AURORA: Let’s start with a littlebit about yourself and yourvision for Pak Suzuki.
HIROSHI KAWAMURA: I joinedPak Suzuki in May 2023. I beganmy career at Suzuki in 1998 inproduct marketing for automobiles.This was the start of my journey toseek my own identity as a businessperson. I first thought I would makemy career in marketing. However,given my academic backgroundin finance and accounting, I wasalso interested in the operationalside, especially accounting andfinance. So, although I started inmarketing, I switched to the salesdepartment, where I had to lookat the profitability of the subsidiaryI was working for. That was whenI began to think about working onthe management aspect. I wasoffered a post in Mexico where Iworked in administration, financeand HR. The company in Mexicowas very small, and this gave methe opportunity to work on a widerplane, and I tried to touch everyaspect of the company’s operations– HR, payroll, salary valuationsystems, accounting, internalcontrols and governance. Afterthat, I was transferred to Germany,where I concentrated on marketingand sales. I visited dealers,worked on product planning andon introducing and marketingnew products. I have alwayspreferred the academic approach.Read and learn, and then try topractise the theory in the businessitself. In this way, I developedmy knowledge of the business;gaining expertise in marketingas well as in administration andfinance. Then, I was appointedas president of Suzuki Italy. Here,the job was to act as an importerof Suzuki automobiles andmotorcycles from Japan, Indiaand Hungary, which were thensold to our dealer network. Thisgave me the opportunity to learnand develop management skills.Suzuki Italy was more of a sales-orientedcompany. Next camePak Suzuki, a company that hasa production arm, and it is a totallydifferent world. I am now learningother aspects of the business.Pak Suzuki is the market leaderin Pakistan, and we have a lot ofstakeholders, including suppliersand dealers, and we also work withthe government. The scope here iseven wider, and it is a very goodopportunity to learn more aboutthe business. This has been thepath of my career development.Rather than fix a vision for myselfat the start, through learningand experience and by takingadvantage of the opportunitiesthat came my way, I enhancedmy business skills and modifiedmy direction.
A: Would it be correct to say theopportunities in Pakistan lie inthe fact that Pak Suzuki is alsoa manufacturing hub?
HK: Yes, and the fact that we arethe market leader with over a 40%market share. We are responsibleto society and the government,and we take this very seriously.
A: Things have changedsignificantly in the last fouror five years in terms of newentrants. Before, one spokeof the big three – Pak Suzuki,Indus Motors and Honda AtlasPakistan, but this landscapeis changing and today a greatdeal of criticism is directed atall three companies in that whatis produced in Pakistan is notequivalent to what is offeredin other markets in terms ofsafety – particularly airbags– and other features. Theperception is that we are notoffered the best, and to someextent, this has enabled theChinese manufacturers to comein and say, we are giving youfuture-looking cars. How do yourespond to these challenges?
HK: Pak Suzuki was establishedin 1983 as a popular car for themasses. Our mission is to provideaffordable vehicles to the peopleof Pakistan. It is always possibleto introduce new features, butthere is always a trade-off withthe price. The question is, whatis the priority – affordability oradded features?
A: Even in terms of safety?
HK: When it comes to safety,we have to think in terms ofencouraging more disciplineddriving. For example, airbags arehelpful in enhancing safety, butfirst of all, drivers and passengersmust use their seat belts, becausewithout the use of seat belts,airbags are dangerous. First, wehave to educate our customersto use their seat belts. Internally,we are discussing the possibilitiesof starting an activity that wouldeducate our customers. Rather thanincreasing features and increasingprices, maybe we should be lookingat starting a driving school.
A: Changing driving habits is goingto be a very hard task in Pakistan.
HK: When I was a child in Japan,we did not wear seat belts. Butthrough government policiesand local education, we becameused to wearing seat belts, andtoday the adoption rate is 100% inJapan. So it is not an impossibletask. Also, there is a penalty if wedon’t use our seat belts. We wouldlike to discuss with the governmenthow to implement safety rulesmore strictly in Pakistan. Butfirst of all, we would like to startby establishing a driving schoolnationwide by working with ournetwork of 170 dealers.
