Sazgar: Setting precedence

Sazgar Engineering, the rickshaw manufacturer, is possibly the only listed company on the PSX that releases its monthly sales and production numbers each month as material information, much ahead of the publication of numbers by the automotive association, PAMA. That’s one best practice that other listed companies should be following. Its latest numbers show a 20 percent increase in sales in FY17 for rickshaws. But Sazgar is also in the news for two other reasons.

One is Sazgar’s rising exports of rickshaws to Japan—a market known to export its pricey vehicles to Pakistan. Sazgar is setting importance precedence in the automotive sector, one that shows that the sector could also develop exportable quality vehicles. The company does have an edge in the way that rickshaws are unique in their own right and could create a niche in a market, which cars may find more difficulty to carve. However, the quality of rickshaws produced by Sazgar also has to be competitive in terms quality and safety to be able to find market access in a country like Japan.

The other interesting bit of news is Sazgar’s tentative plans to set up a car and commercial vehicle assembly in Pakistan, following the flurry of activity in the auto sector. Many new car ventures are in the works that may be bringing a fleet of new quality cars into the mix. (Read our story: Playing your cars right: an update, published on June 5, 2017). Sazgar is only one of the contenders in a long list of prospective foreign players including Chinese, Korean and European giants. But Sazgar has an advantage by way of knowing the ins and outs of the market.

The rise in demand for vehicles with the rising middle class as well as CPEC transportation and trade needs will be driving the automotive sector over the next few years. Even though ride sharing apps have taken over urban cities in terms of easy and cheap transportation, the sprawling inner cities of Karachi and Lahore; and interior provinces, still need rickshaws and Sazgar’s sales numbers are evidence of that burgeoning demand. Diversifying into the export market and entering the car and LCV industry is a smart move. Sazgar, the once underdog is a one to watch out.