Suzuki may invest $460 million into Pakistan if new auto policy revised

By Drazen Jorgic

ISLAMABAD (Reuters) - Suzuki plans to invest $460 million into Pakistan if the government provides the right incentives and amends its new auto policy, the company said on Friday.

Pakistan in March announced a new auto policy that favours potential new entrants over existing manufacturers by offering them lower duties, part of a strategy to attract foreign car makers and loosen the dominance of Suzuki, Toyota and Honda.

The Pakistan Suzuki Motor Company, which assembles Suzuki cars for the local market, said it had concerns that the new auto policy may "damage the tremendous investment potential in the Pakistan automobile sector by existing players such as Pak Suzuki Motor Co".

In an emailed statement to Reuters, Karachi-listed Pakistan Suzuki said: "If the incentives and benefits should be given then we are ready for $460 million investment in Pakistan."

The investment would include creation of a state-of-the-art new plant on an "urgent basis" and from this plant Suzuki would introduce four new models within five years, including two new models by 2018.

Plans to introduce new models would go some way towards soothing government anger about lack of competition and choice in Pakistan's car market.

Officials say they want foreign car makers to shake up the Japanese-dominated market because locally assembled cars are sold at relatively high prices but lag behind imported vehicles in terms of quality and specifications.

The existing Japanese manufacturers feel let down by the government's new auto policy because it prefers outside investment to their own, and removes many incentives for them to invest in the country, said two industry participants familiar with the matter.

(Reporting by Drazen Jorgic; Editing by Christian Schmollinger)