Automotive Industry in Pakistan

Automotive industry in Pakistan started in 1950 and has gone through different phases1950 s (Private sector).1960 s (Private sector). 1970 s (Nationalization). 1980 s onward (Privatization & entry of private sector). Segment wise Automobile Manufacturing Units Cars 7 L.C.Vs 7 Jeeps 2 Truck and Bus 5 Tractor 4 Motor cycle 42 Vendors (400 approx) Industry operates under franchise and technical cooperation agreement with: Japan Europe Korea China The automobile sector has been registering high growth for the last four or five years due to the country's business friendly policies along with lower tariff rates, persistent growth in GDP, and per capita income. Globally considered as the mother of all industries, the auto industry in Pakistan is fast evolving as a robust industry. Some sub-sectors of this fast growing industry, like motorcycle production, have already achieved economies of scale. The level of motorisation has also been gradually rising over the years. In 1998-99, it was three cars per 1000 persons, which has significantly increased to 11 cars per 1000 persons in 2005-06. The indigenous production of motorcycles increased by 25 per cent during 2005-06, reaching to an all-time high of 520,124 as compared to 106,797 units in 1996-97, which accounts for around 380 per cent increase in motorcycle production during the last nine years. The production of trucks as well as that of buses has also posted sufficient increase during the last 10 years. Some 2,994 units of trucks were being produced in the country in 1995-96 which, over the years, have increased to 4,518 units, showing a rise of 51 per cent. In the case of buses, the rise in production is more pronounced as compared to that of trucks as their production augmented by around 74 per cent during the last decade or so. It may be mentioned that Central Board of Revenue (CBR) has suggested levying 6% withholding tax on purchase of new cars with an objective to broaden the tax net. However, the imposition of withholding tax on purchase of new cars is not likely as this will ultimately increase the prices and encourage imports of cars. The industry however is likely to have a neutral impact on the automobile sector. Implementation of Tariff Based System (TBS) and auto industry investment policy are few of the measures that are expected in the upcoming budget. The industry has achieved a phenomenal growth of 50.2 percent in FY04 and increased competition has led to the introduction of innovative products as well as a decline in financing costs. Compared with Pakistan, India has a strong engineering base and has successfully created a sizable capacity for production of vehicles. It enjoys a clear edge over Pakistan in the automobile sector. Indian auto companies are highly cost competitive due to appropriate levels of automation and low cost automation and have achieved a high level of productivity by embracing Japanese concepts and best practices. India is already the second largest two wheeler manufacturer, second largest tractor manufacturer, and fifth largest commercial vehicle manufacturer in the world and has the fourth largest car market in Asia. The automobile industry in India is now gradually evolving to replicate those of developed countries. Pakistan can import automotive components and spare parts from India at a lower price as presently these items are being imported from the Far East at higher prices. On the other hand, India is expected to benefit from free trade due to its low raw material, electric and labor costs. Introduction The automotive industry rightly prides itself on being recognized as the mother of all industries. In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While they may appear to be simple machines, their design and manufacturing have much deeper roots in all the known technologies. In-depth knowledge and skillful application of mechanical, electrical, electronics, chemical and a host of other technologies culminate in achievement and improvement of the manufacturing base of a country, by focusing on a single product the automobile. This then provides an opportunity to produce a large number of goods and services for consumption of the entire international community. Use of the word mother for automotive industry is therefore the most appropriate description to define the nature and importance of the industry. In recent years, we have witnessed that the industrialization of South East Asian countries greatly depend on the development of their automotive industry. Similarly, automotive industry acted as a catalyst in the overall growth of the industry in Japan and Korea and the consequent well being of their citizens. It is indeed heartening that the mother has once again smiled at Pakistan. Fortunately the last 3 years have witnessed phenomenal growth in the industry in terms of technological advancements and production/sales volumes with the local contents rising as high as 90%. The industry is already employing 120,000 people, contributing more than 12 billion rupees to GDP, contributing more than Rs. 30 billion to the national exchequer in terms of duties and taxes, attracted investment worth Rs. 52 billion including a substantial foreign investment. Today the customers have choice to pick from a wide range of products including motorcycles, trucks, buses and cars of premier Japanese and Korean brands at internationally competitive prices which has only become possible due to local contents and availability of highly productive and inexpensive human resources. An automobile has over 2000 components and parts out of which the assemblers usually concentrate on the manufacturing of small but critical parts while the remaining parts are supplied by the vendors and the subcontractors. In Pakistan the automobile components manufacturing industry consists of mainly units producing original components for assembly under deletion program and units producing reconditioned and original components for local use. These units are in three types which include the original equipment manufacturers, independent manufacturers and the ancillary industry producing small parts and nonautomotive items. There are more than 800 vendors in the country with a total investment of over eight billion rupees; they are engaged in the manufacturing of original components for the assembly operation under the deletion program as well as producing reconditioned and original components for sale in the local market. They manufacture and supply the local car assemblers with auto parts such as pistons, engine valves, gaskets, camshafts, shock-absorbers, struts, steering mechanism, cylinder head, wheel hubs, brake drums, wheels, bumpers, instruments and instrument panels, gears of all types, radiators, cylinder liners, blinkers, lights, doors and door locks as well as auto air conditioners. Critics said that the local vendor industry though still in the process of development could not achieve the deletion targets by producing low quality components which are not acceptable by the local assemblers, it is said that the Pakistan Association of Automotive Parts & Accessories which represents the auto parts manufacturers have not in a way been fully able to contribute its share to the development of the sector.The vendors on their part however put the blame on the policy makers and partly on the assemblers who have not been encouraging the local vendors as such. On the other hand it is said that the foreign car principals have no justification for their complaints because of the level of their participation in the local vendor industry. Hino trucks it was pointed out have started manufacturing wheel drums locally while Suzuki is still complaining about the quality of silencer it received from the local vendors. In the world trade, Auto Sector is one of the largest segments. It is the major driver of economic growth and business activities. It puts multiplier impacts on the economy. Day-in, day-out around 200,000 vehicles roll off the world s assembly lines with car as the dominant segment of the industry. Evolution of Automobile Industry in Pakistan Automotive industry in Pakistan started in 1950 and has gone through different phases of progress as summarized below:PERIOD MANUFACTURING OPERATIONS VEHICLES COMPANY 1950 s (Private sector). SKD Assembly. Bedford trucks/buses. General Motors. 1960 s (Private sector). SKD/CKD Assembly Indigenization in :- i) Bedford trucks / buses - 40% approx. ii) Cars - 20%. Bedford trucks/buses, Ford Combi vans, Vauxhall, Ford Prefect, Ford Cortina and Dodge Dart cars. Gandhara Industries Ltd. (formerly General Motors). 1970 s (Nationalization). SKD/CKD Assembly Indigenization process accelerated and achieved 80% deletion in Bedford trucks/buses by 1976. Bedford Trucks/ Buses, cars (upto 1972). PACO 1980 s onward (Privatization & entry of private sector). Progressive manufacturing of cars under Deletion Programme. Suzuki, Toyota, Honda, Hyundai, Santro, Kia, Cuore, Revo and Chevrolet cars. PACO, Pak Suzuki Motors, Indus Motors, Honda Atlas Cars and Dewan Farooq Motors, Adam Motors, Nexus Auto Segment wise Automobile Manufacturing Units Cars 7 L.C.Vs 7 Jeeps 2 Truck and Bus 5 Tractor 4 Motor cycle 42 Vendors (400 approx) Operational Environment Industry operates under franchise and technical cooperation agreement with: § Japan § Europe § Korea § China Production . gaskets.601 in 2001-02 to 126.000 units during 2005-06. camshaft. Pakistan inherited only 5% of the large scale industrial facilities of British India. car and two wheelers have shown remarkable growth over the last five years. radiators. metallurgy. The motorcycles have also shown marvellous growth due to new entrants. technical skill and other pre-requisites for development were also lacking. financial or energy resources. Technology exists for major engine. Development of vendor industries in return assures transfer of technologies in nearly all spheres of engineering. specifically. agriculture contributed more than 62% towards GDP whereas contribution of manufacturing sector toward GDP was only 7%. Source: PAMA The two segments of the industry namely. which is expected to cross 150. basic infrastructural facilities. plastics and glass. sheet metal parts. In 1947. The Beginning of the Pakistan Automobile Industry Pakistan is basically an agrarian economy since its independence. The new entrants with fair competition have brought about the availability of cheaper vehicles in the domestic market. engine valve. Over 400 vendors are engaged in the production of auto parts locally including tyres. oil pump gears. There were neither any automobile assembly . improved liquidity position of certain class as a result of economic growth indicators and other monetary measures. dashboard. pistons.817 in 2004-05. and axles. The growth in domestic market of cars has risen from 40. Vendor Industry The industry has the potential for development of entire engineering sector.Your browser may not support display of this image. Besides. prospective entrepreneurs shy away from investment. This growth is attributed mainly by car financing schemes. At that time Pakistan hardly had any industrial base and was without any institutional. seats. Your browser may not support display of this image. suspension and transmission components but due to limited market. mirrors. However. First serious effort by government to develop