Pak Suzuki set to launch Wagon R on April 18th 2014

KARACHI: Pak Suzuki Motor Company (PSMC) is expected to launch its Wagon R model on April 18.

 Pak Suzuki’s authorised dealers said that Wagon R G2 model will be launched by the end of of the current month.

 Atif Zafar, at JS Research, said that the details and specifications of the car are not yet clear. But he added that it appears the price will be in between the Rs.8,00,000- Rs.10,00,000.

 Zafar said that the PSMC’s latest addition – with an engine size of 1,000CC – will fill the gap in the small-car segment after the discontinuation of Alto. It was learnt that it will be assembled in Pakistan

 Pak Suzuki has also been pursuing the government to allow import of parts from India. Zafar said if this materializes, trade with India could potentially open doors for the re-launch of Alto as well.

 The move is expected to significantly improve PSMC margins going forward; on the back of recent Pak rupee gains vis-à-vis US dollar and Japanese Yen.

 It is said that apart from rupee gains, PSMC’s operational efficiencies from additional production of Wagon R are also likely to drive up PSMC gross margins further.

 Tahir Saeed Auto analyst at Topline Research said that Pak Suzuki’s launch of a new model car in the small segment will bode well for the customers and the company.

 He said consumer generally prefer Suzuki cars ahead of other brands.

 The reason is nothing but the affordable price and new design.

 After the shutting down production of Alto VXR, Pak Suzuki had been trying to deciding which car to manufacture in Pakistan; the replacement is the Wagon R.

 Saeed said that it will fill the gap of Alto and Daihatsu Coure which were discontinued. Pak Suzuki has completed their home work and is now set to launch Wagon R Pakistani Built/Assembled by the end of April 2014.

 The model has a good reputation in the automobile market as used ones are being imported.

 Offered with Dual Air Bags, Disc Brake, Powered Windows, Power Steering , GPS and Automatic Transmission, it has given more pricier models a run for their money.

 However, it unclear at the moment whether the model launched in Pakistan will have the same features or not, he added.

 Zafar on the other hand said that the Wagon R sales and margins improvement post Pak rupee appreciation mean earnings estimates for PSMC by 16percent to 20percent over 2014-15F.

 He added that we have incorporated Wagon R sales of 10,000-12000 units in 2014E/15F, taking our cue from average 13,000 annual unit sales of Alto prior to its discontinuation.

 It is estimated that annual sale of every 10k units of Wagon R would likely deliver a positive earnings impact on the company’s earnings.