Suzuki Company needs to consider more positively on a larger segment of the automobile industry having 1300CC to 1800CC cars. The company is doing great in smaller segment (800cc to 1000cc) cars achieving the highest market share. Suzuki has got the majority of the market share (62 percent market share), and still needs to think about the high segment seriously. One of the foreseeable events, the third phase is “Global Era” for Pakistan automobile industry, this era starts from 2012 onwards in which the auto industry will be transforming itself for achieving the global player by increasing their value-added production, in that particular area Pak Suzuki has no specialities. With the start of “Global Era Phase” due to mass production level the industry experts are anticipating to accomplish the maximum scales supported by the size of GDP of $210 Billion by 2012 and Per capita income which will be reaching $ 1,300. Globalization and dynamic environment lead the auto industry for moving towards the development of skilled people, acquisitions, technological development, advancement of Infrastructure and living conditions/standards, all these factors push the auto industry to produce fuel-efficient, high living standard and environment-friendly vehicles along with meeting or exceeding customer expectations. Consumers still have a lot of queries about quality, safety and after-sale service along with relatively less fuel-efficient engine technologies and features of the cars are still the increasing challenges for the Pak Suzuki Motor Company Limited.
The major problem that the Suzuki Company is facing currently is the form of Suzuki LIANA, which is unable to fulfil the customer’s needs and not able to maintain itself in the market it was made for. Although the company has continuously focused on higher segment, recently company introduced a new model known as Suzuki SWIFT in the market, and it looks quite attractive move of the company in the 1300cc class. But still company has done not much to compete with HONDA and TOYOTA.
Background:
Pak Suzuki Motor Company Limited is a joint venture between Pakistan Automobile Corporation and Suzuki Motor Corporation (SMC) – Japan. The Company was introduced as a public limited company in August 1983 and started commercial operations in January 1984. At the start SMC got the market share of 12.5% and increased it to great extent reaching 73.09%. Pak Suzuki has annual production capacity of 150,000 and with largest manufacturing facilities, PSMC is considered as being the biggest player in automobile business. The company consists of huge product line including cars, small vans, Cargo vans and Motorcycle. PSMC strictly followed the aggressive policy of Indigenization, /The ability to put together a product singly within a country instead of relying on foreign producers or suppliers. Suzuki vehicles have a healthy regional content with up to 72% due to strong support of dealers.
PSMC has the Dealers network on a large scale comprise of 3S (Sales, Service and Spare Parts) which facilities all across Pakistan. PSMC is also focusing on fulfilling social responsibility in which taking care for the Environment Pak Suzuki is the first to institute Factory fitted CNG motor vehicles. PSMC always attempts to achieve a goal aggressively for the purpose of developing a society by increasing industrialization and improving the quality and standard of life by creating job opportunities with the combined efforts of all the dealers, vendors and Pak Suzuki employees. The major automobile companies in Pakistan have been set up as joint venture with foreign multinational companies.
Suzuki’s product line:
SWIFT (1300cc), LIANA (1300 & 1600 cc), CULTUS (1000cc), ALTO (1000cc), MEHRAN (800cc), APV (1500cc).
VISION
Excellence in all respects.
MISSION
Our mission designed to realize the vision is providing automobiles of international quality at competitive price in order to improve skills of valued employees by providing training and inculcating in them a sense of motivation for participating and achieving maximum indigenization and promoting Pakistan`s automobile vending industry in order to make valuable contribution to social development of Pakistan through development of industry in general and automobile industry in particular.
Recent Developments in Automotive Industry:
Pak automotive industry has presently concentrated on creating system improvement, technological expansion and skills refinement depending on forward and backward integration and all these factors supply assistance to the rest of the technical and engineering sector as well. As localized material is being used in mass production, industry’s backward integration for materials and tooling’s such as steel, aluminium, copper, plastics & chemicals, rubber & glass and its forward linkages in the shape of retail & wholesale, franchise & management, workshops & maintenance, filling stations, money matters & indemnification, marketing, advertising and consultancy services and exchange of good and services, it stands to reason that all these factors plays a significant role in the enlargement of auto industry regarding future as well. Considering the other side of the picture, material prices are reduced in overseas markets in order for organizations to reduce per-unit cost and increase revenues.
Government Reforms for Automotive Industry
Now automotive industry is slowly becoming a global thespian by gaining competitiveness, critical mass production and contribution to Pakistan s’ GDP 5.6% by 2012 through attracting domestic and foreign investment in the auto industry and development of human resource through a well-constructed policy framework and for the development of new innovative technology. Regarding the next five years which will be offering many challenges and obstacles, important is being continuing the high growth, achieving competitiveness, invest in compliance for safety and quality of management standards. The targets set by the government and automotive industry together can only be achieved by inclusive policy development due to which cross sectional issues can be addressed. The government of Pakistan has taken the initiative with Automotive Industry Development Program (AIDP) for the sake of addressing issues including the predictability of auto production and stable tariff for the next five years. The (AIDP) undertaking by the government for the development of the automotive industry. The Engineer Development Board (EBD) is given the authority for the implementation of this program in order to boost car production capacity till half a million units along with attracting the investment of US$ 3 Billion and reach the auto export target of US$ 650 Million.
The lower-cost production issues to compete in international market, are focusing on adopting new global emerging trends and dynamics of fuel efficient with environment-friendly vehicles in order to contribute in GDP remain dominant in the policy environment. Unless and until fuel prices are increasing, the demand to produce fuel-efficient and hybrid cars are also under the consideration. The role of foreign investors and their interest in the automotive industry represents about majority of potential and growth opportunities for production and export. Pakistan Automotive industry has positioned to become a global choice for outsourcing and becoming the part of the global supply chain. The government of Pakistan had undertaken major of initiatives in the form of National Trade Corridor Improvement Program (NTCIP) that decreases inefficiencies in the cost of doing business, boosting economic growth and export competitions.