the industry and engineering sector in particularly was observed in 1950 when a six-year plan (First Development Plan) was drafted to guide government investment in developing the infrastructure. needed large capital or were less profitable. The idea was to start local manufacturing with simple and non-functional parts and to add more and more complicated parts in small steps. selfreliance or economy.plants nor were any industrial capabilities available for this sector. the government. Peace in the country and development planning by government resulted in increased economic growth that sequentially laid the foundation of industry. For auto industry. These steps results in growth of the industrial sector resulting 56. as against the targets set of manufacturing 100% of local contents in maximum 10 years actually achieved deletion in eighteen years is 45.78% for trucks . Investment in the automobile industry in Pakistan started in the mid-50's when Kandawalla Industries established its units for assembling buses and trucks. the development of this industrial sector started soon after the independence. This mass production that started in 1964 resulted in the first ever period of progressive manufacturing in the history of Pakistan. National Motors took the indigenization when it came out in the 60's and was said to have reached above 80% deletion of the Bedford lorries and trucks before it closed down. besides developing infrastructural facilities established the Pakistan Industrial Development Corporation (PIDC) in 1950.62 % growth of the manufacturing sector from 1949-1955. According to the planning then done 100% local manufacturing was to be achieved in seven to ten years. Kandawalla Motors on its part came up with 'Nishan' . The main objective of PIDC was to play the pioneering role of establishing such industries which the private enterprise was unable to undertake either because they were technologically complex. it was said that the project was successful but was killed before the commercial production could begin. The idea of progressive manufacturing was first mooted by the Ghandhara Industries and Mack Trucks. Second Period 1964-72 Period of Progressive Manufacturing Potentials of industry and high demand of the products attracted new entrants whereas the existing players started producing in mass quantities. to overcome the initial difficulties. For example. a jeep copied on the pattern of Willeys Jeep of USA by the Pakistan Army. Unfortunately. the company's name was later changed to Naya Daur Motors. It may worth mentioning here that the same blueprint is said to still be in use in Iran till today but under their own brand name. this period does not last long as the projects undertaken proved to be over ambitious that eventually fail. Clearly the concept of progressive manufacturing has not added much to technology. Furthermore. Sind Engg. the President promulgated the Economic Reforms (Amendment) Ordinance after which the Federal Government acquired majority ownership of shares of these industrial units. and Bela Engineers. Triumph and Lamberetta scooters. assembly and manufacturers of motor vehicles. Third Period 1973-87 Nationalization of Industries Following the progressive manufacturing period. LCVs. FORMATION OF PACO In order to manage the automobile units and to advise the Government (in developing policy guidelines for growth and development of auto industry). under the officially appointed Board of Industrial Management with the Minister for Production as its Chairman. their functions were redefined and Pakistan Automobile Corporation (PACO) was created in 1973 as a holding corporation under the administrative control of the Federal Ministry of Production. but still few new units for producing tractors. heavy engineering. New units established were Atlas Honda. Naya Daur Ali Autos Awami Autos Initially. jeeps and specialized vehicle were established. After nationalization. nationalization of industries under Economic Reforms order had a profound impact on automobile industry in Pakistan.50% for 4x4 jeeps and zero percent for cars. A more market oriented approached was observed by Honda motorcycles and Vespa scooters during this period. buses and trucks were established under this concept. these units were renamed (see table 2). but in August 1973.17% for trucks & buses engines. Hyesons Mack Trucks Ali Autos Awami Autos Rana Tractors Millat Tractors Haroon Ind/Karachi Auto Republic Motors Jaffer Trailer Devp Ghandhara National Motors Ghandhara National Motors Kandawala Ind. Rana Tractors. 4x4 vehicles.& buses. 16. TABLE 1: NATIONALIZED UNITS ASSEMBLER RENAMED ASSEMBLER RENAMED Wazir Ali Engg. In early 1972 under Martial Law Regulation. Jaffar Industries. Pakistan Automobile Corporation (PACO) was formed in 1973 under the administrative control of the Federal Ministry of . no new units for manufacturing passenger cars. the management of these industries was taken over by the government. Out of the units taken over by the Government were included iron and steel. including eight automobile plants. heavy chemicals. as they introduced light motorcycles for the first time in a market dominated by heavy motor bikes like BSA. the Government took over the control of 32 industrial units. Khawaja Autos. 43. It was a major public industrial conglomerate of 15 companies including four joint ventures. Awami Autos signed a Joint Venture Agreement with Suzuki Motor Co. It can be observed that number of units in almost all areas of automobiles developed in this phase.Production. and was applicable if CBR also concurred. followed by chemicals (30%) and steel and engineering (15. In March 1974.6%. of Japan and a new company by the Name of Pak Suzuki Motor Co.1%). the remaining 10 projects under the PIDC s control were also transferred to the Mineral Development Corporation. Subsequently. regulations and monitoring was established. PIDC was successful in completing 62 projects at a capital cost of Rs 1. PERFORMANCE UNDER GOVERNMENT CONTROL According to the government resources. The performance of automobile and farm equipment group was the best with production recording an increase of 78. In 1973-74. During 1972-73. The MOI was entrusted the responsibility of allowing any waiver for non-performance. 16 industrial projects were transferred to the respective 12 corporations set up by the Federal Government.8% achieved in 1972-73. The distinctive feature of after nationalization period is the assembly of Suzuki range of vehicles (Cars. Ltd was established in 1982 to produce Suzuki range of vehicles at the existing facilities of Awami Autos. The performance of PIDC can be evaluated from the fact that by the end of December 1973.managed projects and companies produce goods worth Rs. Fourth Period 1987-95 . 470. the PIDC. PACO also established two units in the public sector namely Baluchistan Wheels and Bolan castings. Vans & Jeeps) and Isuzu Trucks & Buses in the public sector. Heavy Mechanical Complex and Heavy Foundry and Forge Projects. P/up.242. Including in these projects were Pakistan Machine Tool Factory. For the first time in Pakistan emphasis was given to develop the nationalized units under took local manufacturing facilities and the development of parts in an organized manner and the system of standardization. The performance of PIDC was also excellent under the nationalization reform and it also contributed towards the progressive manufacturing. The direction for achieving quality standards as laid down by the "Principals" was also established. 446.6 million in 1971-72. large scale manufacturing sector achieved a growth rate of 7% as compared to 11. the nationalized industries made progress on a wide front. This requires the industry to assemble from Complete Knock Down (CKD) and then go on to manufacture components and to achieve a local content of 75% over a five year period.6 million. A number of small and large industrial units that were mostly functioning in the unorganized sector were channelised into a more formal pattern of production management under the PACO control.5 million as against Rs. for further development.Privatization of Industries The policy of de-nationalizing public sector units was adopted once the change in government took place. This results in a number of joint ventures. The process of privatization is still on and fortunately every government has adopted the policy of privatization and opening of the markets for foreign investors. Similarly. persistent growth in GDP. process is on but still many object that this process is not crystal clear and has many short comings NEW MANAGEMENT Indus Motor Co Toyota/Habib Pak Suzuki Motors Co. and . commercial vehicles and motorcycles. Under the Government de-nationalization policy Naya Daur entered into Joint Venture with Kia Motors of Korea and started assembling Kia Ceres Pickups and Kia Pride Cars. Although. Pakistan auto industry enters into assembly/progressive manufacture of passenger cars. Naya Daur which after discontinuation of AMC-Jeep franchise had. Suzuki Motors Japan Honda Atlas Honda/Sharazi Naya Daur Motors Tawakal Group Analysis Of The Automobile Industry The automobile sector has been registering high growth for the last four or five years due to the country's business friendly policies along with lower tariff rates. become a mere vendor to Pak Suzuki (assembling Suzuki Jeeps) was sold to Tawakal group. Privatization brings in foreign companies. Due to these ventures. Most important joint venture that took place was of Atlas with Honda and Indus Motor with Toyota. Once the new management of cars and motorcycle assemblers took over the control they entered into joint ventures with foreign companies mostly Japanese. During the financial year 2005-06. the company is also pursuing export opportunities in the regional countries.000 cars during the current year. all automobile units are now either running on double shift basis or intend to go into double shifts. like motorcycle production. As far as the production of cars in the country is concerned. M/s Sigma Motors . the auto industry in Pakistan is fast evolving as a robust industry. the sale of locally assembly cars posted an impressive growth of 22 per cent.000 to achieve by the year 2010. against 30. some 40. showing an increase of 430 per cent during the last 10 years. production stood at 160. have already achieved economies of scale.000 vehicles per annum. Globally considered as the mother of all industries. Since starting assembly operations in May 2002. the country's auto market will cross the milestone of 500. the company is geared to assemble 2.per capita income. Since 2001-02.000 vehicles were also imported during the said period. Sigma motors have assembled over 3. The tremendous rise in automobile production has resulted from increased domestic demand.holds the distinction of being the first exporter of these diesel engine vehicles.000 Land Rover Defenders. the automobile market has grown by over 40 per cent per annum and if an average growth of 30 per cent is maintained during the coming years.514 units as against 127. In addition to looking after the needs of fleet customers. Being an icon of automobile industry. rising to 155.642 units in 2005-06. To ease the pressure on rising demand and to curb the evolving culture of premium on the factory price. Pakistan has made its debut in the vehicle export market by exporting