A: I understand the trade-offbetween price and enhancedfeatures, but given thecompetition coming from Chinesecars, is Pak Suzuki thinking ofintroducing similar features?
HK: It depends on the size of thecar. Our cars are much lower inprice compared to Chinese cars,which are targeted at a differentcustomer segment. Maybe theircustomers can afford to pay forthese features, but our customersare not always ready to pay. In thisregard, we are always researchingand listening to the feedback fromour dealers. If it becomes essentialto introduce new features, we willdo so; technologically, we can do it.But it is still too early. On balance,pricing still remains the priority.
A: Where does Pak Suzukistand on EVs?
HK: EVs are one solution toprotect the environment. Onthe other hand, there are a lotof shortcomings; the mileage isabout 200 to 300 kilometres, andthere are no charging stations.Localisation is difficult because themain component of an EV – thebattery – is very expensive, andto establish a battery factory, hugevolumes are necessary, and theyare not there at present. Also, thecomponents for EVs are differentfrom the cars we are producing, sowithout introducing new technology,we cannot localise the parts. Ourvision has always been to growtogether with the industry and withthe people of Pakistan. To developour supplier group, support themand create jobs for Pakistan’sautomobile industry. But if weintroduce EVs, we cannot localisethe parts immediately. Then thereis the fact that the value of a usedcar is different. The current valueof our used cars is good. WithEVs, the major cost is the battery,and when the battery deteriorates,the value of the car goes down.However, once volumes go up, itwill be worthwhile to produce suchcars locally.
A: Globally, what does Suzuki’sEV landscape look like?
HK: India is our biggest EVmarket. We produce in India andexport to Europe and Japan.
A: India started off with the samebasic issues with EV production.
HK: Yes, but the market volumesare totally different. In India, weproduce two million cars, andwe have a market share of 40%,so we sell 50,000 to 60,000cars per year, including EVs.In Pakistan, we sell 100 or 200cars per year, and with thosevolumes, we cannot make therequired investment.
A: What about EV motorcycles?
HK: We recently introducedEV motorcycles in India. Butas we cannot import some ofthe components from India,technically, it is not possible tointroduce EV motorcycles for thetime being. On the EV question,we have a different approach.There are multiple ways to achievecarbon neutrality and protect theenvironment, and EVs are just onesolution. Pak Suzuki is taking aunique approach and working onbiogas. Biogas is made up of 95%methane, which is the same asCNG. CNG energy vehicles usedto be produced in Pakistan by PakSuzuki. Biogas is produced usingcow dung and agricultural animaland food waste – and this is whatwe are working on.
A: Have you done this before?
HK: In India, we are alreadyrunning some vehicles on biogas.Technology-wise, it is the same asrunning a CNG car. We are startingthis initiative in Pakistan with theconstruction of our first biogasplant in Manga Mandi near Lahore.
A: When will this actually start?
HK: We held a ground-breakingceremony at the end of April andinvited the Special Assistant tothe Prime Minister for Industriesand Production.
A: Why have you opted for biogas?
HK: It is a very realistic solution forPakistan, because the country hasabout 70 million buffalo and cows,and at the moment, the dung fromthese animals is contaminating theenvironment. If we use this wastein a productive way, this will bevery beneficial for the environmentas well as for the animal farmers.They will be able to sell the dungto our factory to produce biogas.The biogas can also be usedto run some factories. Also, inthe process of producing biomethane,bio-fertiliser can beproduced – and in the agriculturesector, the volumes of fertiliserare insufficient – and therefore,we will be able to provide fertiliserto farmers as well. Biogas willbe very beneficial to everyone inevery direction. For the farmers,for agriculture and for the fertilisersector. It will be a very beneficialand realistic solution for Pakistancompared to EVs.
A: What are the next steps inthis process?
HK: We will first establish ourpilot plant to prove the feasibilityof this business, and once itis proved, we will continueinvesting in this direction. We willtry to gather local investors. Wealso have our dealer network,so we have a lot of stakeholderswho are interested in this typeof business. We aim to establish1,000 biogas factories by theend of 2030.