Competition
Indus Motors Company Pakistan
Indus Motors Company Pakistan production equipment are presented at Port Bin Qasim Industrial Zone near Karachi in an area covering over 105 acres. Indus Motor Company s’ plant is the only assemble site in the world till now where both Toyota and Daihatsu brands are being constructed. Major findings are made to build its production facilities depending on state of art technology. To ensure high rise in productivity, Toyota production systems are applied. Indus Motors Company Toyota manufacturing line has six alternatives of the newly introduced Toyota Corolla, Toyota Hilux Single Cabin 4×2 and versions of Daihatsu Cuore.
Toyota Corolla
The Toyota Corolla car has been achieving success as a strong brand since 1970 in Pakistan whereas Toyota Corolla was not manufactured in Pakistan but at an import basis this brand tremendously took place in the Pakistan automotive market. The most demanded series of Corolla are 1976, 1978, 1986 and the list of early series of the models is still being considered as quiet powerful and memorable brands. Toyota Corolla has assembled progressive manufacturing and marketing techniques in Pakistan since July 01, 1990. Corolla brand has already established itself in the Pakistan auto market. So there was no specified struggle made to establish the brand.
Toyota Corolla is a well-standardized product in the market and its current series is 1300cc XLI, GLI Cruisetronic in each of the product they provide state of the art features, reliability and serviceability to make further loyal customers.
Increasing trends in higher segments
After the disaster that took place on September 11, 2001 increased in the home remittances it resulted in much higher liquidity in the market hence, people started to invest in cars. During that time growth in high capacity car s’ segment increased. It became super easy to buy new cars due to taking loans for purchasing cars provided by banks. In order to fulfill rising demand the automotive production capacity increased. Because of that mass production the domestic car engine technology lags years behind the world markets and people were not even able to get the positives of new technology.
Problems of Suzuki in Higher Segment Cars:
/Suzuki has been more attentive on price determination in higher chunk of cars rather than maintaining quality and giving innovative ideas. Suzuki has more than 50% portion in low segment vehicles which is allowable but on the other hand it’s lacking far behind in higher segment cars. The progress of highly skilled human resource and partnership with business person, acquisition of technology and infrastructure, absorbing the environment changes will drive the automotive industry to produce high living merits, fuel structured and environment friendly vehicles in much better price range along with rewarding the customer requirements and expectations. The consumers query on status, protection and after sale services along with relatively less experienced engine technologies and features are still the major oppositions for the automotive industry of Pakistan, mainly for Pak Suzuki Motors Company Limited.
Major disappointment to Pak Suzuki Motors Company Limited (PSMC) was in the shape of Suzuki LIANA and BALINO, which was not able to compete 100% similar with its competitors, Honda city, Honda civic and Toyota corolla and due to being unable to meet the customers’ assumptions they could not grasp the market. But for PSMC it’s tour didn’t stopped there, and now Suzuki SWIFT has not long ago been launched in the market, which seems to be an appealing offer for the auto market in 1300cc portion, but still PSMC has nothing to compete with HONDA and TOYOTA/. The prominent benefits of loyal customers before starting production of Toyota Corolla brand in Pakistan are that they didn’t need to struggle much to provide awareness because of strong brand loyalty perception. So talking about higher segment (1300cc to 2000cc) cars Toyota Corolla is the leader in Pakistan followed by Honda and then Suzuki.
Now Suzuki is focusing more on its production to meet the market demand in small 800cc and 1000cc cars segment. The reason behind it was that the deletion program has been replaced by tariff based program from year 2006 in order to encourage local automobile part manufacturers to enhance their productivity and reduction in the price as there are incentives in terms of using local parts. So far it was helpful in reducing the price of cars but on the other hand it caused serious issues regarding maintaining quality and innovation. Pak Suzuki has greater advantage then Honda in this policy because the Suzuki has a perception of low cost normal quality car by using local manufacturing auto parts. Suzuki did not faced serious decline in its perception when using the local manufactured auto parts if Honda uses local parts their perception of high quality could decline. So decline in technology will destroy the customer s’ confidence on brands and consumers focus will be shifted on imported vehicles.
Recommendations:
One of the events that cannot be ignored called the third phase is “Global Era” for Pakistan automobile industry, this era starts from 2012 onwards in which the auto industry will change itself for the purpose of becoming a global player by increasing their value-added production. With the start of “Global Era Phase” due to mass production level the industry experts are anticipating for achieving the huge scales which is supported by the size of GDP of $210 Billion by 2012 and Per capita income reaching to $ 1,300. Globalization and dynamic environment leads the auto industry towards the development of skilled people, acquisitions, technological development, advancement of Infrastructure and living conditions/standards, all of such factors will push the auto industry to Produce fuel efficient, high standard and environment-friendly vehicles, and at the same time meeting or exceeding customer expectation. To fulfill the above stated requirements it needs to focus more on product development, technology, R&D, and innovations, Pak Suzuki lacks the expertise in all these areas, so in order to earn maximum profits in higher segments and to remain in competition with Toyota and Honda, strategically Pak Suzuki has to think about how to overcome it on a very serious note.
I’m Bilal Khan Doing Masters in business administration from foundation university Rawalpindi campus with a keen interest in business studies and I write according to my Business Interests.
