Pak Suzuki Reports a Loss For the 6th Consecutive Quarter

By Jehangir Nasir & Hasan Saeed

Pak Suzuki Motor Company Limited, which is the largest player in Pakistan’s automobile industry, has announced its financial results for the first quarter ended March 31st, 2020.

The company reported a loss of Rs. 941.11 million on the back of a massive reduction in sales. The car manufacturing firm had booked a loss of Rs. 980.74 million in 2019, according to a notice sent to the Pakistan Stock Exchange (PSX) on Thursday. According to Capital Stake, Pak Suzuki Motors has declared its 6th consecutive quarter making a loss.

Net sales during the quarter dropped massively by 50% to Rs. 17.74 billion, as compared with Rs. 34.44 billion in the same period last year. With the drop in sales, the cost of sales also decreased by 50% to Rs. 17.16 billion as compared to Rs. 33.32 billion. Gross profits dropped by 49% to just Rs. 572 million compared to Rs. 1.11 billion recorded in the same period last year. The decline in sales was due to increasing car prices and high-interest rates for car financing.

During the start of the year, Suzuki increased the prices of all of its variants in the range of 4-7%, which helped the company to maintain the gross margins at 3.25%. However, the company saw a gigantic slump in sales volume for cars and light commercial vehicles as the volumes declined by 63% from 36,412 units to 13,605 units.

Models 1Q2020 (Jan-Mar) 1Q2019 (Jan-Mar)  Difference
Swift 412 1101   -62.60%
Cultus 3946 6281   -37.20%
Wagon R 1576 8501   -81.50%
Mehran 05 9576   -100%
Bolan 1677 5398   -69%
Alto 4298
Ravi 1691 5555     -69.60%
Total 13,605 36,412   -63%

 

It is worth mentioning that Mehran had been discontinued by Suzuki last year and was replaced by Alto. Consequently, higher prices of vehicles have affected the sales volume of the company.

Suzuki saw a 223% increase in finance cost as lower customer deposits forced the company to rely on borrowings to finance its working capital requirements amidst high inventory levels as sales remain slow.

It reported a loss per share of Rs. 11.44 in this quarter as compared with a loss per share of Rs. 1.92 in the same period last year.

The company booked a net tax benefit of Rs. 384.39 million during the 1st quarter, 2020. It had reported a loss before tax of Rs. 1.32 billion and after the tax credit, the loss was minimized to Rs. 941.11 million during the above mentioned period.

While the previous quarter wasn’t impacted that much at the start by the coronavirus pandemic but in the last month, sales dropped by 50% on a month-on-month basis. This was the biggest drop in sales amongst the big three companies Honda, Toyota, and Suzuki. Now due to the lockdown, they have closed all operations and this will impact both the production as well as sales.

It is highly likely that the company will be seeking to increase the price of their cars as the dollar has devalued against the rupee (Toyota has already done this) and they will be looking to make up for the lost sales and profit.

It will be interesting to see how the company recovers from this because the current crisis has hurt the savings of its customers too and it will be hard for them to buy new cars. We see even tougher times ahead.


      • If there is loss then blame the dollar, if the prices are revised upwards blame the rupee.
        Stop making fool of the public. May all the liars and manipulators exit from our dear country. Ameen.

      • It is below that now and yet company did not announce to reduce prices significantly like they do on the slightest dollar devaluation.

  • They can get out of this Los if they stop making without AC cars like seriously a car cost more then a million that has no AC power windows etc are after that. if they Decreases the prices it will be good for All. Alto vxr should like around 1150 n ags around 1350
    Vx tou honi e ni chahiye

    • What features these companies are giving the buyer in these prices that you are asking them to remove the ac and other features. They will be pleased to do it but this wont stop their greed for money and they will not stop increaasing prices.
      Some regulatory mechanism/index should be intriduced to control this free for all price revision chaos. Only allowed to increase prices if it is justified. Transparent system required.

  • Company is manufacturing but not upgrading there Vehicle’s system like, AC, power window, deshbord, Main lights and interior space,air beg etc and price of those Vehicle’s are too high so because of that they are in loss and market value of company is going down day by day. In last i give you suggestion send some officers or marketing person’s of company in the field for survey you will get more information about your Vehicle’s and about company if price will be down may b sale more Vehicle’s in market.

  • Reduce your profit margins. The cost of your cars is 50 % of your selling price. In the last 20 years you people have fleeced general public and minted billions and billions without spending a penny from company Pocket. General public money in the form of advance payment for booking.

  • Auto industries is a big mafia like others, government should take inquirie against auto Industries

  • یہ جتنی سیل ھوئی ھے اس میں بھی 60 پرسنٹ پرافٹ ھی ھے ان کا ۔قوم اب سیانی ھوتی جارہی ھے

  • I agree with all those who have made the point that suzuki company in Pakistan is producing low quality cars. The quality is low and the prices are ridiculously high. I wanted to buy the new alto, it would cost me 1.6 million with all costs. But oh boys, the suspension was the worst than Mehran. After 50 miles of drive I felt as if I have travelled 500 miles. This I say, without exaggeration. It was like sitting on a wooden plank. Now imagine the exageration for yourself. AC in summer would refuse to work. It gives up on you, totally . The plastic they have used is worst than ordinary plastic crockery. I mean, its a toy which cost 1.6 million. To them a say good luck with this bad curry.

  • The way they have looted our nation in the name of 3rd class worst and over priced vehicles, i wish they suffer double loss in Q2. A middle class family who bought their Mehran (sorry teen dabba) is a fraud of the century. I mean is this really a car in such a high price? Now the legacy is still continue and they are keep on manufecturing cars with less features as compared to other countries which is again a question mark on our govt. Anyhow, finger crosed for Q2 report and waiting to see them suffering just like our nation suffered from many decades.


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