A: Isn’t that a very ambitious target?
HK: In Pakistan, there are already5,000 biogas plants.
A: Who is running them?
HK: They are very small, andthe biogas produced cannotbe used as fuel for cars; theyrequire additional facilities topurify the gas. So, yes, it isrealistic to aim to establish1,000 biogas plants.
A: How much is Suzukiinvesting in this?
HK: We have not finalisedthis, but the total cost may beapproximately 200 million rupeesper plant.
A: Pak Suzuki has signed anMOU with the University ofAgriculture in Faisalabad. Is thispart of the same project?
HK: Yes. We were looking fora partner for this project andwe contacted several fertilisermanufacturers. But when wecontacted the University ofAgriculture, we found that theyhad the skills to develop biofertilisers.They already havetwo or three biogas plants. Theyhave the knowledge to set up abiogas business.
A: How have Pakistan’s recenteconomic difficulties impactedcar sales, and how have youdealt with this?
HK: The worst time was whenI came to Pakistan in 2023,especially as imports of automobilecomponents were restricted.Our first priority was to supportour suppliers and dealers. Theyare very important partners. PakSuzuki is a subsidiary of theSuzuki Motor Corporation, Japan,and for them Pak Suzuki is avery important subsidiary affiliate,because Pakistan was the firstcountry where our automobileswere produced outside Japan –added to which, Pakistan is now thenumber one manufacturer in termsof market share. In this context,Suzuki Motor Corporation is totallycommitted to Pakistan and, despitethe hard times, they supported us.However, our suppliers and dealersare independent partners, and ifthey go bankrupt or the industrycollapses, it cannot be revived,and this is why our priority was toconcentrate on helping them sellvolumes. We worked on increasingthe volume by sacrificing ourprofit, and to at least stabilise at aminimum of 40,000 units to keepour stakeholders alive. That wasour mission.
A: Now that the situation iseasing, do you think you can gobeyond 40,000 units?
HK: Yes. Interest rates are goingdown, the customer mindset isimproving, and they are ready to buy.A lot depends on the governmentpolicy, but the market situation hasimproved in the last two years.
A: Are you satisfied with thecurrent government policies?
HK: Basically, the governmentis very helpful in supporting theautomobile industry. Sometimesthere is a discussion point, butoverall, the government hasbeen very helpful in assisting ourindustry to survive.
A: To what extent are PakSuzuki parts localised?
HK: To proceed to localisationvolume is very important.For example, to localise theheadlight of an Alto requires aninvestment of two billion rupeesfor manufacturers, and then theyhave to advertise. So if the volumeis small, localisation is not feasible.Volume is very important. Ourlocalisation target is over 60%.
A: What is the present rateof localisation?
HK: For the Alto, over 70%. Forthe other cars, we are aiming forat least 50%.
A: What is not localised?
HK: The engine components.Some parts of the engine can belocalised, but not the total engine,because the volumes are missing.High-tech parts, like airbags, arenot localised because the technicalassistance is missing. For high-techparts, we need technicalpartners, and unfortunately, manyglobal supply players hesitateto come to Pakistan due to theinstability or the market conditionsand because the volumes are stilltoo small.
A: Which is the best-selling PakSuzuki car?
HK: The Alto. Then the Swift.
A: Do you have plans to introducea higher CC car in the market?
HK: We are planning tointroduce new vehicles in thehigher car segment.
A: Will such cars not becompeting with the existingChinese cars in the market?
HK: We can compete withthese cars.
A: Even price-wise?
HK: I hope so.
A: What is your ambition for PakSuzuki for the next three years?
HK: To remain committed to ourmission; to grow together with thepeople of Pakistan. We would liketo collaborate and cooperate withthe government in making policies,and of course, expand our business.Additionally, we want to put ourbiogas project on a firm footing.As the market leader in Pakistan,we have a social mission tocontribute to the sustainable growthof Pakistan’s automobile industry.Finally, we would like to makeTeam Pak Suzuki a very advancedorganisation with a competitiveedge. This is my mission.
Hiroshi Kawamura was in conversationwith Mariam Ali Baig.For feedback: aurora@dawn.com