its first batch of Land Rover Defenders to Sri Lanka. The local carmakers are expected to roll out 200. As a result of this demand driven growth in the production of cars in the country.000 units by the year 2010.the sole distributor and assembler of Land Rovers in the country .000 direct employment opportunities besides contributing substantially in duties and tax revenues to the national exchequer. which are in use all over the country.131 cars in 1995-96. .309 units during the previous year. the Land Rover Defender is presently being used in over 150 countries around the world because of its simplicity of design and sturdiness. Now. while the country has an annual production target of 500. giving a healthy impetus to the industrial output and generating over 150. Some sub-sectors of this fast growing industry. In the capital city of Islamabad alone. Since it has achieved autarky in the production of motorcycles. which has a ratio of 23 cars per 1000 persons.124 as compared to 106. And yet. it was three cars per 1000 persons. which accounts for around 380 per cent increase in motorcycle production during the last nine years. showing a rise of 51 per cent. while more highways are planned to be built in different parts of the country with Rs527 billion (US$ 878. this will lead to the creation of more jobs thereby accelerating the pace of economic activities in the country. over the years. the rise in production is more pronounced as compared to that of trucks as their production augmented by around 74 per cent during the last decade or so. giving rise to the need to improve and widen the national roads network. The increase in demand for automobiles can be traced to rising income levels. the country has started exporting the units over and above its national requirements to overseas markets.000 vehicles are assembled and marketed every month. the country still stands relatively low in terms of motorisation when compared globally and even to its neighbours like Iran. measuring 0.3 million) in the next eight years. The result is a quantum jump in car registrations. While all this is leading the motorisation of the country. In the case of buses. it can't be ignored that this influx of new vehicles has made the existing road infrastructure insufficient. such rapid motorisation is a sure indicator of accelerated growth in the industrial sector in general and the auto sector in particular. on an average.518 units. over five million registered vehicles are plying on the country's roads. Presently.000 units of motorcycles during the year 2006-07. In 1998-99. Similarly. which has significantly increased to 11 cars per 1000 persons in 2005-06. The production of trucks as well as that of buses has also posted sufficient increase during the last 10 years. For a developing country like Pakistan. The country has also started importing vehicles. primarily due to bank leases. some 13.The level of motorisation has also been gradually rising over the years. Some 457 motorways have already been constructed in the country. Notwithstanding a manifold increase in car production during the last few years. some 2000 vehicles are registered every month. Pakistan aims at producing 700. creating new jobs and .8 million kilometers. Naturally. Some 2. have increased to 4.797 units in 1996-97. As a result. the demand for cars in the country is still a lot greater than their supply. reaching to an all-time high of 520.994 units of trucks were being produced in the country in 1995-96 which. the indigenous production of motorcycles increased by 25 per cent during 2005-06. The road construction spree would further bolster economic activities. creation of new job opportunities and liberal auto financing by financial institutions. However. in turn. as a matter of policy. has attained a level of an indispensable and . almost all banks have registered windfall profits. which would further push up the domestic demand for automobiles and. Therefore. most commercial banks are aggressively focusing on consumer financing. Union Bank 110 per cent. For example. When the government undertook restructuring of the economy. One hopes that the cycle of rise in demand and supply in the auto sector would have a healthy effect on the national economy as a whole. The performance of other banks is equally impressive. because it offers them a better rate of return as compared to the corporate sector. with its almost a decade old history. they started diverting their funds towards the more lucrative consumer financing. Metropolitan Bank 80 per cent.11 per cent on corporate lending. while the banks faced a dilemma of excess liquidity. United Bank Limited has declared a net profit of 62 per cent. Though the main objective of consumer financing is to solve some of the immediate or short-term problems of the customers. PAAPAM. The Bank of Punjab 72 per cent. real estate and IT sectors. through attractive packages. Meanwhile. showing an increase of 104 per cent and 251 per cent respectively over their previous year's profits. which is not only meeting the demand of the local assemblers in a sizeable number of auto-parts. creating new jobs and positively impacting the GDP growth. auto financing and other such schemes have given rise to lucrative consumer banking. at the macro level. Swelling bank profits have enabled them to offer attractive salary packages to their functionaries.more opportunities for gainful employment all over the country. the National Bank of Pakistan has declared a net profit of Rs12. ensuring continuity in its growth.7 billion (US$ 212 million) and Muslim Commercial Bank Rs8. this did not happen. It has already led to the growth of a fairly strong auto-parts manufacturing/ vending industry. As a result of this spurt in auto. impact their local production as well. Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) was formed in 1988 to represent and to provide technical and management cooperation to its members. in giving a push to large-scale manufacturing. but also competing in the international market for a share in the global auto-parts market.9 billion (US$ 148 million) for the year 2005. it was expected that bulk of excess liquidity available in the market post 9/11 would go towards the development of the corporate sector. Now. Faysal Bank 75 per cent. The average lending rate on consumer financing is around 16 per cent as compared to 9 . A better salary structure would naturally enable the employees to spend more on items like vehicles. Bank Al-Habib 171 per cent and so on and so forth. it is resulting. 786 7.571 2. PAAPAM is the member of the Federal of Pakistan Chamber of Commerce & Industry (FPCCI).744 5.991 4.200 S ~ ~ ~ 6.342 8.998 12.588 4.071 3.878 Suzuki (Baleno) P ~ ~ ~ 2.795 15.484 1.extremely effective link between the policy-making echelons at government and the whole entity of its member firms.705 8.412 2.625 4.922 4.666 3.615 4.027 5.610 5. Tractors. Investments in place now exceed US$ 1.768 4.045 2.352 S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 4.951 Honda (City) P ~ ~ ~ ~ ~ ~ 3.810 15.591 21.513 6.280 5.'06 Honda (Civic) P 4.287 434 127 7 0 0 1000cc Suzuki (Khyber/ Cultus) P 5.913 Suzuki (Alto) P ~ ~ ~ ~ ~ 4.904 1.639 S ~ ~ ~ 3.375 2.386 3.196 11. With a registered membership base of over top line tier one 278 members and general manufacturers base of over 1200 companies.606 3.637 6.458 Toyota (Corolla) P 4.637 7.290 5.714 16.062 5. Trucks and Buses assemblers.611 21.871 4.136 3.251 1.824 6.411 17.417 11.370 4.998 1.091 384 73 1 0 0 S ~ ~ ~ ~ 825 1.382 3.486 5.867 20.560 .824 4.019 6.359 12.164 5.816 4.274 1.116 6. PRODUCTION (P) & SALE (S) OF VEHICLE FROM 1995 ONWARD CAR 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 1300-1600cc (2000cc Diesel) Upto-Oct.763 12.749 7.390 7.153 5.188 2.321 23.635 6.927 10.525 23. The Association achieved recognition form the Government of the Pakistan in 1999 and today is represented in many Government and semi government as well as Private Institutions by its members.928 4.794 4. Motorcycle.007 31.615 S ~ ~ ~ ~ ~ ~ 3.720 6.939 0 S ~ ~ ~ 2.352 11.651 8.873 4.173 0 Suzuki (Liana) P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 5.731 5.439 Nissan (Sunny) P ~ 599 933 481 83 319 81 51 26 0 0 0 S ~ ~ ~ 546 95 310 113 69 25 1 0 0 Kia (Classic NGV) P ~ ~ ~ ~ ~ ~ ~ 459 188 465 0 0 S ~ ~ ~ ~ ~ ~ ~ 687 81 546 0 0 Kia (Spectra) P ~ ~ ~ ~ 890 1.162 S ~ ~ ~ 8.369 8.879 3.784 2.489 2.097 10.240 2.883 1.441 8.778 8.608 4.965 2.002 30.151 12.097 12.5 billion.771 17.527 11.775 7.268 8. PAAPAM has under its wings manufacturing companies making parts for Pakistan s Cars.861 20.094 11.271 11. A.A.169 9.701 7.135 6.621 33.937 1.841 7.917 1.345 4.204 4.592 7.683 1.143 16.789 Hyundai (Santro Plus) P ~ ~ ~ ~ 599 3.883 4.392 668 264 S ~ ~ ~ 223 501 455 560 795 1.620 127. N.929 2.936 16.533 1.009 7.028 3.518 1.478 258 Dong Feng P 789 696 784 486 250 420 310 510 104 23 4 2 S ~ ~ ~ 430 318 351 378 511 75 27 16 2 Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 551 466 171 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 565 464 141 Isuzu P 165 79 59 N.652 186 S ~ ~ ~ 259 193 198 204 614 845 1.707 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 TRUCK Upto-Oct'06 Hino P 1.883 1.A.461 39.964 16.514 50.461 126.174 3.823 6.221 S ~ ~ ~ ~ 1.165 35.757 Suzuki (Margalla) P 6.424 BUS Hino P 186 206 186 258 534 444 630 756 1.403 160.073 98.134 1.114 7.326 1.838 5.501 8.454 2.293 649 309 Nissan P 50 79 108 266 146 102 36 60 96 120 48 12 S ~ ~ ~ 252 162 102 36 36 107 93 79 12 Dong Feng P 154 70 220 600 780 780 420 480 89 110 40 4 .S ~ ~ ~ ~ ~ 4.902 6.208 1.468 8.052 3.431 16.339 8.986 13.579 6.262 1.874 38.195 1.190 Suzuki (Mehran) P 8.083 913 912 1.058 51.548 3.449 601 Nissan P 383 795 483 251 174 198 206 627 898 1.304 2.332 800cc Daihatsu (Cuore) P ~ ~ ~ ~ 1.273 1.245 3. N.207 35.074 ~ ~ ~ ~ ~ ~ ~ ~ ~ S~~~~~~~~~~~~ TOTAL CARS: P 30.682 32. N.994 2.845 4.131 32.748 27. 128 897 366 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 165 866 353 Volvo P ~ 4 112 85 0 0 0 0 0 0 0 0 S ~ ~ ~ 4 56 67 0 0 0 0 0 69 Transmobile (Yasoob) P 124 179 5 ~ ~ ~ ~ ~ ~ ~ ~ ~ S~~~~~~~~~~~~ TOTAL TRUCKS: P 2.164 240 261 489 294 618 792 1.101 8. N.031 1.382 3.955 96.580 6.A.433 11.196 1.460 S ~ ~ ~ 37.187 3.705 31.309 155.A.604 590 S ~ ~ ~ ~ 378 3.499 773 S ~ ~ ~ 278 455 309 626 758 948 1.582 27.889 10.525 7.174 4.883 4.088 62.353 3.667 3. N.262 31.047 41.868 3.187 1.838 61.482 14.306 1.A.922 7.573 40.072 4.982 10.148 11.020 1.121 S ~ ~ ~ 15.684 38.022 925 1.498 S ~ ~ ~ 971 1.022 3.432 31. 774 2.201 7.383 14.298 475 Sigma (Defender) P ~ ~ ~ ~ ~ ~ ~ ~ ~ 444 1.394 2.717 397 TOTAL LCVs: P 8.429 2.992 4.756 10.399 3.429 4.045 2.743 2.070 PICK-UP Suzuki (Ravi) P 1. 