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Scarcity of locally assembled small vehicles

Pakistan is a developing market for automobiles and its allied industry. The automobile industry plays a vital role in economic growth having enormous investment opportunities. The automobile industry in Pakistan includes companies manufacturing passenger cars, buses, trucks, pickups, vans, trucks, rickshaws and motorcycles, etc. The creativity of Pakistani designers is marvelous that they designed the passenger motorcycle rickshaw commonly named the Chingchi that has eliminated the conventional Tanga (light carriage or curricle drawn by two horses). Now the motorcycle loader rickshaw is taking over the workload of the small pickups and donkey carts. The need of the time is to add the some basic safety features in these locally designed vehicles.

The three main manufacturers in the automobile sector involved in the manufacturing of the passenger cars are Suzuki, Toyota and Honda. The Pak Suzuki Motor Company was established as a joint venture of Government of Pakistan and Suzuki Motors Japan in 1982. The Pak Suzuki Motors launched the 800 cc car Suzuki FX in 1984. It was latterly changed to Alto and Mehran. Still, it is the country’s most favorite small car.

The Indus Motor Company Limited (Toyota Indus) was incorporated in 1989 and started its commercial operation in May 1993. It was the first time that 1300 cc Sedan was assembled in the country.

The Honda Atlas Motors was established in November 1992 and the first Honda Car was rolled off in May 1994.

The interest rate is at very low level since 2014 due to a reduction in international fuel prices that has increased the buying power of the customers. Due to increase in demand, the local manufacturers are unable to provide the timely delivery of the locally assembled cars. The delivery time is ranging from four months to nine months for different vehicles. The increasing delivery time is encouraging the investors to take the premium for ready delivery. Due to supply and demand gap, the business is at its peak and locally known as “OWN” (Premium on the invoice price of the car to get an early delivery).

Secondly, the locally assembled automatic transmission vehicle is not available in 800 cc and 1,000 cc category. One of the major reasons the people are going to purchase the imported vehicle is the availability of an automatic transmission.

The import of used cars and minivans during 2017 has increased by 70% as compared to the year 2016. The total import during the last year was more than 65,000 vehicles. Toyota Vitz was the most popular imported vehicle in 2017 as more than 8,500 units arrived in the country. The import of Daihatsu Mira has also increased by 70% to more than 6,000 units. The import of other 660 cc cars has also increased to more than 25,000 units during the year 2017. This shows the interest of the public in the 660 cc imported vehicles. Unfortunately, no company is assembling the 660 cc cars in the country. Similarly the demand of Toyota Vitz is continuously increased during the last decade and now it’s the country’s most popular imported vehicle.

It is disappointing that Indus Motor has not yet started the manufacturing of Pakistan’s favorite car. Many taxes and duties are imposed on the imported vehicles. The cost of these 660 cc small cars can be much less if we manufacture these cars in the country.

The more than US$ 60 billion loan from the People Republic of China in the China-Pakistan Economic Corridor (CPEC), is set to change the face of Pakistan’s economy. The CPEC initiative is beneficiary for the economy of both the countries. The China will get the quick access to the Arabian Sea and Middle East markets and in return Pakistan can get support from the China in the technology transfer and the development of human capital. It is very unfortunate that so far Pakistan has failed to get any advantage in this regard. The CPEC projects are mainly covering the power projects and construction of the roads. It is very unfortunate that Pakistani workforce got very little chance in the projects and all the major positions are filled with the Chinese workforce.

Pakistan has the world’s sixth largest population and more than 40% population is below the 30 years of age. There are more young potential customers of the small 660 cc cars.

In the near future, the plants of Hyundai, Kia and Renault will be commissioned. The vehicles of these brands will be available in the marker in the next year. The companies should focus on the manufacturing of the 660 cc cars with international safety standards and features. The availability of small vehicles with fewer prices will increase the customer base and more youth can drive the cars at an affordable economical price. This will have the following advantages:

  • Economical Drive (Low Fuel Cost due to 660 cc engine)
  • Environment Friendly (Less Carbon dioxide emission)
  • Reduce Traffic & Parking problem due to Small Size
  • Enhanced Safety Features will reduce the accidents

The second important factor that we want to discuss is the use of Big Jeeps like the Toyota Land Cruiser. More than 3,000 units of Land Cruiser were imported during the year 2017. Despite of high taxes and duties, people are still purchasing these big vehicles. The government should encourage the manufacturers to start the production of these big vehicles in Pakistan and ban its import. The local production will definitely reduce the cost of the vehicle. This will also help the economy in saving the foreign exchange used for the import of these big vehicles. It is a fact that due to poor law and order situation, many rich people are using the bullet proof big vehicles. It is a great opportunity of investment and creating job opportunity if the manufacturing of these vehicles start in the country.

The most important need of the hour is the availability of the locally manufactured 660 cc fuel efficient automatic vehicles. We hope the car manufacturer will focus on this segment of the population and start this project.

The authors can be reached at http://www.twitter.com/farhan6309902

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