Pak Suzuki is one of the leading brands currently operating in Pakistan. However, the not so New Year 2018 did not turn out to be quite fruitful for the company. The company has faced a drastic decline in their profits. According to one of the reports Pak Suzuki motor company limited faced a total decline of approximately 31% by the end of March 31st, 2018. In figures, this percentage approximately makes up to Rs. 904.14 Million which is without any doubt a lot.
Last year around the same time the company made an estimated profit of Rs. 1.30 billion. This also indicates that the shares of the company even dropped down. In March 2017 the shares of Pak Suzuki was around Rs.16 However this is the CEO of the company stand around Rs.11 only. Adding on even the gross profit have decreased 10% which makes about Rs.2.6 billion.
The sales particularly the net sale of the company was around Rs.31.51 billion last year. This year the net sale decreased to Rs. 23.89 billion. The company had even better Expectations this year but the figures changed dramatically. The main reason for this decline in the sale is probably because of continuously increasing prices of vehicles. It is no surprise that Pak Suzuki has increased the prices of cars several times in the year 2018. At one point the consumers were unhappy due to the quality and the features available in the cars. On the other hand, Pak Suzuki was focused towards increasing the prices rather than maintaining the quality. The prices of the cars why increased in January and then later in April. The only reason put forward by the company for this increased is the devaluation of Pakistani rupee against dollar.
The sales volumes are more likely to increase mainly due to increase in the earnings. According to the analysis made, the total increase in the earnings is about 24%. This increased credit can be given to increase in prices, whereas the actual unit sale has declined. Clearly, meaning that most of the profit which is being made by Suzuki now is due to increased profit margin.
On the other, if one tries to estimate the gross margin the results are indeed quite low. The gross margin stood at 8.3% which is probably due to Cultus. It is quite sad to see that only Cultus managed to perform well in the market. In comparison to other cars by Pak Suzuki which was launched this year.
The gross margin is further affected by depreciation in Pakistani Rupee against the dollar. Yet at the same time, it is even likely to suffer due to Japanese Yen appreciation against the dollar. The future sale of Pak Suzuki yet remains dicey. However if the company performed at the same pace, then the sales are likely to decline. People these days have numerous options available in the market at a lower cost. So the only edge company had over its competitors of being a cheap brand is even long gone. Therefore, Pak Suzuki needs to set new unique selling proposition in order to stay in the market.