A major Pakistani-based automaker has threatened to shift its investment for a new plant worth $400-500 million to Iran from Pakistan citing dearth of incentives for assemblers in the neighboring country.
Pak Suzuki Motor Company, an affiliate of Suzuki Japan that has over 50% market share in the South Asian country, informed the Islamabad government a few months ago of its plan to make big investments and work on vendor development and new models for the regional market.
“We may shelve our investment plans in Pakistan besides rolling out new models as the ADP (automotive development program) has nothing to offer,” spokesperson for PSMCL Shafiq Ahmed Shaikh said.
The car industry was dissatisfied, as the new Pakistani policy lacked assurance of a level-playing field for all automakers and assemblers, Dawn reported the company spokesperson as saying.
Pak Suzuki has planned an overall investment of over $1 billion in coming years in technology transfer through joint ventures with the Japanese auto sector.
“It seems the [Pakistani] government does not want investment from Japanese assemblers,” he said.
Sources close to the matter have said Iran has become an attractive country in terms of investment after the lifting of sanctions and many companies, including leading car manufacturers of the world, are considering setting up their plants in Iran.
Suzuki's currently relationship with Iranian car manufacturers is limited to only a couple of models, including the aging Grand Vitara and the Kizashi models. The company has attempted to grow its market share but has focused more on the subcontinent market due to its low cost of entry.
Suzuki's Iranian partner Iran Khodro produced 4,393 Suzuki Grand Vitara vehicles during the Iranian year that ended March 19, 2012. The company currently produces several cars and motorbikes, including the Persian sounding Mehran, Swift, Wagon R and Kizashi, the latter also being produced in Iran in small numbers.
Pak Suzuki may find it difficult to enter the Iranian market considering two of their models, which were either being produced in Iran at some point or now ceasing production, will be competing with similar Chinese offerings at a lower price.
Suzuki also produces several small and large motorcycles, including Inazuma Aegis, Inazuma, Intruder and Hayabasa.
