PACRA Upgrades Entity Ratings of Pak Suzuki Motor Company Limited

The ratings of Pak Suzuki Motor Company Limited (hereinafter referred to as “PSMC” or “the Company”) reflects a robust business profile, anchored by its prominent position among the leading automotive original equipment manufacturers (OEMs) in Pakistan. The Company assembles and manufactures a wide range of vehicles locally, maintaining a dominant presence in the small and mid-sized car segments. PSMC operates the most extensive nationwide dealership network and continues to play a pivotal role in shaping Pakistan’s automotive landscape. As a wholly owned subsidiary of Suzuki Motor Corporation, Japan (SMC-Japan), PSMC benefits from strategic and operational support. The automotive industry in Pakistan is undergoing a structural shift from traditional dominance to a more competitive, multi-brand environment. New entrants such as Kia, Hyundai, Haval, MG, Changan and etc. are introducing product innovation, particularly in SUVs/crossovers, hybrid, and electric vehicle segments, expanding consumer choices across various categories. According to Pakistan Automotive Manufacturers Association (PAMA) data, passenger car sales recorded a recovery of ~38% in FY25, reaching 112,203 units from 81,579 units in FY24. Similarly, the light commercial vehicle (LCV) & jeep segment grew by ~61%, reaching 35,820 units compared to 22,250 units in the prior year. Aligned with these industry trends, PSMC demonstrated a marked improvement in sales performance during CY24 and 1QCY25. The rating upgrade incorporates PSMC’s strengthened market position, improved financial performance, and enhanced profitability metrics, which are expected to be sustained, as reflected in the Company’s projections. PSMC’s best-selling model remains the Suzuki Alto, followed by the Swift, Cultus, and Wagon R, all of which continue to appeal to buyers through their reliability, value offerings, and differentiation in features. PSMC holds an estimated ~60% market share among PAMA-member companies in the passenger car segment and achieved ~43% capacity utilization during CY24 (CY23: ~27%). The motorcycle division achieved ~45% utilization during the same period (CY23: ~36%). Looking ahead, the industry faces emerging challenges as new players have captured a meaningful share of the market. While their direct impact on PSMC’s core 1,000cc and sub-1,000cc segments has been limited thus far, the future entry of Chinese manufacturers in this segment with competitive pricing strategies could exert pressure on sales of these categories. Moreover, increasing imports of used vehicles may introduce another layer of competition. On the regulatory and compliance side, achieving the export targets set under the Auto Industry Development and Export Policy remains a challenge, primarily due to the sector's reliance on imported completely knocked-down (CKD) kits. This reliance limits the industry's ability to remain price-competitive in international markets, constraining export potential, and requires a comprehensive going-forward strategy. The financial risk profile of the Company is characterized by healthy cashflow generation and an efficient working capital cycle. The Capital structure remained low-leveraged, with a modest portion of TERF as long-term borrowing, while short-term borrowing limits remain unutilized. PSMC relies on internal cashflows for necessary CAPEX. After settlement of all accumulated foreign liabilities, the Company reported a foreign exchange gain during CY24.
The ratings are dependent on the Company’s ability to sustain its market share, maintain profitability and growth momentum, and ensure continued compliance with applicable regulations and policy frameworks.

About the Entity
PSMC is a wholly owned subsidiary of its Parent Company, SMC-Japan, which holds ~99.12% of the stake in the Company. The control of the Company vests with the Board of Directors, which comprises seven members. The Chairman of the board is Mr. Masafumi Harano.