AURORA: Let’s start with a little bit about yourself and your vision for Pak Suzuki.

HIROSHI KAWAMURA: I joined Pak Suzuki in May 2023. I began my career at Suzuki in 1998 in product marketing for automobiles. This was the start of my journey to seek my own identity as a business person. I first thought I would make my career in marketing. However, given my academic background in finance and accounting, I was also interested in the operational side, especially accounting and finance. So, although I started in marketing, I switched to the sales department, where I had to look at the profitability of the subsidiary I was working for. That was when I began to think about working on the management aspect. I was offered a post in Mexico where I worked in administration, finance and HR. The company in Mexico was very small, and this gave me the opportunity to work on a wider plane, and I tried to touch every aspect of the company’s operations – HR, payroll, salary valuation systems, accounting, internal controls and governance. After that, I was transferred to Germany, where I concentrated on marketing and sales. I visited dealers, worked on product planning and on introducing and marketing new products. I have always preferred the academic approach. Read and learn, and then try to practise the theory in the business itself. In this way, I developed my knowledge of the business; gaining expertise in marketing as well as in administration and finance. Then, I was appointed as president of Suzuki Italy. Here, the job was to act as an importer of Suzuki automobiles and motorcycles from Japan, India and Hungary, which were then sold to our dealer network. This gave me the opportunity to learn and develop management skills. Suzuki Italy was more of a sales-oriented company. Next came Pak Suzuki, a company that has a production arm, and it is a totally different world. I am now learning other aspects of the business. Pak Suzuki is the market leader in Pakistan, and we have a lot of stakeholders, including suppliers and dealers, and we also work with the government. The scope here is even wider, and it is a very good opportunity to learn more about the business. This has been the path of my career development. Rather than fix a vision for myself at the start, through learning and experience and by taking advantage of the opportunities that came my way, I enhanced my business skills and modified my direction.

A: Would it be correct to say the opportunities in Pakistan lie in the fact that Pak Suzuki is also a manufacturing hub?

HK: Yes, and the fact that we are the market leader with over a 40% market share. We are responsible to society and the government, and we take this very seriously.

A: Things have changed significantly in the last four or five years in terms of new entrants. Before, one spoke of the big three – Pak Suzuki, Indus Motors and Honda Atlas Pakistan, but this landscape is changing and today a great deal of criticism is directed at all three companies in that what is produced in Pakistan is not equivalent to what is offered in other markets in terms of safety – particularly airbags – and other features. The perception is that we are not offered the best, and to some extent, this has enabled the Chinese manufacturers to come in and say, we are giving you future-looking cars. How do you respond to these challenges?

HK: Pak Suzuki was established in 1983 as a popular car for the masses. Our mission is to provide affordable vehicles to the people of Pakistan. It is always possible to introduce new features, but there is always a trade-off with the price. The question is, what is the priority – affordability or added features?

A: Even in terms of safety?

HK: When it comes to safety, we have to think in terms of encouraging more disciplined driving. For example, airbags are helpful in enhancing safety, but first of all, drivers and passengers must use their seat belts, because without the use of seat belts, airbags are dangerous. First, we have to educate our customers to use their seat belts. Internally, we are discussing the possibilities of starting an activity that would educate our customers. Rather than increasing features and increasing prices, maybe we should be looking at starting a driving school.

A: Changing driving habits is going to be a very hard task in Pakistan.

HK: When I was a child in Japan, we did not wear seat belts. But through government policies and local education, we became used to wearing seat belts, and today the adoption rate is 100% in Japan. So it is not an impossible task. Also, there is a penalty if we don’t use our seat belts. We would like to discuss with the government how to implement safety rules more strictly in Pakistan. But first of all, we would like to start by establishing a driving school nationwide by working with our network of 170 dealers.

A: I understand the trade-off between price and enhanced features, but given the competition coming from Chinese cars, is Pak Suzuki thinking of introducing similar features?

HK: It depends on the size of the car. Our cars are much lower in price compared to Chinese cars, which are targeted at a different customer segment. Maybe their customers can afford to pay for these features, but our customers are not always ready to pay. In this regard, we are always researching and listening to the feedback from our dealers. If it becomes essential to introduce new features, we will do so; technologically, we can do it. But it is still too early. On balance, pricing still remains the priority.

A: Where does Pak Suzuki stand on EVs?

HK: EVs are one solution to protect the environment. On the other hand, there are a lot of shortcomings; the mileage is about 200 to 300 kilometres, and there are no charging stations. Localisation is difficult because the main component of an EV – the battery – is very expensive, and to establish a battery factory, huge volumes are necessary, and they are not there at present. Also, the components for EVs are different from the cars we are producing, so without introducing new technology, we cannot localise the parts. Our vision has always been to grow together with the industry and with the people of Pakistan. To develop our supplier group, support them and create jobs for Pakistan’s automobile industry. But if we introduce EVs, we cannot localise the parts immediately. Then there is the fact that the value of a used car is different. The current value of our used cars is good. With EVs, the major cost is the battery, and when the battery deteriorates, the value of the car goes down. However, once volumes go up, it will be worthwhile to produce such cars locally.

A: Globally, what does Suzuki’s EV landscape look like?

HK: India is our biggest EV market. We produce in India and export to Europe and Japan.

A: India started off with the same basic issues with EV production.

HK: Yes, but the market volumes are totally different. In India, we produce two million cars, and we have a market share of 40%, so we sell 50,000 to 60,000 cars per year, including EVs. In Pakistan, we sell 100 or 200 cars per year, and with those volumes, we cannot make the required investment.

A: What about EV motorcycles?

