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SAZEW Reports Remarkable Profit Growth Driven by Haval H6 HEV Popularity

Lahore, Sazgar Engineering Works Ltd. (SAZEW) reported significant growth in its profitability during a recent Analyst Briefing, attributing much of this success to the popular Haval H6 HEV, Pakistan's first locally manufactured hybrid vehicle. The company recorded net sales of Rs34.5 billion in the first nine months of the fiscal year 2024, a 170% increase year-over-year. Gross margins also rose substantially, contributing to an eightfold increase in earnings per share.

According to JS Global, the substantial improvement in SAZEW's financial performance can be traced back to a strategic shift in its product mix towards the high-end SUV segment, notably the Haval H6 HEV. This model's success has helped boost the company's SUV market share from 9.8% in March 2023 to 38.8% in March 2024. The management highlighted that the cost advantage of Chinese auto parts has made high-end models like the H6 HEV more competitive in price compared to similar Japanese SUVs, which could be up to 30% more expensive.

Despite operating at only 15% to 20% of its production capacity, SAZEW has increased its output, reducing lead times from six months to two to three months. The company is also exploring further additions to its product lineup, including the Tank500 and ORA-03 EV, which are currently in the testing phase. The Tank500 is positioned as a viable option for high net worth individuals, priced significantly lower than comparable imports such as the Land Cruiser.

On the three-wheeler front, SAZEW has been granted a license to produce electric three-wheelers in Punjab, although the high cost of imported batteries has posed challenges to market penetration. The company's localization efforts in the four-wheeler segment remain minimal, but it plans to increase localization through vendor partnerships, despite not expecting significant capital expenditures for in-house production of localized parts.