KARACHI: Sales outlook for a leading Japanese local car assembler appears positive for the current and next fiscal year after getting additional orders for supply of 50,000 vehicles to the Punjab government.

The Pak Suzuki Motor Company Limited (PSMCL) has entered into an agreement with Bank of Punjab last week for sale of 50,000 units of Suzuki Ravi and Suzuki Bolan Van under “Apna Rozgar Scheme” of Punjab government.

The car assembler informed the stocks exchanges this week that these vehicles will be supplied from October 2014 to October 2015.

This sale of vehicles will improve the profitability of the PSMCL which enjoys over 50 per cent market share.

Punjab government has allocated Rs 25 billion for the taxi scheme in its 2014-2015 budget.

The Punjab government will acquire vehicles from local assemblers which will be used as taxi in rural areas

Auto analysts at brokerage houses believe that the Rozgar Scheme can lift PSMCL’s expected earnings in 2014-2015 by 13 to 20pc.

PSMCL has capacity to produce 3,000 units per month each of Ravi and Bolan on three shifts. The company sold 14,000 units of Bolan and 11,700 units of Ravi in calendar year 2013 (CY13).

The company also produces 150,000 units (on double shift basis) and sold 76,000 cars/LCVs during CY13 compared to 96,000 cars/LCVs during 2012.

Earlier in 2012, the Punjab government, under its taxi scheme, had given an order of 20,000 cabs to PSMCL. The cabs produced under the scheme had 60pc share (12,000 units) of Suzuki Mehran and 40pc (8,000 units) of Suzuki Bolan.

Market sources said that the it seems that the Punjab government has given entire contract of vehicle manufacturing for taxis to Pak Suzuki while there was another assembler – Al-Haj FAW (local assembler in partnership with Chinese FAW group), which was also capable of producing small pickup-vans.

Though the Chinese group is capable of producing vehicles like FAW X-PV and FAW-Carrier but PSMCL remains a major beneficiary given its huge capacity and long association with the Punjab government in earlier schemes.

The Punjab government will take the vehicles from local assemblers which will be used as taxi in rural areas for mass transportation.

When an official in Al Haj FAW was asked to comment on Punjab government’s decision of giving entire assembly of units to PSMCL, the official said his company was still in negotiation with the Punjab government and hopeful that the government would consider its request in giving some share in providing vehicles to Rozgar Scheme.

Published in Dawn, August 2nd , 2014