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Pak Suzuki Motor sales volume rises 16.4pc in Jan-June 2018

Pak Suzuki Motor Company Limited (PSMCL) continues to be in the front of automobile industry of Pakistan. Over a period of time, the management has developed an effective and comprehensive network of sales, services and spare parts dealers who cater to the needs of customers and render effective after-sale service in the whole country.

Pak Suzuki Motor is endeavoring to enhance sales, profitability and diversity in its operations through upgrading the existing products and launching new products.

The PSMCL officials mentioned that the strengths of Pak Suzuki are in quality products, diversified product range and well-organized dealers’ network, ensuring availability of spare parts at economical prices and reliable after sales service. The management aims to offer quality services with convenient access to customers in Pakistan. PSMCL has strong dealership network spread all over the country. The management has been continuously improving and strengthening the dealership network.

As on June 30, 2018, authorized dealership network of Pak Suzuki enlarged to 137 outlets in 71 cities all across Pakistan where customers are offered wide range of products and support services. It is recorded in the financial statement of the company that during the period (January-June 2018) the industry sales volume for cars and light commercial vehicles grew by 16.4 percent as compared to the same period of last year. During the period (January-June 2018) 134,494 units were sold as against to 115,586 units in the same period of previous year. The sales volume of Pak Suzuki enhanced by 13,988 units from 62,494 units (January-June 2017) to 76,482 units (January-June 2018).

Pak Suzuki outperformed the industry growth rate and attained 22.4 percent growth in sales volume. The total sales volume of PSMCL showed 56 percent of Pakistan’s total market of cars and light commercial vehicles. Financial experts also represented that Pak Suzuki is operating approximately at full capacity and attained production volume of 71,137 units which showed 95 percent capacity utilization.

During the period under review, sales volume of PAMA member firms, producing motorcycles and three wheelers, raised from 833,396 units to 988,375 units. Rise of 154,979 units shows 19 percent improvement in sales volume over the corresponding period last year. It is also recorded that PSMCL sales volume grew by 19.5 percent and attained sales volume of 11,292 units as against to sales volume of 9,453 units in the same period of last year.


Furthermore, the company earned net profit Rs 1,298 million as against to Rs 1,992 million in the corresponding period of previous year. The experts of PSMCL also recorded that the net sales revenues rose by 33.2 percent (Rs 15,563 million) from Rs 46,829 million to Rs 62,392 million chiefly because of enhanced sales volume during the period under review. The gross profit declined in absolute terms by Rs 460 million from Rs 4,825 million to Rs 4,365 million while gross profit margins decreased from 10.3 percent to 7 percent of sales. Change in product mix of sales unit and devaluation of Pak Rupee adversely affected the gross profit margins. Distribution expenses grew by Rs 64 million from Rs 1,382 million to Rs 1,446 million, however, as a percentage of net sales declined from 3 percent to 2.3 percent. Administration expenses rose by 38 percent from Rs 736 million to Rs 1,016 million. However, administration expenses remained at 1.6 percent as a percentage of net sales. Rise in administration expenses attributable to higher salaries and wages and other staff related expenses.

Other operating income declined by 56 million from Rs 445 million to Rs 389 million, which was chiefly due to decline in income from bank deposit. Finance cost also grew from Rs 41 million to Rs 93 million, mainly because of higher exchange loss in the period under review. Other operating expense shows contributions for Workers’ Profit Participation Fund and Workers’ Welfare Fund. The aggregate amount declined from Rs 215 million to Rs 152 million consequential to decline in profit before tax. Expense for income tax declined from Rs 904 million to Rs 750 million. As a percentage of net profit before tax, tax expense grew from 31 percent in 2017 to 36 percent during 2018. Tax rate of 36 percent for the period under review included 29 percent tax rate on profits and super tax of Rs 130 million, showing 6.4 percent of profits before tax.

The financial statement of PSMCL also showed that the State Bank of Pakistan (SBP) increased the policy rate by 175 basis points to 7.5 percent during the calendar year 2018. It is the sharpest rise in interest rates in recent past. Provisional growth rate for financial year 2017-18 clocked in at 5.8 percent. However, SBP sees slower growth rate of 5.5 percent in FY19. Average inflation for FY19 is predicted to remain between 6 percent and 7 percent because of higher fiscal deficit, food inflation, higher oil prices and Pak Rupee depreciation. Macroeconomic indicators of the country are challenging for auto industry. Pak Rupee devaluation, growing raw material prices, predicted hike in interest rate, political unrest and current account deficit are major challenges for auto industry in future.

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