119 63 26 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 65 142 17 TOTAL BUSES: P 474 456 591 1.416 2.055 12.376 2.203 8.310 5.241 10.492 8.149 Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 1.274 792 657 622 380 459 564 374 807 1.332 1.418 2.861 2.762 825 307 S ~ ~ ~ 1.710 2.107 1.034 1.124 1.827 2.933 25.053 10.228 7.066 778 1.384 1.605 927 351 LCV 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 (4X4) Upto-Oct'06 Suzuki Jeep (Potohar) P 2. N.290 484 S ~ ~ ~ 615 464 432 506 465 807 1.411 1.065 1.767 435 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 1.896 25.472 1. N.460 1.A.120 1.A.363 1.263 2.800 1.360 1.736 9. N.411 4.362 1.591 4.223 1.326 1.983 2.270 8.286 5.182 384 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 407 1.S ~ ~ ~ 585 699 827 469 501 69 131 47 12 Master P ~ ~ ~ ~ ~ ~ ~ ~ ~ 21 6 1 S ~ ~ ~ ~ ~ ~ ~ ~ ~ 23 10 1 Isuzu P 84 101 77 N.185 1.186 (2000cc 4WD) Kia (Sportage) P ~ ~ ~ ~ ~ ~ 513 820 802 414 0 0 S ~ ~ ~ ~ ~ ~ 503 814 698 425 0 0 TOTAL SUV: P ~ ~ ~ ~ ~ ~ 513 820 802 414 0 0 S ~ ~ ~ ~ ~ ~ 503 814 698 425 0 0 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 .548 14.695 S ~ ~ ~ 1.075 3.871 1.620 2.359 5.389 2.482 1.022 9.799 1.697 3.177 2.451 4.234 2.547 1.A. N.012 9.441 7.987 4.088 S ~ ~ ~ 4.701 7.156 S ~ ~ ~ 8.319 10.575 0 S ~ ~ ~ 1.741 2.033 12.380 1.952 1.060 1.056 31.069 4.A.244 9.368 2.721 3.534 2.528 1.296 1.288 4.086 1.360 5.121 854 1.701 2.540 4.245 2.424 9.A.085 3.177 32.223 1.A.229 3.067 S ~ ~ ~ ~ 1.036 7.684 Toyota (Hilux) P 939 2.922 10.222 374 VAN Suzuki (Bolan) P 3.087 3.274 7.037 2. N.551 30 Dong Feng P ~ ~ ~ ~ ~ ~ ~ ~ 304 21 24 3 S ~ ~ ~ ~ ~ ~ ~ ~ 209 86 33 7 Hyundai (Shehzore) P ~ ~ ~ ~ 1.793 2. 454 8.424 287.924 190.038 15.371 12.012 22.271 360.240 35.288 12.804 2.198 3.498 74.136 9.186 2.978 MOTORCYCLE Honda P ~ 68.627 175.198 18.545 TOTAL FARM P 16.490 S ~ ~ ~ 23.P ~ 106.183 6.000 S ~ ~ ~ 61.001 26.365 8.417 14.093 10.111 115.840 24.630 14.313 6.427 50.040 23.887 15.719 23.383 416.062 13.265 9.065 14.062 90.293 17.435 26.360 7.637 20.888 21.855 17.018 9.757 3.742 Ferguson) S ~ ~ ~ 15.705 S ~ ~ ~ 4.027 117.886 50.433 Millat (Massey P 9.360 24.658 108.788 27.017 S ~ ~ ~ ~ ~ ~ ~ 2.550 86.370 14.138 12.504 86.414 23.578 48.149 Fateh Hero P ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 34.494 12.066 516.121 24.222 22.954 6.679 287.031 3.444 27.127 13.153 6.201 31.760 Sohrab P ~ ~ ~ ~ ~ ~ ~ 6.245 14.764 Sohrab (Triwheeler) P ~ ~ ~ ~ ~ ~ ~ 1.007 15.166 615 S ~ ~ ~ ~ ~ ~ ~ 585 3.311 CYCLES: S ~ ~ ~ 89.802 14.010 17.200 48.939 6.536 58.783 Suzuki P ~ ~ 4.649 8.873 301.959 108.081 15.644 24.978 87.561 105.649 120.110 105.446 6.617 16.403 12.801 17.423 17.407 71.373 16.215 19.027 .114 16.258 2.856 14.276 23.801 26.770 43.475 4.559 31.832 35.013 3.234 16.448 22.237 TRACTORS: S ~ ~ ~ 27.133 22.449 TOTAL MOTOR.343 3.160 25.900 43.126 19.797 92.590 5.579 78.943 2.FARM TRACTOR Upto-Oct'06 Fiat (New Holland) P 6.357 78.435 71.430 S ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 33.054 S ~ ~ ~ ~ ~ ~ ~ 10.142 16.124 144.154 7.163 24.397 90.999 22.639 59.471 Yamaha P ~ 38.435 23.024 27.801 12.396 12.201 190.560 74.415 24.463 59.189 520.144 26.064 19.186 15.430 4.272 7.495 S ~ ~ ~ 12.863 26.169 303.503 4.637 63.574 8.876 9.002 17.640 146.113 171.172 360.218 651 Qingqi (Triwheeler) P ~ ~ ~ ~ ~ ~ ~ 10.635 23.072 13.610 27.850 120.738 4.656 417.163 15.663 14.478 7. 000 Dewam Farooque Motors Ltd.000 Sind Engineering Ltd. SUV Dewan Farooque Motors Ltd.000 (LCV 11.000 Ghandhara Industries Ltd. 25. 1. 1. 10. Ltd. 4x4 Land Rover Manufactured at Ghandhara Nissan Plant.000 MOTORCYCLE Atlas Honda Ltd.ANNUAL PLANT CAPACITY CAR Pak Suzuki Motor Co.000 Ghandhara Industries Ltd.000 Ghandhara Nissan Ltd.000 Sigma Motors (Pvt. 400.000 VPL Limited 500 **** Master Motor Corporation Ltd.000 LCV & 4X4 Pak Suzuki Motor Co.050 BUS Hinopak Motors Ltd. 4x4 1.000.000 Dawood Yamaha Ltd. 2.000 Millat Tractors Ltd. 34. 10. Not declared TRUCK Hinopak Motors Ltd. 68.000 . 8.800 *** Ghandhara Nissan Ltd.000 Sind Engineering Ltd. 200. 3. 8. Ltd. 12.000 Dewan Farooque Motors Ltd. 15.000) Indus Motor Co. Ltd. 25. 3. TRACTOR Al-Ghazi Tractors Ltd.000 * Honda Atlas Cars (Pakistan) Ltd. 30. Ltd.) Ltd. 6.000 Indus Motor Co. 10 billion Rs.000 Saigols Qingqi Motors Ltd. 30 billion Rs. Porter s Model Analysis of Pakistan Automobile Industry . 2 billion Import Substitution $ 500 million $ 100 million Foreign Exchange Savings $ 200 million $ 70 million LIST OF LOCALLY ASSEMBLED AUTOMOBILES Your browser may not support display of this image. 65. 6 billion Revenue to GOP Rs. 1. (Sohrab) Contribution of Cars and LCV s to Pakistan s Economy Description Cars LCV s Contribution to GDP Rs. 100.Suzuki Motorcycles Pakistan Ltd. 10 billion Rs.000 Pakistan Cycle Industrial Cooperative 42.5 billion Direct Employment 3000 jobs 1500 jobs Investment Rs. PRICE LIST OF CAR IN PAKISTAN Your browser may not support display of this image. LOCALLY ASSEMBLED MOTORCYCLES PRICE LISTS Your browser may not support display of this image.000 ** Society Ltd. due to unprecedented increase in demand has made the government rethink its policy. The most recent example of liberalizing imports in cars has opened up the market for imported cars again. stands at Rs210 billion while export of auto parts are estimated at $35 million. Government in order to accommodate more these groups has allowed the import of Chinese motorcycle which even at 100 %. It seeks to enhance auto-sector s contribution in GDP to reach 5.000 to 250. Likewise. The plan discourages import of used cars through tariff measures and calls for introduction of a computerised registration system on a uniform basis for access across the country. It has proposed a phased reduction of tariff for the high tariff rates of localized items and the tariffs would come down by at least 15 percentage points for the localized components within . The manufacturers of buses are also facing problems due to misuse of the import laws. As such. Lahore and seeks to reduce the existing monopolistic tendencies of the existing manufacturers by encouraging new entrants. The key behind this argument being that Pakistan s car market is small and to make any foreign automobile company set up its plant here special set of incentives are needed. The annual gross sales turnover of the auto industry. at present. Karachi and Motorway. the employment level has been projected to increase from 192. The availability of more consumer finance has effected the middle income groups too.000 as direct jobs and from around one million to 2. Previously the lobbying power of the manufacturer was so great that duties on imported cars were as high as 300%.Government The government has always been over protective of the automobile sector. The plan envisages development of two auto-parts vendor clusters near Port Qasim. After some hue and cry the government has streamlined its policy with the introduction of a predetermined five-year tariff under the Auto Industry Development Plan (AIDP) to increase production turnover of the auto industry and annual export of parts to $10 billion (Rs600bn) and $650m (Rs39bn) respectively by 2011.6 per cent and the share in manufacturing sector to 25 per cent by 2011. the increase in production turnover is projected to increase by 185 per cent while the exports of auto parts would make quantum jump. Similar issues can be seen with motorcycle. Even though this has remained core policy.5 million indirect jobs. The tariff for CKD non-localized parts would be reduced from 35 per cent to 32. However. Similarly.5 per cent in 2007-08 and would keep on decline by 2. However. For localized parts of CKD cars. the tariff would be reduced from 50 per cent to zero next year (2007-08) and to be kept at that level thereafter. components and manufacturing. the tariff on CBU two wheelers would reduce to 60 per cent by 2010-11 from existing rate of 90 per cent. Some productive asset investment incentives would also be provided to the vendors and manufacturers. the tariff on CKD kits would be reduced from existing 30 per cent to 20 per cent in phased manner to 2010-1. For LCVs. they would be asked to provide a commitment to develop and purchase local parts for fitment in the locally assembled cars. For CBU cars between 1500-1800cc. the applicable rate of 75 per cent would be reduced at the rate of five per cent per annum to 50 per cent in 2010-11. the tariff for vendors and manufacturers of parts and components which is currently zero for raw material. the tariff would reduce from 50 per cent to 45 per cent in 200809 and further to 35 per cent in the next two years. The government has also proposed to allow the assembly of new entrants through import of 100 per cent CKD kit at the rate of duty applicable to non-indigenised parts. the tariff for CBU LCVs. the existing tariff of 35 per cent has been proposed to be reduced to 25 per cent in 2010-11. Similarly. while it would be reduced for trucks from 10 to five per cent and from 30 to 25 per cent next year.5 per cent every year to 25 per cent in 2010-11. The tariff for prime movers (above 280HP) and would remain unchanged. the current rate of 65 per cent would be reduced at the rate of five per cent annually to 50 per cent by 2010-11. the tariff on CKD kits would be reduced from 20 per cent to 15 per cent at the rate of one per cent every year. For two-wheelers. The import duty on completely built units (CBU) of cars would not be further lowered to encourage investment in the auto sector. the tariff for CBUs would be reduced to 25 per cent next year and then kept at that level for the next five years. For CBU cars exceeding 1800cc.five years but still remain higher than CKD (completely knocked down) tariffs for non-localized components. The rate for CBU cars up to 1500cc. the rate would be reduced from 60 per cent to 50 per cent in a phased manner by 2010-11. . As such. five per cent for sub-components and 10 per cent for components would be reduced to zero for all the three categories from next year. For localized CKD parts of tractors and heavy commercial vehicles. For prime movers (up to 280 HP) the tariff for CKD would be reduced from 10 per cent to five per cent next year and then kept at that level onwards. Imported cars may excellent safety standards but lack of awareness of them is hindrance in the local market. This has tended to lead the government to favor other side then consider their aspect on issues. Supplier Power The power of manufacturing companies is immense in our country. . Threat of New Entrants In our industry we have become prone to Honda. Thus the power of buyers in Pakistan our auto sector is does not play a significant part in determining how policy is determined. With all this said. imported cars have reduced the premiums on cars. This scenario is present in all segments of the auto industry in Pakistan.Buyer Power In Pakistan automobile market the power of the buyer is limited. The recent changes in liberalization were made after a lot of protests were made people and that too after a period of 3 years of consisting paying almost premiums of 10% prior to import liberalization. Another aspect which might have been useful to supplier is the deletion program. This situation offers little room for local suppliers. As a result supplier tend to toe the line of the manufacturers. All companies have their CKD kits imported from abroad through their parent companies. premium affecting the buyers is limited to certain models out of which maximum premium is of Rs 60. The upcoming entrants in the cars market who plan to setup assembly plants are Proton and Renault. There is lot of dissonance about imported cars.000 is on Corolla Xli. Toyota and Suzuki even if the public is getting a better imported car in same price range major part of our population will go for same existing local assembled brands. It is only effective with no powerful lobbying group. Now with more choice with models. Consumers tend to assume that they have defects and the dealer is trying to sell them something not worth their money. This is likely to make the competition and reduce prices. The government has not been able to