IMPORT OF USED CARS DAMAGED LOCAL INDUSTRY

INTERVIEW: Syed Muhammad Jamil, Director Suzuki Motorways

KHALIL AHMED, SENIOR CORRESPONDENT
Mar 19 - 25, 2007

PAGE: Please tell us something about yourself and your organization/show room?

SYED MUHAMMAD JAMIL: I am Director of Suzuki Motorways at Sharea Faisal. I am an Automobile Engineer and have been working in this field for the last 38 years. I got working experience of auto business both in Pakistan and abroad. I must tell you that I am fond of car racing and have participated in various car rallies at the only racing track at Agha Motor Sports, Gharo. I have modified cars for rallies and you would be surprised to know that we have stretched a normal Mehran to about 2 feet to give it a Limousine look.

As far as my organization is concerned, I started my business as a service oriented organization in 1989 and later as an authorized 3s dealer of Pak Suzuki Motor Company Limited.

PAGE: Would you please brief us about sales volume of your organization during 2006? How many units do you sell every month on average? Give the specification of the cars sold.

SMJ: I started my business with the sales target of 300 vehicles per year. Slowly and gradually with consistent and focused approach, we have been able to increase our sales to 1600 cars per year now. The most demanded Suzuki product is Mehran which has the largest contribution in our sales as well.

PAGE: What is the market response to Suzuki products?

SMJ: The market response to Suzuki products is very good. We all know that Pak Suzuki holds 52 % market share in car sales in our country. One of the reasons for the good market response could be economic prices of Suzuki products.

PAGE: Has the import of cars damaged our local industry?

SMJ: Yes, the import of used cars has damaged our local car manufacturing industry as well as it has damaged industrial growth of the country, causing serious un-employment. Moreover, I must tell you that the import of cars does not add to the government revenue as there are loopholes i.e. evasion of customs duties, etc. The import phenomenon is detrimental to our foreign reserves as well. The arrival of more than 45,000 used cars during the last fiscal year is still impacting the local sales despite the fact that imports of second-hand cars have declined. In my opinion, it should be banned as the imported cars are Japan's domestic models which are not favourable to the conditions in our country. The imported cars have caused severe problems for the buyers as the repairing of these cars becomes a headache.

Since there are no diagnostic gadgets and service manuals, the service facility for these cars has become an enigma. Spare parts are not available in the market, which gives trouble to the buyers. Spare parts of Toyota Platz, Vitz, Mini Pajero etc are not available whereas the spare parts of Suzuki can be bought from all corners of the country. Spare parts of imported cars when needed are mostly smuggled via Dubai for higher prices. We need to comprehend that we are losing our foreign reserves by importing junk from Japan. There should be strict restriction on the import of vehicles from some other countries such as Malaysia, Thailand, etc.

If import of used vehicles is not stopped, our local industry will get damaged. We need to know that auto industry is the backbone of any developing country which saves foreign reserves and enhances tax revenue.

PAGE: It is believed that delivery process is very slow. If one pays premium, the delivery is quick and in other case, one has to wait for months. Your comments please!

SMJ: Slow process of delivery is an issue, however, a lot has been done in this regard. Our local manufacturers have invested a lot of finance to tackle this issue. A lot has been done to enhance production but we all should know that it is not a matter of seconds to enhance production as a lot is done i.e. building new assembly line, importing machinery, etc. However, efforts have been put in for enhancing the production of locally manufactured parts through local vendors.

As regards the issue of premium, I think there are two factors:

1. There is no other investment opportunity in the country for investors other than buying cars.

2. Buyers have lost patience and do not wait for delivery of the car.

If buyers do not lose patience, the issue of premium on cars will get resolved itself.

PAGE: Pak Suzuki holds 52 per cent market share followed by 29 per cent by Indus Motor Company, 18 per cent by Honda and five per cent by Dewan Farooqui Motors? Your comments please!

SMJ: Pak Suzuki is the major player in the market with a number of models, prices and especially new setup of 3s dealers network. Pak Suzuki supports dealers through training of Sales, Service and Parts staff. Pak Suzuki has got an excellent management which takes proactive measures to tackle its competitors. Let me tell you that the sales of vehicles have showed 20-30 per cent monthly growth for the last few years because of various reasons such as low interest rates and robust economic growth in our country. However, recently due to the rising interest rates between 14 and 15 per cent as compared to eight per cent just two years back on car financing, the sales of locally assembled cars have witnessed a little impact. At the same time you would be happy to know that the Suzuki products have showed rise in sales instead of dismal performance in terms of car sales by other manufacturers. It should be known that the overall sales of vehicles depicted a rise of seven per cent during the first six months (July-December 2006) of the current fiscal year.

PAGE: Would you tell us about the sales of Suzuki Liana and other Suzuki products?

SMJ: Suzuki Liana is gaining momentum and I hope that it would make a difference during the current year. The buyer of this product must be happy with the quality and luxury of the product at the affordable price. Suzuki Liana competes with Toyota Corolla and I get a very good feedback from the buyers. Let me tell you about the sales of Suzuki products. A total of 11,930 units of Suzuki Cultus, 10,113 units of Alto and 17,044 units of Mehran were sold in July-December 2006.

PAGE: Based on your experience, would you tell us whether the cut in petrol prices would boost the sales of vehicles?

SMJ: We all know that an ordinary citizen prefers getting a company fitted CNG vehicles and all Suzuki cars are available with this option. The Rs four per litre cut in petrol price is unlikely to boost the sale of cars. The number of vehicles fitted with CNG is growing and this trend would continue.

PAGE: Do you think that foreign investment in the auto sector would benefit the consumers and the economy?

SMJ: I support the contribution made by the foreign investors. It is always good to have foreign investment, however, the issue of quality should be looked at and the low quality Chinese products should not be brought in the market.

Note: Khalil Ahmed writes for PAGE. He never contributed in any financial daily. Similarity of name could be a co-incident.