Suzuki plans to stop production of Cultus

After discontinuing Liana 1300cc Car in 2014, Pak Suzuki Motor Company (PSMA) is mulling to stop production of its famous brand Cultus 1000cc car shortly and introduce Celerio 1000cc in place of Cultus by the end of this year, the industry source told Pakistan Today.

However, the company is also considering producing another car ‘Alto 660cc’ next year (2017-2018) in Pakistan to cover up rising demand of small vehicles throughout the country.

The car dealers said that the company had informed them about the replacement of Cultus 1000cc car but the company did not give exact date of discontinuation of this model. Pak Suzuki will introduce another car of 1000cc just after discontinuing the production of Cultus in Pakistan.

After discontinuation of Liana, Pak Suzuki replaced it with modern Suzuki Swift 1300cc which is much smarter and its demand is continuously rising among the car lovers.

An industry source said: “Pak Suzuki will continue the production of Mehran 800cc car as its demand is stable in the market and company is selling 2500-3000 cars on monthly basis. Around 80 per cent parts of Mehran are being prepared in Pakistan through Pakistani vendor industry.”

An analyst said that Pak Suzuki had started planning to capitalise new Celerio 1000cc which may likely to start from 2017 with high probability of one more model Alto 660cc in 2018.

He said Celerio would contribute 15-17 per cent to total volumes of PSMC during 2017-20 while Alto 660cc will contribute 18-20 per cent from 2018-20. As a result, analyst estimates volumes of PSMC to grow at a 5-year (2016-20) CAGR of 12 per cent to reach 1,60,000 units in 2020.

Pakistan car sales is likely to grow at 5-year (2016-20) CAGR of 12 per cent due to improving law and order situation in the country, rising auto financing owing to 42-year low interest rates, increasing disposable income and China Pakistan Economic Corridor (CPEC).

Almost every bank in Pakistan is ready to finance the car throughout the country as their profitability through T-Bills has gone down and its deposits have also shrunk in last seven month. The banks provide finance to the customers for cars at 11-13 per cent as they (Banks) think that auto financing is little save investment compared to credit cards and other loans.

Further, it seems from draft of Auto Policy 2015-20 (AIDP-II) that the government will protect existing assemblers and give incentives to new entrants. Due to this, Pakistan that has 13 cars per thousand people will reach 20 cars per thousand by 2020, the analyst said.

In the Draft Policy, the government had totally refused to extend the age limit of used imported car from three years. The government has reduced age limit of imported used cars from five years to three years in Dec 2012 to boost the local auto industry and this decision of the government has shrunk the import of used cars from 60,000 units in 2011-12 to 24,000 units in last seven months. The private dealers imported 18,000-20,000 small cars up to 1000cc including the automatic Vitz, said H M Shahzad, Chairman All Pakistan Motor Dealers Association (APMDA). The demands of small cars were persistently increasing in the country, he added. Pak Suzuki sales increased by 90 per cent YoY to 83,188 units in July-January 2015-16 primarily due to Punjab government taxi scheme, he added.