implement it due to lobbying power of the manufacturing companies. In our analysis the major reason for lack of buyer power is lack of consumer groups in our country. As our country is still progress it is hoped that in the future with development of consumer groups in the country will lead to similar formations in the automobile sector. The local production of after market vehicle parts and accessories is estimated at US$850 million. In their response the local manufacturers had to decreased prices by Rs 10. The motorcar industry has also seen a drastic change with the import of vehicles being allowed in the recent few years there have been a large number of imported cars flushed into the market which have led to the decrease in on-money prices of the locally assembled car New firms have also entered the market such as proton and Renault are having talks with the government to enter the market both these company s have the intention of setting up plants in the country which will increase the local assembled car production Buses and Trucks in Pakistan Pakistan has a growing market for vehicles and accessories (including tractors). which is being met from local sources and imports. The vehicle industry demonstrated a very impressive growth rate of 46.The story is different in motorcycle market. Annual demand is estimated at 300.000 to Rs 15. Only five of these vehicle manufacturers are engaged in the manufacture/assembly of buses and trucks.000.000. The local governments encourage franchised companies to introduce more buses on city routes by providing 4 percent loans for bus purchases. The lower income group which have been offered imported Chinese motorcycles lead them to accept this as the other Japanese brands did not fall in their category. Four hundred vendors that manufacture vehicle parts and accessories support 25 vehicle manufacturing and assembly facilities in Pakistan. Total imports are valued at US$300 million.7 percent during the past fiscal year.9 million units. This has lead to prominent brands reducing their prices by Rs 10. The government is also . Today the customers have a choice of wide range of motorcycle of Japanese and Chinese brands at internationally competitive prices which have only become possible due to local contents and availability of highly productive and inexpensive human resources.000 units. There are currently 44 motorcycle assemblers in Pakistan. mainly due to growth in demand and the availability of consumer credit and low interest rate loans. The total number of vehicles in Pakistan is over 4.000 to Rs 15. Rivalry There is very strong competition in motorcycle industry with many Chinese motor bikes coming into the market. offering exceptionally good sales opportunities for exporters in the bus and heavy truck segments. Recently. For companies interested in selling vehicles in Pakistan. MARKET CHARACTERISTICS STATISTICAL DATA Market Size (U. Pakistan has a sophisticated and regulated banking industry with both state-owned and private banks offering a full range of financial services including trade financing. Recently. Trade Sources and estimates OVERVIEW (TRENDS AND HIGHLIGHTS) . and providing incentives to entrepreneurs.5 3. water. the government has made tremendous progress in promoting CNG usage by setting up filling stations. and noise pollution to the vehicle industry. Pakistan is reported to rank third among the CNG users in the world. Import under this customs duty exemption is channeled through Small and Medium Enterprises Development Authority (SMEDA) and vehicles imported under this scheme cannot be resold or transferred without obtaining permission from SMEDA. as the government applies the National Environmental Quality Standards related to air. Buses using Compressed Natural Gas (CNG) are particularly in demand.5 5% Exchange Rate 1US$=Pak Rupees 55 57 58 Source: Imports. the best strategy is either to find a local partner to act as the sole distributor/agent or to register and establish a representative office in Pakistan.giving 10 percent rebates of custom duties for the import of public transport vehicles. the government exempted buses in Completely Knocked Down (CKD) condition from customs duty irrespective of whether they ran on Compressed Natural Gas (CNG) or diesel fuel. and 60 percent on Completely Built Units (CBU) for trucks and 20 percent on CBU for buses. CNG is an indigenous smoke-free.S. The general tariff regime in Pakistan is 20 percent on CKD both buses and trucks.000 vehicles have already been converted to CNG and the clean fuel has gained instant popularity. Companies engaged in manufacturing and assembling buses and trucks should consider entering this market. Dollars. converting petrol-run vehicles. As a result. Exports. in Millions) FY-2000/01 FY-2001/02 FY-2002/03 Projected Avg. more than 265. Production: Federal Bureau of Statistics. Annual Growth rate for following 2 Years Import Market 200 220 300 30% Local Production 500 700 850 20% Exports 30 25 30 5% Total Market 670 895 1120 25-30% Imports from US 2.2 2. and relatively clean fuel. 086 1. South Korea.Pakistan offers a promising market for vehicles and accessories. Exporting destinations including Europe. the export of vehicle parts is registering continuous growth over the last few years.500 120.000 31.000 108.2 billion in FY-2003 and is expected to grow by 25-30 percent annually over the next two years. FY-2001 and FY-2002 .$670 million in FY-2001 to U.900 1. Other major suppliers were Japan.191 Source: Pakistan Automotive Manufacturers Association *Light Commercial Vehicles Vehicle Export and Import: Pakistan does not qualify as a major exporter of vehicles. Australia. with good sales opportunities for exporters in some segments of the industry.627 165.955 23. Production figures of vehicles are as follows: Vehicle Production in Units Description Installed Capacity (per annum) Production 2000-2001 Production 2001-2002 Production 2002-2003 Motorcycles 340.304 269.326 1.055 12. and the Gulf States has enhanced the credibility of Pakistan vehicle parts manufacturers. Iran. Its exports are limited to tractors and a few thousand motorcycles.$ 1.000 7.S.548 Trucks 12.000 39.801 26.134 1.296 Tractors 33.240 Total 521. Japan.073 *LCVs 28. import share grew from 2.400 189. The local manufacturer of original equipment manufacture (OEM) parts has encouraged Pakistani vendors to enter the export market.424 9. Import of CKD (Completely Knocked Down) and CBU (Completely Built Units) Vehicles for FY2000.105 Cars 106. Sri Lanka.500 912 1.S.601 62.5 percent in FY-2003. and China. Vehicle-part exports were approximately US$30 million in FY-2003. Italy.689 196. However. The total market has expanded from U.2 percent in 2001 to 3.573 40.929 Buses 1. Indonesia. Available data indicates that the U.S. Pakistan continues to depend on the imported CNG conversion kits.7 percent during the past fiscal year. which is being met from local sources and imports.670 23. which need to be converted to the CNG in FY-2005-06.067 1. Import total around US$300 million.177 CBU 4.632 Total: 43.204 189.013 2. The government initially plans to import about 2.809 Source: Ministry of Commerce.044 174.251 175. The local production of after market vehicle parts and accessories is estimated at US$ 850 million. Various countries have shown interest in extending economic and technical assistance for the conversion of these buses to CNG in major cities.753 35.409 213. there are about 100. mainly due to surging demand and the availability of consumer credit and low interest rate loans.797 209. Private sector has already taken initiative and would shortly operate a fleet of 300 CNG buses in Karachi.000 dedicated Compressed Natural Gas (CNG) buses annually.277 16.657 20. Pakistan The total number of vehicles in Pakistan is over 4. The vehicle industry demonstrated a very impressive growth rate of 46. .000 diesel-run buses plying on the roads. Currently.9 million.344 67.Commodities 1999-2000 2000-2001 2001-2002 Quantity (Number) Value (Thousands of US$) Quantity (Number) Value (Thousands of US$) Quantity (Number) Value (Thousands of US$) CKD 39.716 18.000 units.120 24.967 193. There are 25-vehicle manufacturing and assembly facilities in Pakistan that are supported by 400 manufacturers of vehicle parts and accessories. An annual demand is estimated at 300. As a result. Number of Registered Vehicles in Pakistan Description FY-1997 FY-1998 FY-1999 FY-2000 FY-2001 July-Dec FY-2002* Motor Cars. and providing incentives to entrepreneurs to switch to CNG run vehicles.969 1.The Pakistan Environmental Protection Council and its related provincial agencies have been established to implement the national environmental control policies.963 .307 1. Pakistan has 32 trillion cubic feet of proven natural gas reserves and potential reserves of 200 trillion cubic feet. Recently.876 1. Jeeps & Station Wagons 1.236 million cubic feet per year. It currently produces 2.162. and relatively clean fuel. Pakistan is reported to rank third among the CNG users in the world.068. and encouraging the use of better quality of fuel and improved maintenance of the vehicles. The government is promoting environmentally sound technologies and the use of alternate fuels for vehicles. The government has applied the National Environmental Quality Standards related to air. the government has made tremendous progress in promoting CNG usage by setting up filling stations. and continues to rise. more than 265. including Islamabad. CNG is an indigenous.199. in the next phase of the government s plan. converting petrol-run vehicles. Air pollution in Karachi and Lahore at present is reported to be 20 times more hazardous than the World Health Organization's standards. smoke-free. and noise pollution to the vehicle industry. Vehicle assemblers in Pakistan have responded by marketing dedicated CNG cars and buses that have gained instant popularity. water. Thus.116 1.182.085.000 vehicles have already been converted to CNG. The network of the CNG buses is to be extended to other cities. 