unprecedented depreciation of the Pak rupee, rising interest rates, political instability, rising inflation and government import control measures are having a negative impact on Pakistan’s economy. The large scale manufacturing (LSM) sector experienced a decline of 10.26% in the financial year July 2022 to June 2023 (FY2023), the report said. Pakistan’s fiscal year runs from July 1st to June 30th.
During this period, the share of the automotive sector declined by 2.21% in LSM during FY23. Exports to the automobile industry were also hit, falling from $32.5 billion in FY22 to $27.9 billion in FY23. The amount of remittances in FY23 also decreased to $27.9 billion compared to $31.3 billion in FY22.
Similarly, imports into Pakistan also declined to $52 billion due to strict import restrictions imposed by the State Bank of Pakistan (SBP). This reduced Pakistan’s current account deficit (CAD) to $2.6 billion in FY23 from $17.5 billion in the previous fiscal.
pakistan auto industry
Pakistan’s automobile sector saw a significant decline in sales from the second half of 2022 due to import restrictions imposed by the SBP on the import of complete knockdown (CKD) kits. Due to import restrictions, the manufacturer will no longer be able to produce it in 2023. OEMs were forced to opt for “non-production dates” (NPDs).
Import restrictions will be eased in June 2023, which is likely to remove supply constraints and could lead to improvements in manufacturing.
Popular cars in Pakistan
Popular cars in Pakistan’s automobile industry include familiar names such as Honda City and Civic, Suzuki Alto, Wagon R Swift, Cultus (Celerio), Toyota Corolla and Yaris.These names and the cars themselves are very similar to what these companies sell in the Indian market, but the prices in Pakistan are much higher
For example, the Maruti Suzuki Swift is priced from Rs 60,000 (ex-showroom) in India. According to the prices posted on pakwheels.com, the price of the same product in Pakistan starts from 42.6 million Pakistani Rupees. At current exchange rates, 1 INR is equivalent to 3.31 PKR as of October 23, 2023.
So, even after adjusting for currency, the Swift price in Pakistan is over Rs 12.5 million in Indian Rupees. The story is the same for other cars. For example, Suzuki Alto’s price starts at Rs 22.5 million ex-showroom. The price of Suzuki Jimny is a whopping 60.49 million rupees.