HK: We recently introduced EV motorcycles in India. But as we cannot import some of the components from India, technically, it is not possible to introduce EV motorcycles for the time being. On the EV question, we have a different approach. There are multiple ways to achieve carbon neutrality and protect the environment, and EVs are just one solution. Pak Suzuki is taking a unique approach and working on biogas. Biogas is made up of 95% methane, which is the same as CNG. CNG energy vehicles used to be produced in Pakistan by Pak Suzuki. Biogas is produced using cow dung and agricultural animal and food waste – and this is what we are working on.

A: Have you done this before?

HK: In India, we are already running some vehicles on biogas. Technology-wise, it is the same as running a CNG car. We are starting this initiative in Pakistan with the construction of our first biogas plant in Manga Mandi near Lahore.

A: When will this actually start?

HK: We held a ground-breaking ceremony at the end of April and invited the Special Assistant to the Prime Minister for Industries and Production.

A: Why have you opted for biogas?

HK: It is a very realistic solution for Pakistan, because the country has about 70 million buffalo and cows, and at the moment, the dung from these animals is contaminating the environment. If we use this waste in a productive way, this will be very beneficial for the environment as well as for the animal farmers. They will be able to sell the dung to our factory to produce biogas. The biogas can also be used to run some factories. Also, in the process of producing biomethane, bio-fertiliser can be produced – and in the agriculture sector, the volumes of fertiliser are insufficient – and therefore, we will be able to provide fertiliser to farmers as well. Biogas will be very beneficial to everyone in every direction. For the farmers, for agriculture and for the fertiliser sector. It will be a very beneficial and realistic solution for Pakistan compared to EVs.

A: What are the next steps in this process?

HK: We will first establish our pilot plant to prove the feasibility of this business, and once it is proved, we will continue investing in this direction. We will try to gather local investors. We also have our dealer network, so we have a lot of stakeholders who are interested in this type of business. We aim to establish 1,000 biogas factories by the end of 2030.

A: Isn’t that a very ambitious target?

HK: In Pakistan, there are already 5,000 biogas plants.

A: Who is running them?

HK: They are very small, and the biogas produced cannot be used as fuel for cars; they require additional facilities to purify the gas. So, yes, it is realistic to aim to establish 1,000 biogas plants.

A: How much is Suzuki investing in this?

HK: We have not finalised this, but the total cost may be approximately 200 million rupees per plant.

A: Pak Suzuki has signed an MOU with the University of Agriculture in Faisalabad. Is this part of the same project?

HK: Yes. We were looking for a partner for this project and we contacted several fertiliser manufacturers. But when we contacted the University of Agriculture, we found that they had the skills to develop biofertilisers. They already have two or three biogas plants. They have the knowledge to set up a biogas business.

A: How have Pakistan’s recent economic difficulties impacted car sales, and how have you dealt with this?

HK: The worst time was when I came to Pakistan in 2023, especially as imports of automobile components were restricted. Our first priority was to support our suppliers and dealers. They are very important partners. Pak Suzuki is a subsidiary of the Suzuki Motor Corporation, Japan, and for them Pak Suzuki is a very important subsidiary affiliate, because Pakistan was the first country where our automobiles were produced outside Japan – added to which, Pakistan is now the number one manufacturer in terms of market share. In this context, Suzuki Motor Corporation is totally committed to Pakistan and, despite the hard times, they supported us. However, our suppliers and dealers are independent partners, and if they go bankrupt or the industry collapses, it cannot be revived, and this is why our priority was to concentrate on helping them sell volumes. We worked on increasing the volume by sacrificing our profit, and to at least stabilise at a minimum of 40,000 units to keep our stakeholders alive. That was our mission.

A: Now that the situation is easing, do you think you can go beyond 40,000 units?

HK: Yes. Interest rates are going down, the customer mindset is improving, and they are ready to buy. A lot depends on the government policy, but the market situation has improved in the last two years.

A: Are you satisfied with the current government policies?

HK: Basically, the government is very helpful in supporting the automobile industry. Sometimes there is a discussion point, but overall, the government has been very helpful in assisting our industry to survive.

A: To what extent are Pak Suzuki parts localised?

HK: To proceed to localisation volume is very important. For example, to localise the headlight of an Alto requires an investment of two billion rupees for manufacturers, and then they have to advertise. So if the volume is small, localisation is not feasible. Volume is very important. Our localisation target is over 60%.

A: What is the present rate of localisation?

HK: For the Alto, over 70%. For the other cars, we are aiming for at least 50%.

A: What is not localised?

HK: The engine components. Some parts of the engine can be localised, but not the total engine, because the volumes are missing. High-tech parts, like airbags, are not localised because the technical assistance is missing. For high-tech parts, we need technical partners, and unfortunately, many global supply players hesitate to come to Pakistan due to the instability or the market conditions and because the volumes are still too small.

A: Which is the best-selling Pak Suzuki car?

HK: The Alto. Then the Swift.

A: Do you have plans to introduce a higher CC car in the market?

HK: We are planning to introduce new vehicles in the higher car segment.

A: Will such cars not be competing with the existing Chinese cars in the market?

HK: We can compete with these cars.

A: Even price-wise?

HK: I hope so.

A: What is your ambition for Pak Suzuki for the next three years?

HK: To remain committed to our mission; to grow together with the people of Pakistan. We would like to collaborate and cooperate with the government in making policies, and of course, expand our business. Additionally, we want to put our biogas project on a firm footing. As the market leader in Pakistan, we have a social mission to contribute to the sustainable growth of Pakistan’s automobile industry. Finally, we would like to make Team Pak Suzuki a very advanced organisation with a competitive edge. This is my mission.

Hiroshi Kawamura was in conversation with Mariam Ali Baig. For feedback: aurora@dawn.com