490 4.293 Total 4.401 161.499 *6 months data from July-December Source: Federal Bureau of Statistics Market share of Japanese brands (Assembled in Pakistan) Car Make (Brand) Motorcycles Buses/Trucks LCVs Tractors % share 90% 90% 80% 50% 0% Suzuki Honda Nissan Suzuki Toyota Yamaha Hino Toyota Honda Suzuki Mazda Nissan Daihatsu (Cuore) Source: Pakistan Automotive Manufacturers Association Market share of non-Japanese brands (Assembled in Pakistan) Car Make (Brand) Motorcycles Buses/Trucks LCVs Tractors 10% 10% 20% 50% 100% Hyundai Qingqi Dong Feng Hyundai Massey Ferguson Kia Sohrab Volvo Kia Fiat Fiat Zabardast Universal Source: Pakistan Automotive Manufacturers Association .569 156.108 154.588 57.309 746.376 107.844 83.772 2.343 848.068.283.296 4.596 4.887 69.279 786.129 Motor Cabs/Taxis 83.590 Buses 119.788.907 199.260.175.995.062 56.718 772.892 92.421 2.991 Motor Cycle (3 Wheels) 76.730 2.381 196.322 132.559.141 Motor Cycle (2 Wheels) 1.929 150.719 Others 700.182 83.173.895 145.687 83.945 4.315 724.701.111 148.303.636 Trucks 131.488 2.555 32.365 125.236.224 81.345 99.777 95. In order to meet rising demand the vehicle industry has considerably increased its production capacity. Twenty-five leading manufacturers/assemblers in Pakistan have set up as joint ventures. Korean. technical collaboration in vehicle industry with foreign multinational companies.6% Trucks: Hino (Hinopak Motors) 41. whereas the local investment is approximately US$ 1. Five out of 25 leading local manufacturers are engaged in the manufacture/assembly of buses and trucks.0 billion.5 billion in Pakistan's vehicle sector.5% Nissan (Ghandhara Nissan) 32. The vehicle industry in Pakistan can be broadly categorized into following segments: The industry operates under franchise and technical cooperation agreements with leading world manufacturers.1% Nissan (Ghandhara Nissan) 4. the production volumes have been low in the past but the industry has undoubtedly entered a new era as it produces eight international brands in various models.0% Mazda (Dong Feng) (Sind Engineering) 26. COMPETITIVE ANALYSIS Market Share of Buses and Trucks Buses: Hino (Hinopak Motors) 58.Overview of Technical Collaboration in Vehicle Industry Category Number of Manufacturers/Assemblers Technical Collaborations Status Cars 6 Japan 5 Republic of Korea 2 Italy 1 LVCs 3 Japan 2 Republic of Korea 1 Jeeps 1 Japan 1 Trucks and Buses 4 Japan 3 China 1 Sweden 1 Tractors 3 United Kingdom 1 Italy 1 Romania 1 2/3-Wheelers 8 Japan 3 Italy 1 China 3 Pakistan (local brand) 2 Total: 25 29 Source: Pakistan Automotive Manufacturers Association Due to limited market size. and European entrepreneurs have invested almost US$ 1. This Industry Sector Analysis (ISA) report covers Trucks and Bus sector of vehicle industry in Pakistan.5% . Japanese.3% Mazda (Sind Engineering) 37. 000 liters.883 units.9 tons and 15 tons pay load commercial vehicles fitted with Cummins engines. which pioneered transportation of goods by long bodied vehicles and established Container Freight Stations and Inland Dry Ports.929 and 1.249 and 192 Cars . Low bed Trailers. has entered into an agreement with leading Chinese truck assembler. 3. from 1. maker of Mazda trucks. The Dry and Liquid cargo transportation resources comprise 6x4 and 4x2 configuration Prime Movers coupled with 40 feet and 20 feet containers. a sister concern of Omar Jibran Engineering Industries Limited.065 units in FY-2002. Those will replace Mazda trucks as the Mazda Motor Corporation. has started production of medium loaded trucks and luxury buses in collaboration with China.Zabardast . Dong Feng.5-ton (capacity 2600cc) Chinese truck . Mazda (Dong Feng) and Nissan) in FY-2002/03 jumped to 1.Iran border) and at Nowshera (Pakistan-Afghanistan border). Sindh Engineering.208 units in FY-2001/02. in collaboration with Jiangsu Mudan Automobile Group Company of China. Bus sales should increase in coming months as Sindh and NWFP introduce their respective transport plans. Japan. Flatbed Trailers. has indicated it will not be able to supply the T-3500 chassis.296 and 1. respectively.had already been launched in March 2002 by Adam Motor Company. The Production and Sales of trucks (Hino. Master Motor Corporation. Under a franchise agreement. Mazda. the Chinese company will assemble vehicles of 1. A 1.5 tons. Nissan) stood at 1. a subsidiary of Master Group of Industries. National Logistics Cell (NLC).086 and 1.134 and 1. In the truck segment. has recently repositioned its logistical resources including establishment of major warehousing facilities in Quetta (located on the Pakistan . to introduce Chinese trucks. An assembler linked the rise in bus production to rising sales of buses under the Urban Transport Scheme (UTS) in Punjab.000 liters to 40.Domestic Production: The Production and Sales of buses (Hino. It has a fleet of 1318 vehicles with Dry cargo carrying capacities ranging from 25-50 tons individually and 382 vehicles in Liquid cargo tankers with capacity ranging from 9.332 units in FY-2003 as compared to 1. Dry Cargo Carriers (with Trailers) Nos Capacity Mercedes Benz 413 25 Volvo 357 25 TO 50 Mitsubishi 168 25 TO 40 Renault 356 25 TO 50 Mitsubishi Car Carrier 24 8 cars 1318 Total: 39. Car carriers and Tankers. 148.569 were load-carrying trucks of capacities of 10.959 Km in pursuit of business and pleasure. however.845 Km in 2002-03 or by 47.823 Km in 1990-91 to 251. and 2003 (Estimated) (Population in thousand) Total Punjab Sindh NWFP Baluchistan FATA Islamabad Year 1951 33816 20557 6054 4587 1187 1337 94 Year 1981 84453 47292 19229 11061 4332 2199 340 Year 1998 130600 72585 29991 17577 6510 3138 799 Year 2003 149030(E) 82710(E) 34240(E) 20170(E) 7450(E) 3420(E) 1040(E) FATA: Federally Administered Tribal Area Source: Population Census Organization NWFP: North West Frontier Province .728 million liters The road sector. Population of Pakistan Province-wise 1951. 1981.028 high type and 100.817 low type roads. 20. Pakistan has a road network covering 251.44 million registered vehicles were plying a network of 249.4 percent. is more promising.938 million liters Water Bowzers Nos (Lits) Mercedes Benz 32 9000 Isuzu Water Bowzers 2 9000 Mitsubishi Water Bowzers 34 27000 To 30000 Renault Water Bowzers 9 25000 To 35000 Volvo 1 25000 Total: 78 Total: 1. In 2003.Bowzers Nos (Lits) Mitsubishi 80 28000 To 40000 Renault 99 25000 To 35000 Volvo 125 25000 To 40000 304 10. Out of this. some 4. and 40 tons. 1998.661 in 2001-02. to 251.845 kilometers including 151. The total roads increased from 170. Buses and Trucks on the Road (000 number) Year Buses Trucks Tankers Oil Water 1997-98 72.7 1999-00 92.0 8.8 0.4 0.3 1998-99 84.4 121 6.4 7.2 0.AC Buses 275-350 hp Premier Bus Services 81 .7 2000-01 97.3 7.8 1.0 0.6 135.1 132.5 117.1 *Estimated Source: National Transport Research Center NEW BUS TRANSPORT NEEDS BY PROVINCE PUNJAB Current Bus-Franchise Operation in Punjab Lahore Within City Engine Capacity Horse Power (hp) New Khan Metro Bus Services 255 .1 6.Non AC Buses 175-200 hp Chatta Bus Services 40 .8 2001-02* 99.0 149.6 7.Non AC Buses .Non AC Buses 175-200 hp Daewoo City Bus Division 70 .Non AC Buses 175-200 hp Monolite Bus Services 40 .Non AC Buses 175-200 hp Baloch Bus Services 24 .8 127.8 1.8 July-March 2002-03* 97. 5 million people commute on a daily basis. Lahore serves as a distribution center for the heavily industrialized surrounding area. and mini-buses daily. There are more than 900 buses of six franchised companies serving city routes in the Punjab province. In general.AC Buses 200-300 hp Rawalpindi/Islamabad Varan Tours 155 . and the Lahore University for women. CNG buses are needed to replace the existing 8000 LCVs/wagons. wagons. The City District Government (CDG) of Punjab encourages franchised companies to introduce more buses on city routes by providing 4 percent subsidized loans to transport companies and individuals for purchasing buses. About 3. It is the principal commercial and banking center of the province.Non AC Buses 175-200 hp Bashir Sons 40 AC Buses 275-300 hp Rawalpindi/Islamabad Varan Tours 105 .Non AC Buses 175-200 hp Faisalabad Minthar Metro Bus Services 20 . capital of Punjab province. The government is also giving a 10 percent rebate on custom duties for the import of public transport vehicles. over half a million passengers arrive and leave the city on 4.000 buses.(+12 Double Decker) 175-200 hp Multan New Khan Metro Brothers 81 . is the second largest metropolitan city of Pakistan having an estimated population of about 7 million people. The CDG is not requiring the transport companies to introduce air-conditioned buses as their fare is higher as compared to . the buses and mini-buses are over-loaded and the number of road-worthy vehicles is highly insufficient to meet the demand. Monolite Urban Star has introduced Euro-2 standard environment-friendly Chinese buses. the passengers face serious transportation problems particularly during peak rush hours.Non AC Buses 175-200 hp Bashir Sons 40 . Another 1600 large.Non AC Buses 175-200 hp Lahore.Non AC Buses 175-200 hp Total Buses: 798 Demand (under process): Lahore Premier Bus Services 40 . In addition.Non AC Buses 175-200 hp Faisalabad Minthar Metro Bus Services 40 . University of Engineering and Technology. An educational and cultural center. the city is the site of the University of the Punjab (the oldest university in Pakistan). These vehicles will help reducing vehicular pollution besides reducing traffic burden on the City roads. Punjab o Franchise period-10 years o Exclusivity of routes for operation o Flexible fare structure o Lease of land of PRTC Depots/terminals for operation.C. More than 74 private companies offered bids for operation with minimum 400 buses in different cities of Punjab province under the franchise scheme. 10% for CNG buses o No concessionary fare o Minimum fleet requirement for operation is 40 brand new buses and 20 for smaller cities o Extended from bigger cities to smaller cities o Exemption of import duty on import of buses o Due protection to foreign investment o Flexible/supportive legal structure of the operators o Exemption from IRO and Declaration as an essential service to save from menace of unionism SINDH Current Urban Transport Scheme (UTS) in Sindh Karachi Within City Engine Capacity . The sustained growth in the demand for passenger vehicles has produced very positive demand projections. but CDG is not averse to this option. office and workshop where available o Subsidy on the mark up of loans (70: 30) debit/equity ration up to a maximum of 5 % for A. parking. Diesel. as well as planned investments of Rs. Procedure for Grant of Franchise Buses & Incentives In Punjab o Advertisement for bids o Evaluation of bids by Evaluation Committee headed by Minister Transport o Security of documents of financial soundness o Bids Evaluation Committee recommends qualifying bids for approval of Chief Minister o Final approval granted by Chief Minister.the ordinary ones.19 billion to meet the projected demand of 2210 buses for FY-2004 and FY2005. Five million commuters use different public transport vehicles daily. At present 2321 big buses. * In addition. In addition. The Green Bus Company serves 2 routes with 28 buses.000 to 15. with a projected population of 13 million (2003). and 3262 wagons serve the city. Most of the international trade of Pakistan and landlocked Afghanistan passes through the city s busy port.Horse Power (hp) The Green Bus Company 28 Non AC Buses 175-200 hp Allied Bus Service 30 Non AC big Buses 300-350 hp The Worldwide Express 30 Non AC Buses 175-200 hp Sweden Bus Company 32 AC long Buses 300-350 hp Green Bus Company 28 AC Buses 200-300 hp Metro Bus Service 197 Non AC buses 175-200 hp City of Karachi.000 additional large buses will be needed to cater to the demand.854 inter-city buses. requires 8000 buses for public transport. Karachi is the hub of a sprawling metropolitan area and is the nation s largest city and its chief transportation. * Some new investment has come in the shape of Green Buses/Metro Bus Service/Gray Horse Public Transport Company Limited in Karachi including foreign investment from Swede-Spanish company * There is a current shortfall of 5000 long buses * Karachi has 14. Present mix of transport including mini-buses/wagons comes to 3000 buses. 