Research Analyst
Jan 18 - 24, 2010

Pak Suzuki Motor Company Ltd. (PSMCL) is a Pakistan-based automobile manufacturing company. It is a joint venture between Suzuki Motor Corporation of Japan and Pakistan Automobile Corporation.

The company's products include Mehran, Alto, Cultus, Liana, Bolan Van, Ravi Pickup, JIMNY MT, APV, and Potohar. Recently, the company has launched its new product with brand name Suzuki Swift.

There are about 154 active vendors of Pak Suzuki spreading from Karachi to Lahore and Rawalpindi. Almost all the dealers of Pak Suzuki undertake the company's banner services; sales, service, and spare parts.

Its manufacturing plant located at Bin Qasim has a production capacity of 150,000 vehicles per year. The company has also facilities of press shop, welding shop, paint shop, engine and transmission assembly shop, final assembly, and hi-tech inspection shop.


Suzuki Liana Prod. 383 478
Sale 411 491
Suzuki Cultus Prod. 5,612 4,983
Sale 5,488 4,933
Suzuki Alto Prod. 4,271 4,917
Sale 3,712 4,305
Suzuki Mehran Prod. 7,255 9,450
Sale 7,625 9,222
Suzuki Bolan Prod. 5,407 3,715
Sale 5,425 4,331
Suzuki Swift Prod. - 97
Sale - -
Suzuki Ravi Prod. 7,847 4,923
Sale 7,828 5,057


Pak Suzuki produces a wide range of vehicles to serve a large market of customers in the country. Each of the Pak Suzuki products enjoys a unique market position and the exceptional success of its vehicles is an evidence of the company's performance.

A specialty that earns the company an edge over its competitors is its Press Shop-PSMCL is the only automobile manufacturer that owns this facility. It is a major source of delivering low cost vehicles to the customer.

Before quality product rolls out from the plant, it goes through the state of the art manufacturing processes under strict quality control measures. The press shop consists of the most modern stamping facilities equipped with a Tandem Press Line with more than 1,000 stamping dies. The facility of Tandem Press Line renders the company the status of modern car manufacturing company in Pakistan.


Company's profitability remained under pressure due to devaluation of Pak Rupee against the basket of currencies. The company earned after tax profit of Rs 21.206 million against Rs 636.968 million in the corresponding period of last year. Sales revenues decreased 46% (Rs 15.129 billion) from Rs 32.910 billion (September 2008) to Rs 17.781 billion (September 2009) due to lower volume.


Turnover 17,780,928 32,909,782
Cost of sales 17,226,896 31,943,187
Gross profit 514,032 966,595
Distribution Costs 161,285 229,161
Administration Expenses 345,343 341,149
Profit before tax 394,693 974,526
Net profit 212,206 636,968
EPS (Rs) 2.58 7.74

Gross profit decreased from Rs 966.595 million to Rs 514.032 million because of lower sales volume and higher exchange rate.

The company had to take all possible steps to avoid further losses. The distribution expenses decreased from Rs 229.161 million to Rs 161.285 million. The savings were recorded in advertising, sales promotion and warranty. Administrative expenses marginally increased from Rs 341.149 million to Rs 345.343 million.

Financial charges decreased from Rs 58.348 million to Rs 9.058 million. Other income reduced from Rs 708.815 million to Rs 431.669 million due to drop in income from bank deposits.

Contributions for worker's profit participation fund, worker's welfare fund, and expense for income tax decreased.


The demand for automobiles remained sluggish during the 3rd quarter 2009. The industry for cars and light commercial vehicles produced 72,318 units against 123,070 units in the same period last year. The demand fell 40%.

During the period, 76,037 units were sold as compared to126,115 units in same period last year.

Demand declined due to the combination of factors including cost-push inflation, resulting from unfavorable exchange rate, higher interest rates, and restricted financing by banks and leasing companies.


In the quarter under review, sales volume declined 56%. Pak Suzuki had to curtail its production to 32,560 units against 74,698 units produced same period last year. The level of production represented 29% capacity utilization.

Automobile industry witnessed a sign of improvement in third quarter over second quarter. The sales volume of the industry in third quarter was improved 26% over the second quarter. Sales volume of PSMCL grew 55% in third quarter over second quarter.

The market for motorcycles and three wheelers also remained depressed. The overall demand fell more than 12%. During the period, 412,816 units were sold as compared to 466,846 units in the same period last year.

Pak Suzuki increased prices of its cars (excluding Liana) by Rs 10,000 to Rs 25,000 in response to the rising cost pressures amid appreciation of foreign currencies against the rupee. The prices were effective from January 1, 2010.


Automobile industry is passing through a difficult time. The decline in demand and profitability is a major challenge for the PSMCL. However, the company is making effort to restore healthy returns on equity, as it brought a new addition in its product line.

In the federal budget 2009-10, the government withdrew 5 percent federal excise duty on 1000cc and above. This decision is no doubt helping PSMCL in increasing sales volume. That is also to increase tax revenues of the government.