Sazgar Engineering Works Ltd (SAZEW) held a corporate briefing. The SAZEW specialises in manufacturing four-wheeler and three-wheeler vehicles, automotive parts (tractor wheel rims), and the import and sale of home appliances.
The company manages products of two different Chinese brands, Beijing Automotive Industry Holding (BAIC) and Great Wall Motors (GWM). Haval is product of GWM. Management informed that SAZEW has an exclusive agreement with GWM for assembling its products in Pakistan.
Management believes customers falling in the car price bracket of Rs8mn+ are not that price sensitive. This will help the company in maintaining its sales momentum.
A dominant portion of the company’s sales is from GWM Haval. Within this, hybrid versions constitute sales in the range of 60-90%.
Currently, Haval products are available in the market with a lead time of 2-3 months. The lead time used to be 4-6 months; however, production was ramped up recently to reduce the lead time.
SAZEW has 50 dealers for 3-wheelers and 16 dealers for 4-wheelers. The total production capacity for 4-wheelers is 24,000 units per annum (single shift). Currently, the company produces 30 cars daily, and management expects capacity utilisation to reach 35-40% by the end of the year. This translates into a monthly production of 700 vehicles.
If the duty structure does not change, management expects margins to remain at the current level. The company’s tax benefits will end in 2026, and after that period, management believes higher production/sales numbers will help the company maintain GP margins.
Management does not plan to introduce an instalment plan on their products as they believe players offering instalments have high cash reserves.
Management plans to use vendors to meet the targeted localization level of the products. The company’s funds will not be used to meet the localization level (i.e., Capex on parts).
SAZEW has received the Punjab license for Electric Auto Rickshaws (EV). The company is exporting its rickshaws to 25+ countries, including Japan.
The company has also introduced two more GWM models, “ORA” and “Tank 500 HEV,” in the local market. These are currently in the sampling/testing phase. A decision regarding local assembly will be made after studying these models.
Management commented that new models would be brought to the market with the consultation of Chinese partners. If the duty structure increases, the additional cost will be passed on to consumers, or the company can absorb some of the portions.
Courtesy – Topline Research
