KARACHI: French automaker Renault, which was earlier considering assembling cars in Pakistan, has suspended talks with Ghandhara Nissan Ltd (GHNL), a stock notice said on Friday.

Meanwhile, Nissan has been in talks with GHNL for the assembly of vehicles in the country.

GHNL informed stock investors that the company, in collaboration with a potential partner, was in talks with Alliance (Renault plus Nissan). However, owing to commercial reasons, GHNL’s arrangements with the potential partner could not materialise. From then on, Nissan has been in discussion with GHNL while Renault suspended talks, it said. “They, however, shared their view that Pakistan is an alliance project and they aim to select only one partner for Renault and Nissan models in Pakistan,” it added.

GHNL was responding to a Nov 3 letter by the Securities and Exchange Commission of Pakistan (SECP) regarding the volatile trading in the GHNL stock following rumours that the talks between Renault and the company about their collaboration had failed.

The SECP observed that the trading volume and price of GHNL over the preceding 15 days experienced significant volatility. In the absence of any material announcement from the company, the SECP sought a clarification for the substantial volatility in the stock price.

GHNL said no event concerning the company took place during the period under discussion that could possibly result in any significant volatility in the price or volume of its shares. “There was no cause of material announcement to be made by the company,” it said.

GHNL added that its share price remained between Rs173.18 and Rs153.38 during this period. This fluctuation in the price and volume co-relates with the movement in the KSE-100 index as well as all-share index, it said.

GHNL said this fluctuation can be attributed to the rising political uncertainty, which has remained the main driver of price fluctuations for most stocks on the stock exchange.

It may be recalled that the chairman of the Board of Investment (BOI), Miftah Ismail, said in November 2016 that Renault would start producing vehicles in Pakistan in 2018 as the company had submitted an application in this regard.

He said Renault would initially make an investment of $100 million to produce 6,000 vehicles per shift at the plant set up by GHNL in Karachi. Renault intended to manufacture 16,000 vehicles in three shifts and raise the production capacity to 50,000 in two phases, he claimed. According to the BOI chief, Renault had planned to manufacture both sport utility vehicles and sedans.

Renault already has an alliance with Nissan since 1999, making it the longest-running transnational partnership between two major manufacturers in the automotive industry.

Finance Minister Ishaq Dar had led a delegation to France in September to hold negotiations with leading French car manufacturers, including Renault.

Published in Dawn, November 11th, 2017