3601 mini-buses. The Transport and Communication Department offered franchises on 18 new routes. at least 4. Only six are operational at present. The City District government Karachi (CDGK) has a passenger load of 10.000 on a daily basis. which are owned by private operators. a federal-funded project. and 2) Karachi Public Transport Scheme (KPTS). commercial. and manufacturing center. Karachi has 2 transport plans: 1) Urban Transport Scheme (UTS). financial. The . North West Frontier Province (NWFP) Peshawar. which is being funded to the City District Government Karachi (CDGK) under federal sponsorship.. Ltd.000 rickshaws. In addition..000 buses. The number of unregistered vehicles might be more than double the registered ones. Allied Motors Ltd. commercial vehicles. Public transport vehicles in the province roughly total 258..Worldwide Express.000 -. the capital of North-West Frontier Province is a commercial center and the traditional terminus of caravans from Afghanistan. pre-empt imports and help achieve deletion programmes. a federal-funded project.000 miscellaneous. and 115. Problems Faced By the Automobile Industry The automobile industry of Pakistan is an oligopoly with 22 automobile OEMs producing passenger cars. 105. Ltd. The mostly nonair-conditioned diesel buses have a capacity for 40 seated and 50 standing persons.. and operates 32 buses. vendor industry in organized sector and unorganized sector.l a lot of other Chinese companies have also entered the market like Cherry QQ . The major assemblers/manufacturers are Pak Suzuki Motor Co. 23. 15.. .. the city required at least 500 buses to overcome its lingering transport problem. namely imports ($70 million annually). It was initiated through the Karachi Public Transport Scheme (KPTS). carrying a total number of 90 passengers. Ghandhara Industries Ltd. World Korean Motors Ltd. Dewan Farooque Motors Ltd.. Development of vendor industry would be able to expand the employment opportunities.000 trucks. The Sweden Bus Company. These buses under the Urban Transport Scheme have a concessional leasing rate of 7 percent. reduce cost of production. There are four sources of spare parts. Honda Atlas Cars (Pakistan) Ltd. Atlas Honda. tractors and motor cycles in collaboration with Japanese and Korean manufacturers. Various operators are running another 197 Metro buses under the KPTS. It faces a number of obstacles: * The Vendor industry plays a critical role in the growth of auto industry as all the component parts are not manufactured under one roof. a newcomer operates 2 lucrative routes with a fleet of only 30 buses. The District Transport Authority (DTA) has decided to designate 21 new bus routes under the UTS scheme in Peshawar. of Pakistan Ltd. smuggling.. Hinopak Motor Ltd. nearly 2 percent lower than the market rate. which is not a part of the Urban Transport Scheme (UTS). DTA is inviting bids from interested parties for at least five 50-seat buses for each of the 21 new routes. Indus Motor Co. and Fateh Motors Ltd. Ghandhara Nissan Ltd. Suzuki Motor Cycles Co.500 mini-buses. (Pakistan).13. automotive pump. Rao Engineering Ltd. tyre. and Sindh Engineering (Pvt) Ltd. the production and import of cars stood at 62. there is a slew of small units in the unorganized sector located mostly in Karachi.000 (39000 and 46000 respectively) due to rising value of Japanese Yen and slackness in the economy. * The market conditions for truck and bus industry have deteriorated during the past few years to a seemingly irreparable extent. Exide Pakistan Ltd. Loads Ltd. The unorganized vendor industry is producing quality products imitating foreign makes with extraordinary skill and expertise of the experienced but unqualified workers. The capital and operational cost of commercial vehicles has increased to an alarming limit while the revenue did not increase correspondingly. gasket. of which half is serviced by local production.. It is observed that local car market. Lahore and Gujranwala which fabricate smaller parts (without brands or names of manufacturer) such as ignition control system.000 respectively) falling from 85. rendering it beyond the reach of middle class.. engine valve. door operating system.. . auto filter.. dash board light indicator. One reason is the increased import of CBU buses in recent years. During 1999-2000. General Tyre and Rubber Company Ltd. The quality is improving with keen competition among the workers. Motor vehicles worth $300 -$400 million are imported annually besides import of other transport equipment worth $150. Unabated smuggling of auto parts has hamstrung the development of vendor industry. In addition. * The total auto market exceeds $1 billion. It will take a few years to meet the entire demand of spare parts for expanding the automobile industry.500 (32. piston radiator. built alarm system.$200 million forming 4 to 5 per cent of the total import bill. the capacity utilization of truck and bus industry is less than 7 per cent as the production is 1000 compared to annual installed capacity of 15.. etc. as disclosed by a spare parts dealer. particularly of small brands is much bigger but it remained limited due to high prices. Thal Engineering. The vendor market hasn t developed to the extent that it can provide the same quality supplies as that of imports. Balochistan Wheels Ltd. * The government has been urging the auto industry to explore ways and means for boosting exports and criticized the inexorable jump in prices of car in the short span of time. The manufacturing of medium and heavy transport equipment has become an unprofitable business. These are much cheaper than those produced under brand names or imported and. 800 CC cars are 30 per cent dearer in Pakistan than in India. Transmission Engineering Industries Ltd.000. supplying different parts namely axle products. Axle Products Ltd. For example. Mali Auto and Agricultural Industries Ltd. command a big market. Landhi Engineering Works.. Bolan Castings Ltd. Allwin Engineering Industries. wheel. micro touch button..Organized sector consists of some 350 units such as Agriauto Industries Ltd. fly wheel.. Therefore.. therefore. shock absorber.. radiator core. Atlas Battery Ltd. battery.500 and 30. handle lock revolving warning light and horn. fewer employment opportunities for local engineering sector. coinciding with the period of the textile quota termination. The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has been calling for an upward revision of deletion program. * The rise in new entrants is adding more capacity to the surplus pool threatening levels of the industry. mounting taxes. The automakers have been asked to indicate the deletion program and achieve an optimum within four years. etc. Pakistan has not been able to derive maximum benefits in terms of technical know-how. This places considerable stress on the manufacturers. automobile industry suffers from a high cost of production because of heavy import component as the plants are merely engaged in assembling rather than "manufacturing". little technology inflows and inflated market rates for the locally manufactured automobiles. to the mutual advantage of the manufacturer and consumer. Under the existing covenants of WTO.* Like other industries. contrary to industrialized nations where output of cars runs into millions resulting in lower cost per unit. * Our automobile industry does not enjoy economies of large-scale production. * Reduction in customs duty on automobiles and spare parts has caused erosion in the viability and competitiveness of the local industry. The industry's demand for immediate protection against imports may not be easy to accede. which means minimum inclusion of local components. * Transfer of the state-of-art technology from parent companies of Japan and Korea is one of the most important areas of automobile industry. At the same time. especially in times of rising costs. Factors stopping growth . * Smuggling of cars from neighboring countries. production technology. quality control. * The expansion of capacity and the distribution of volume of different models and makes within the auto industry prevent them from realizing economies of scale. The result is inflated profits for foreign-based manufactures. Escalating input prices such as power and raw materials. The all-important aspect in the local manufacturers is the need to improve the quality of goods to conform to international standards. import duties are required to be gradually reduced. It is simply importing CKD kits to assemble vehicles locally. technological innovations should also be assiduously pursued which alone can ensure production of superior quality finished goods and high level of capacity utilization in local industry. post-sale servicing. Unfortunately. * The industry is far behind the schedule of deletion program as indicated by WTO. and high wages relative to productivity add to this cost. * Lack of spare parts market for vendors as they are bound to sell parts to the assemblers only.* Heavily reliance on imported Completely Knocked Down (CKD) Kits. * Tariffs of 35% for import of CKD by the OEMs and commercial importers have eliminated the attraction for deletion. a component developed for one assembler is not accepted by others. It accounts for 60% of the domestic market. * Delays in inspection and approval of parts by the parent company. which comprises 400 units. The vending industry. Indian Automobile Industry Snippets * India is being recognized as potential emerging auto market. * Indifferent attitude of the assemblers i. * 2/3rd of auto component production is consumed directly by OEMs. * Automobile industry expert predicts that by 2050 every sixth car in the world will be for Indians. * Ineffective implementation and monitoring of the deletion program has resulted in lesser deletion in the car industry as compared to 84 per cent in Tractors and an average 50 per cent in Bus and Truck manufacturing. * Small size of the market resulting in under capacity utilization. o India is the two-wheeler capital of Asia with an average of 27 two-wheelers per thousand people. Facts & Figures .e. growth rate of 20%. o India became the fastest growing car market in the world in 2004. compared to China's 8 two-wheelers per thousand people. India is the second-biggest market for small cars after Japan. * Passenger vehicles sales crossed the mark of 1 million in 2004-05. with an estimated size of 5. A part developed locally has to be sent to Japan or Korea for approval. is operating at just 30 per cent of its capacity. * Foreign players are adding to their investments in Indian auto industry. Current Scenario o India represents one of the largest two-wheeler markets in the world.4 million units a year. Indigo o Mahindra Bolero Rs. 3-5 Lakhs o Ambassador o Fiat Palio o Hyundai Santro. Cars by Price Range * Under Rs.06 million. Indians will buy every sixth car produced in the world. 2. the total sales of passenger vehicles . the Indian automobile component industry is estimated to triple from USD 63 billion to USD 190 billion within a span of six years by 2012. As per the research of RNCOS. It is said that for every Re 1 spent. Wagon R. Versa. relaxation of foreign exchange and equity regulations. presence of international automakers. And by 2050. in the financial year end in 2005. Getz o Chevrolet Opel Corsa o Maruti Zen. Study says that by 2010 India will take over Germany in sales volumes and Japan by 2012. Indian Automobile Industry Estimation Estimated turnover USD 12 billlion. Apart from serving the domestic market. The country has now come to be recognized as a potential emerging auto market.It seems that India has finally arrived in the big league of Asian car markets. one of the leading industry firm. Optra.000 vehicles. Esteem. reduction of tariffs on imports and few others are the components of its booming auto market. Elantra o Mahindra Scorpio o Maruti Baleno . utility vehicles and multi-utility vehicles . Omni Reva Rs. The auto component market is also in its full swing. Alto. Gypsy o Ford Icon & Fiesta o Tata Indica. a cumulative growth of 9.24 to the Indian economy.cars. the auto sector has turned as a sourcing base for the global auto majors. 