Pak Suzuki Motor Company (PSMC) held an analyst briefing earlier today that highlighted the company’s financial results for the 1st quarter of 2022 (1Q 2022), and its future prospects.
It expects a 5-10 percent drop in sales in the 2023 fiscal year (FY 2023) due to price hikes, interest rate hikes, and consumer finance tenure restrictions by the State Bank of Pakistan (SBP).
PSMC claims that 35 percent of its total sales are from consumer financing. According to details, about 40% of PSMC’s target customers are from rural areas whereas 60% are from urban areas.
The company claimed that its gross margins declined from 3.6% in 4Q2021 to 2.8% in 1Q2022. The decline occurred due to currency devaluation, higher inflation, and supply chain issues that caused freight costs to rise drastically. PSMC foresees, however, that the freight charges will decline in the coming months.
Delivery Delays and Swift’s Success
PSMC stated that it isn’t facing any serious ramifications of the ongoing chip shortage. It highlighted that the late delivery charges incurred in 1Q2022 will continue going forward but at a slower pace. It is also trying to manage the supply chain to make timely deliveries.
Suzuki also claimed to have received 6,500 bookings for the new Swift in two months. It added that these orders have gone far beyond the expected 1,500 orders in one month.
Suzuki has localized the production of its vehicles by the following percentages:
- Swift 35%
- Cultus 51%
- Wagon R 60%
- Alto 62%
- Bolan 72%
- Ravi 68%
Future Plans and Prospects
The company acknowledges the demand for hybrid and electric vehicles (EV) and plans to enter those segments in the future. However, it did not specify a timeline for the execution of that plan.
It added that the restrictions on Completely Built-Up (CBU) imports will not impact the company’s profitability. However, any restriction on Completely Knocked Down (CKD) imports will reduce its margins further.