Pak Suzuki to cease Mehran from next year

KARACHI: Leading automaker Pak Suzuki Motor on Thursday announced that it would cease production of its much sought-after and low-priced Mehran from next year, apparently in a move to launch new brand with modern features amid impending competition from Chinese brands.

“Management of PSMCL (Pak Suzuki Motor Company Limited) has decided to discontinue Model SB-308 (Mehran) from April 2019,” the car maker, having more than half of share in 260,000 market, said in a statement.

“Consequently, 23,821 units will be produced from September 2018 to March 2019.”

The company planned to produce 4,574 units of Merhan SB-308 VX and 19,247 units of SB-308 VXR.

Mehran has been a popular passenger car for over two decades because of its low price. It accounted for 33 percent of the company’s production of more than 144,000 units during the last fiscal year of 2017/18.

Analysts and car dealers said the elimination of the model might shock customers with low buying power.

“Customers might be deprived of a good bargain (as a result of discontinuation),” Syed Daniyal Adil, auto sector’s analyst at Topline Securities said. “But, upcoming Bravo by United Motors will fill in this gap,” Adil said.

Chinese Bravo is a chic contemporary passenger car of 600cc with all the modern features and touted as Mehran rival. It is expected to be launched soon.

Analysts said automakers fear competition from modern features-laden imported cars and upcoming entrants.

Kia, Renault, and Hyundai are also about to unveil cars as there is a robust demand in the market.

Adil said Pak Suzuki has already planned to stop production of VX in December.

“It might be part of a cannibalisation move as the company planned to rev up its Alto model (with 660cc).”

Mohammad Shahzad, an imported car dealer said foreign cars with attractive configurations could make up for elimination of low-priced local models. “But, the price of imported cars gets double after heavy duty structure,” he added.

The government allows import of three-year or above old cars with their annual import standing at almost 70,000 units.

Pak Suzuki posted a strong growth of 26 percent in sales during the last year.

Brokerage Topline Securities said much of the growth stemmed from robust sales of Wagon-R that increased 65 percent, followed by Cultus (rising 20pc) and Mehran (up 22pc). Total sales of light commercial vehicles, vans and jeeps stood at 258,632 in the last fiscal year.

An analyst said there is backlog that would continue to meet the customers’ needs till sometime.

Analysts said auto vendors might need to restructure moulds to meet new supply needs of Suzuki that claimed to have achieved 80 percent of localisation.

Pak Suzuki said all production and supply of the parts should be in accordance with the firm schedules.

“The last order from suppliers for imported materials must be done in accordance with the stock available at supplier’s premises, orders in pipeline and stock at PMSC,” it said.

“The suppliers who are using local materials are also advised to strictly follow the firm orders of PSMC before the placement of last order for procurement of local materials.”