The auto industry in Pakistan continues to face challenges, with declining sales, production shutdowns, and high taxes impacting local car manufacturers. Pakistan Suzuki Motor Company (PSMC) has also been severely affected, experiencing significant hurdles in 2023 that resulted in losses totaling Rs. 10.07 billion.

The main reasons for this considerable loss were a sharp drop in sales and high taxation, as outlined in the company’s financial results for the year.

There was a drastic decline in sales, with net sales revenue plummeting by almost 50% to Rs. 102.11 billion compared to the previous year. PSMC attributed this decrease to being non-operational for a significant portion of the year due to inventory shortages.

Key Points

Despite the sales decline, PSMC was able to increase its gross profit to Rs. 17.27 billion, up from Rs. 11.68 billion in the same period last year. This improvement resulted in a higher profit margin of 16.91%, compared to 5.77% in 2022.

Nevertheless, the company faced a notable rise in expenses. Administrative expenses increased by over 31% to Rs. 3.89 billion, while other expenses surged to Rs. 2.12 billion, significantly higher than the previous year’s Rs. 8.89 million.

Despite these challenges, PSMC achieved a profit before tax of Rs. 113.49 million, a substantial improvement from the Rs. 3.03 billion losses in 2022. However, hefty taxes amounting to Rs. 10.1 billion erased the entire profit, compared to Rs. 3.14 billion paid in the previous year.

Recent Car Sales Decline

Following a brief increase for a month or two, there has been another downturn in car sales. According to the latest report from the Pakistan Automotive Manufacturers Association (PAMA), there was an 8% decrease in month-on-month car sales, with 9,709 units sold in February 2024 compared to 10,536 vehicles in January 2023.

However, in a year-on-year analysis, there has been a significant 57% increase in car sales. Car manufacturers were able to sell 6,186 vehicles during the same period last year.

What are your thoughts on the current state of the industry and PSMC’s substantial loss? Share your views in the comments section.