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Suzuki plans investment of $460 million in new production line

KARACHI: Pak Suzuki Motor Company Limited, which achieved the milestone of manufacturing two million vehicles this week, has announced that it is setting up a new production line with an investment of around half-a-billion dollars.
The company is planning to invest $460 million in a brand new plant, Pak Suzuki spokesperson Shafiq Ahmed Sheikh told The Express Tribune on Tuesday.
Pakistan’s auto industry produces 200,000 to 250,000 new locally assembled vehicles, while the country also imports around 50,000 vehicles every year.
Pakistan’s fast growing middle-income class is attracting not only current players, but also new auto players, to invest, said JS Global Capital Head of Corporate Sales Syed Atif Zafar. For example, Renault and Kia Motors announced their entry into Pakistan, followed by the introduction of about two models by Kia Motors to test the market.
Addressing an event, where the company announced its future plans, Adviser to Prime Minister on Commerce Abdul Razak Dawood said, “It is a historic achievement by Pak Suzuki to produce two million vehicles in Pakistan.”
Pak Suzuki MD and CEO Masafumi Harano said, “This year Pak Suzuki will be producing around 144,000 units in line with the market demand. However, in the next couple of years, it will reach the production capacity of 150,000 vehicles per year.”
Also speaking on the occasion, Suzuki Motor Corporation Japan Chairman Osamu Suzuki said, “Pak Suzuki was the first to enter Pakistan’s automobile industry,” and expressed hope that it would contribute more to the development of Pakistan’s auto industry.
In the backdrop of the growing middle-income class, demand in the country is robust. “Economic indicators are positive, the current government is gaining trust, people are coming to purchase,” said the company spokesperson. Major demand in the market is up to 1,000cc vehicles.
Zafar added that the overall market was showing growth. However, economic slowdown was imminent in the country, which was going to affect the purchasing power of the people and the condition of being an income tax return filer had also affected the vehicle market.
“Currently, sales are strong, but in the near future, demand is going to be weak,” he said.
Following the arrival of new players, like Renault and Kia, competition will increase and industry margins will be squeezed.