5-10 Lakhs o Chevrolet Swing. Steady and impressive annual growth rate. Industry analysts predict this industry to touch USD 13000 million mark by 2010. with exports of 166. For the first time. 3 Lakhs Maruti 800. Tavera o Hyundai Accent. this is the vastness of Indian automobile industry. everybody wanting to be here.5% annually.crossed the one-million mark to touch 1. The perception of foreign investors has changed. the auto sector returns Rs. plus components revenue USD 3 billion. Innova o Tata Safari o Mitsubishi Lancer.670 units in 2004-05. 10-15 Lakhs o Ford Mondeo & Endeavour o Chevrolet Forester o Skoda Octavia Classic & Combi o Honda Civic & CR-V Rs. 30-90 Lakhs o Audi A6. Terracan & Tucson o Mitsubishi Pajero o Audi A4 o Opel Vectra o Honda Accord o Mercedes C Class o Toyota Camry Rs. * The automotive industry crossed a landmark with total vehicle production of 10 million units.5 per cent * Car exports stood at 1. * The two-wheeler segment.10. Lancer Cedia o Honda City Rs.179 units in 2004-05. SLK.6 per cent with 70.224 units as against 78.97.60. Continental GT & Flying Spur o Rolls Royce Phantom o Maybach Indian Auto Market Growth for the year 2005-06 * The domestic automobile industry sales grew 12.629 units in 2004-05.70.094 units against 8.193 units against 1. 1 Crore o Bentley Arnage.o Toyota Corolla.82. the market grew by 13. SL & CLS-Class o Porsche Boxster.20.8 per cent at 89. * The growth of domestic passenger car market was 7. S Class. 911 Carrera & Cayman S o Toyota Prado Above Rs.317 units against . 15-30 Lakh o Maruti Suzuki Grand Vitara o Hyundai Sonata Embera.56. 5 Series & 7 Series o Mercedes E Class. A8 & TT o BMW X5. * According to the Society of Indian Automobile Manufacturers (SIAM). Cayenne. car sales was 8. 765 units in 2004-05.237 units against 1. upward trend of purchasing power in the hands of rural people.07.43.683 units against 3. * Three-wheelers sales rose by 17 per cent at 3. A brief input about the growth of various segment of two-wheelers with the statistics from their leading manufactures are as follows.50.208.1 per cent with 3.428 units in 2004-05.08. * Motorcycles had the upward march. * Medium and heavy commercial vehicles managed a growth of 4. Two Wheeler segment as a whole during the year 2004/05 grew by over 15%.4 per cent at 1.187 units against 3.64. The northward trend of growth among the two-wheelers is set to continue in the years ahead. The two wheeler industry was able to achieve the record performance of crossing 6 million two wheelers with exact sales standing at 6. * Scooter segment grew by 1.924 units in 2004-05.159 units against 9. Scooters 2001-02 2002-03 2003-04 2004-05 2005-06 937506 848434 935279 987498 1020013 Though the metal bodied geared scooters have fallen out of favour of the Indian two-wheeler user their upward trend in growth has been due to rise in the sales of Scooterettes and Motor Scooters.5 per cent against 23 per cent growth in the year ended March 31.62. 17.430 units in 2004-05. This goes on to show that Bajaj Auto has lost its supremacy in the Scooter and moped segment as they have shifted focus to motorcycles. This growth has been due to the Government's initiative on rural roads and better connectivity with major towns and cities. improved agricultural performance.18.19.417 units against 49. * Light commercial vehicles sales growth was 19.936 units in the year 2004/2005 of two wheelers which don't include motorcycles.60. 2005.09. Bajaj Auto has been able to sell 152. fall at 9.22. * Commercial vehicles segment grew at 10.862 units in 2004-05.753 units in 2004-05. They have shown a negative trend in the two wheeler segment other than the motorcycles.860 during the year 2004-05.1 per cent in domestic market touching 58. .5 per cent.15. The company also accounts for half the market in the motorcycle segment.710 units of motorcycle in the year 2004/2005.90 lakh of mopeds during 2005/2006. * A consistent policy should be declared by the Government every 7-10 years in order to make the local manufacturer more focused and more certain. They account for nearly 80% of the total two wheeler sales in the country. Mopeds 2001-02 2002-03 2003-04 2004-05 2005-06 427498 351612 332294 348437 379574 Mopeds which were once the entry level options in the two-wheeler. This trend is set to continue as more and more models of this hot set of two wheelers enter the market. Hero Honda which claims to be the largest manufacturer of two-wheeler in the world was able to sell 2. as the motorcycles race ahead other two-wheelers will find it difficult keep up with the pace of their growth.Motorcycles 2001-02 2002-03 2003-04 2004-05 2005-06 2906323 3876175 4355168 5193894 6201214 Motorcycles as has been mentioned through out this website have become the most preferred choice among all two-wheeler users. have been replaced by entry level or price category bikes which provide all the comfort and advantages of a motorcycle but at an affordable price. Bajaj Auto one of the largest manufactures of two wheelers in the country has managed to sell about 1. Recommendations Here some proposed suggestions are given to progress the auto industry in Pakistan by taking some important measures . This trend is supposed to continue in the days to come.449. * The current deletion policy and form "S" be maintained and officially announced to lessen . TVS Company one of the pioneers of mopeds manufactures of India was able to sell about 2.62 million motorcycles during the year 2005/2005. Thus it has not come as a surprise that mopeds have shown a negative growth over the recent years. The only way forward for the assemblers is either by expansion in their production capacity along with brand extension or through inclusion of updated and better quality vehicles in their trading portfolio. However in today s fast globalizing world changing models. The most recent statistical data issued by Pakistan Automotive Manufacturers Association explains that the arrival of the imported vehicles and rising interest rates situation has decelerated the over all sales figures of the automobile industry which is considered as a large scale-manufacturing sector of economy. * The government should also keep a close watch on new entrants so as to prevent Foreign Firms from dumping there vehicles to the Pakistan market Conclusion The local automobile industry has experienced impediment and decline in its different segments as compared to earlier where the industry observed tremendous high growth in terms of production and sales. which was reduced to 60 to 25 per cent should be increased to 60 per cent. government and general public in terms of employment and price. The import of used automobiles has considerably declined in the first quarter of the current fiscal year. Following international trends. improving fuel efficiency. On the back of high demand various vehicles were . * Market expansion measures should be taken which will definitely benefit the industry. a glut of imported used automobiles and a saturating auto market. cutting costs and enhancing user comfort without compromising on quality are the most important challenges of the industry. This downtrend can be ascribed to uncertain policies. * The duty on parts be increased from 35 percent to 45 per cent to create a gap between CKD which is also 35 per cent. Localization should be increased and investments should be made to increase localization. * Financing options such as leasing and car finance scheme in collaboration with banks and financial institutions should be extended on a wider basis so as to increase the purchasing capacity of the buyers. * The duty on 10 seater and above 10 Seater van. The vast import of used cars has affected demand of locally manufactured automobiles. * Volume of production should be increased in order to achieve the economies of scale. * Deletion level should be increased specially of high tech and major engineering parts. * The car manufacturers should also encourage the use of CNG as an alternative to fuel in order to stimulate the demand of the cars despite the rise in fuel prices. the auto industry in Pakistan is also quickly evolving and may soon begin materialize the dream of achieving economies of scale.uncertainty created by WTO agreement. 741 units whereas sales of Indus Motors were down by 14 percent to 3. Nonavailability of parts and their unsatisfactory performance on Pakistani roads has somewhat halted their imports. Import of CBU were up by a 574 percent whereas those of CKD was down by 62 percent sending a clear message that we might witness a slow down in car production in the last quarter of 2006. Pak Suzuki holds a main lump ensued by Indus Motors.663 units months on months basis. Almost all major automobile units in Pakistan either are running on double shifts or planning to go into double shifts to meet the growing demand. Pak Suzuki and Indus Motors whose sales were up on year on year basis were down in double digits when compared on mo-m. Likewise. Market share of Pak Suzuki improved to 55 percent whereas market share of Indus Motors surged to 31 percent on year on year basis. Import tariffs should be fixed to help promote manufacturing of cars and auto parts locally. But there should keep a balance between production levels of vendors and assemblers with continued governmental assistance. The lack of long-term auto policy will have a negative impact on the growth of local auto industry.000 units. 15. Rs. The industry is required to enhance investment from Rs.571 units in July to September period of 2006. the industry has to inject Rs 14 billion in 2008-09.000 to 516. for2008-09. Help is needed to make Pakistan a global supplier of auto components and embodying incentives to facilitate research and development. In the month of October 2006. import of cars was down by 53 percent to 6. while the government should encourage local and foreign investment for capacity expansion in order to meet the rising demand. Comparing the import of vehicles on a quarter on quarter basis.333 units. It may be mentioned that over 70 percent of the cars enrooted either through leasing or bank financing in Pakistan. This phenomenal growth in demand is amazing especially in the face of increased financial charges by the leasing or bank financing. 21. 27. when compared against 13. sales of Pak Suzuki were down by 24 percent to 5. 450 billion in 2010-11 and Rs 5.6 percent to 50.927 units in April to June 2006.707 units on year on year basis and were down by 20. Industry car sales in 4 months FY07 were up by 7.63 billion in 2007-08 for the production capacity of 276. . Rs 11 billion in 2009-10. Further break-up of the car sales revealed that in 4M/FY07.imported in the ending months of last fiscal.2 percent to 10.917 units were sold by Pak Suzuki. On the contrary the Pakistani auto market has grown up around 30 percent in the last 10 years.20 billion in 2011-12 for incremental car production capacity from 348.000.63 billion in 2006-07 to Rs.629 were contributed by Indus Motors and the rest by Dewan Motors and Honda Atlas. In terms of market share. 21. as a result creating a glut of imported cars.