Sazgar Holds Car Prices, Bets Rs22 Billion on Massive Expansion

LAHORE: Sazgar Engineering Works has decided to swallow the tax hike itself, at least for now. The Haval assembler told that it will not lift vehicle prices despite the 18pc general sales tax now in force. Management called it a customer-first decision. Sazgar does not want people buying cars today to pay for a tax the company thinks may not last.

Much of Sazgar's near-term pricing strategy now hangs on a single document. Islamabad still has not notified the Auto Policy 2026-31, nearly three months after the previous regime lapsed on June 30. Sazgar expects the new framework soon and hopes it brings a lower GST. Until it lands, prices will track existing notified taxes, and management will hold off on any major pricing decisions.

Rivals chose differently. The rate on hybrids had initially jumped to 25pc after the previous concession expired, and Indus Motor raised Corolla Cross hybrid prices by more than Rs1.3 million. On September 13, the Finance Division issued SRO 1525(I)/2026, cutting sales tax on locally manufactured hybrids up to 2000cc to 18pc with immediate effect.

Also Read: Sazgar’s SUV Sales Crash 76% in July After Record-Breaking June Surge

A record year gives Sazgar room to wait. The company booked a profit after tax of Rs23.6 billion in FY26, up 44pc, while revenue climbed 76pc to Rs191.7bn. Its fourth-quarter profit of Rs8.7bn marked the highest in its history, and shareholders collected Rs70 per share in dividends across the year.

The cracks show in the margins. Gross margin slipped to 22.3pc in the fourth quarter from about 25.4pc in the first nine months, which management put down largely to product mix. Executives went a step further: the company is preparing for its margins to converge toward industry averages.

Sazgar Rs22bn Expansion Plan

Sazgar has committed Rs22bn to an expansion that includes a new paint shop. Management expects to finish the work within nine to 10 months. Management said around Rs17bn would come through debt, with the remaining Rs5bn financed through equity.

That borrowing arrives on a balance sheet where finance costs already nearly doubled to Rs454 million in FY26, according to Arif Habib Limited.

The payoff could run bigger than first advertised. Management now puts post-expansion capacity at around 180 vehicles a day, up from the roughly 100 it disclosed earlier.

Also Read: IMF Rejects Pakistan's 1% NEV Sales Tax Proposal

The product roadmap shows where Sazgar thinks policy will head. Management believes the government will back plug-in hybrids, and it will shape future launches around that view. Under the current framework, concessionary duties on electrified parts remain intact: 4pc on HEV parts and 3pc on PHEV parts.

Next in line comes the GWM Cannon Alpha pickup, which Sazgar plans to launch in the coming months at what it calls a competitive price. At the Pakistan Auto Show last week, the company rolled out a broad new-energy lineup alongside the Tank 300 and Jolion Max.

ARCFOX sits further up the ladder. Management described the brand as semi-premium and among the higher-positioned of China's 109 automotive brands. Whether Sazgar assembles it locally from CKD kits or imports it fully built still depends on the new auto policy.

On the ground, Sazgar runs 32 active dealerships, the largest network among Pakistan's new entrants, with five to six more opening soon.

The brokerage covering the briefing kept its BUY call on SAZEW, noting the stock trades at just 4.1 times its estimated FY27 earnings.

For car buyers, Sazgar's restraint offers a reprieve. For the company, the reward depends on a policy Islamabad has yet to sign off.