Just yesterday, news regarding Pak Suzuki showing its intention to replace the Mehran hatchback with Alto 660cc by 2018, spread like wild fire. The company also revealed its plans of replacing its 1000cc Cultus with the Celerio hatchback in 2017, the information was reportedly shared with the Senate Standing Committee on Industries & Production.
However according to the Express Tribune, Pak Suzuki denied launching any new model in the next two years according to a company spokesman, adding that the investment if any, was contingent on the government offering the same incentives it was offering to new entrants in the Automotive Development Policy 2016-21. According to Pak Suzuki:
We have neither given a launch date nor have any plan for our vendors to localize parts for models. There is no change in our official policy. We are still waiting for a reply from the government on the written proposal we submitted to it a few months ago. The new models were planned along with the new Greenfield plant the company wanted to set up with over $430 million investment, but since we did not get the incentive in the new auto policy; we have not finalized anything.
Pak Suzuki, the largest automobile assembler of the country has been enjoying all sorts of benefits & support from the government ever since. Yet during the period of almost 3 decades, the company is blamed for providing sub-standard, obsolete yet overpriced products which are no longer offered anywhere in the world. The company even after the span of 30 years is yet unable to manufacture an F8A engine from the 1970s on its own. Pak Suzuki assembled vehicles have always enjoyed zero competition in the market, thanks to the generous support from the Pakistan government.
Yet even after having enjoyed such a tremendous support from the government, the demand to get equal incentives as that of new entrants is not at all justified. Let’s have a look at various factors why Pak Suzuki feels so insecure, even after having more than 50% of the market share.
Obsolete Model Lineup:
The prime factor for such insecurity is the Pak Suzuki product lineup itself. The majority of the vehicles they sell here have completed their life years ago in the international markets, yet Pakistan remains the only country where these cars are sold, that too at exorbitant prices. Suzuki Ravi & Bolan are the vehicles from the 1970s, yet unchanged in 2016 and sold for about PKR 700,000. Mehran is another prime example which is a 28 year old car and despite missing out on everything including safety & quality is still charged a hefty amount.
Not just this, the Cultus also dates back the late 80s. Being a hatchback version of the Margalla sedan which Pak Suzuki used to sell between 1990-98, the Cultus launched in 2000 remains unchanged and continues to be sold despite more than 16 years of production period. Launched for a mere PKR 4.8 lac back in year 2000, the same car after 16 years is now sold for PKR 11.99 lac.
The 2nd generation Swift hatchback when launched in Pakistan back in 2010, was already replaced by a newer 3rd generation model in international markets. The Swift that is being sold in Pakistan was globally sold between 2004-2010 and now the 3rd generation has been replaced with the 4th generation while Pak Suzuki is yet to introduce the 3rd generation Swift here.
This remains the case with their discontinued models too. Suzuki Liana was introduced in Pakistan back in 2005, the same year when it was discontinued globally. The locally made Liana started to roll off the assembly lines at Pak Suzuki a year later in 2006.
First generation Baleno was produced between 1995 and 1998, while it was introduced in Pakistan in 1998 when the facelift was launched globally. The Baleno facelift was produced between 1999 and was phased out in 2002 while Pak Suzuki launched the facelift here in 2002.
The 5th generation Alto was produced between 1998-2004 globally. Pak Suzuki introduced the 5th gen Alto in year 2000 and continued to sell it till 2012 without any change. The Alto was globally replaced by 6th generation HA24 model in 2004.
The Khyber, which was sold till year 2000 by Pak Suzuki was discontinued globally in 1988. Also called as the SA series Cultus/Swift, the car was replaced in 1989 by the SF series which happens to be the Cultus that we see today, still being sold by Pak Suzuki.
Lack of Competition:
While Pak Suzuki is proudly the largest automobile assembler of the country & has the largest market share as well, the fact remains that none of the vehicles offered by Pak Suzuki have been able to survive in a true competition. In fact most of the Pak Suzuki vehicles have been able to become successful only because there was no competition available in the market.
However whenever there was a competition, Pak Suzuki products suffered badly. Take Margalla for example, it was the only 1300cc entry level sedan available in the market back in the 90s. The car came without metallic colors, paint quality was lousy, interior quality was sub-par but was successful mainly because of easy maintenance and no competition in its class. Margalla enjoyed sales of around 6,000 units a year till 1996. But when Honda launched the City sedan in January 1997, the sales of Margalla were cut into half and it was able to sell just around 3,000 units a year before being eventually replaced by Baleno.
Similar examples of Baleno & Liana can be considered when the cars were unable to keep up with the competition and today the 1300cc entry level sedan market which was once ruled by Pak Suzuki with their Margalla sedan, without competition off course, is now ruled by Honda City. Pak Suzuki today has no representation in the sedan segment of the market.
One of the main reason people prefer to buy Suzuki vehicles even if they are well over-priced is because of their cheaper maintenance. However, today the kind of cars Suzuki is indicating to replace no longer offer such cheap maintenance that people expect from a Suzuki vehicle.
Related: Just How Old The Suzuki Bolan Is..
The failure of Liana sedan is partly attributed towards expensive maintenance, the spares of Liana in most cases were as expensive as Honda & people never really considered going for an expensive-to-maintain Suzuki.
By selling obsolete cars in high prices, Pak Suzuki has actually created huge problems for its own to face. While the company may have churned huge profits by selling these cars in large numbers, it is now hindering them to introduce newer vehicles as well. People are happy to pay huge amount of money for cars like Mehran, Bolan, Cultus only because they are cheaper to keep & run but hesitate to go for modern vehicles even if they offer good value for money. By unnecessarily stretching the production span of these cars, there has been no transition at all. Had Pak Suzuki kept updating/ introducing newer vehicles, it would have been a lot easier for them to stay ahead of the competition.
Related: The Oligopoly Redefined..
Perhaps Pak Suzuki knows very well that they cannot expect people to buy a cheaper-to-maintain Mehran one day, and go for the complex & a rather expensive-to-maintain Alto 660cc the other day. That’s the factor which can literally ‘kill’ any of Pak Suzuki’s vehicles- the cost of maintenance. Remember the fate of Suzuki Liana…
Pak Suzuki’s WagonR took a long time picking up sales and same can happen to its upcoming range of vehicles. And with the possible competition that may arrive in our market, the future may not be so bright for Pak Suzuki in Pakistan.