A goldmine for some

By Tajammul Hussain
July 18 - 24, 2005

It is widely believed that the invention of the wheel changed the way man worked and socialised. The indispensable invention triggered a revolution that marked the beginning of a new era of rapid human advancement. This article traces the history of the automobile industry, sometimes referred to as the mother of all industries, attempts to explore the present status of the industry in Pakistan, and contemplates its future.


Although Nicolaus August Otto invented the gas motor engine in 1876, it was Gottlieb Daimler's invention of the first gas engine in 1885 that really set the wheels of the automotive revolution in motion. Some historians argue that the credit for the revolution goes to Karl Benz, a German mechanical engineer, who designed and in 1885 created the world's first practical automobile powered by an internal-combustion engine. John W Lambert was the first American to produce a gasoline-powered automobile in 1891, aptly named the Lambert.

At the turn of the century, Henry Ford managed to improve the assembly line for automobile manufacturing with the introduction of the Model-T, installed the world's first conveyor belt assembly line in his Ford factory in Ford's Highland Park, Michigan, invented a logical transmission mechanism, and convinced the steam-powered world that gas-powered automobiles were our best option. These inventions significantly raised production while cutting production cost and time.

Other notable heroes of the industry include Rudolf Diesel, who invented the diesel-powered internal combustion engine, and Charles Franklin Kettering, who created the first automobile ignition system and the first engine-driven generator.

In the end, one could conclude that the present automobile was not developed or designed by a single producer or maker; instead it has been an on-going process that has taken over a century of dedication and competition that has driven us to the present day technological model of excellence and marvel of human and scientific achievement.


The auto industry is generally doing well within Asia as is apparent from recent figures and the free-flowing investment in the region. In Japan, Honda, Nissan and Toyota have announced increased production targets for the current and past year. Toyota alone manufactured over 275,000 units for local distribution and export (6 percent growth). Nissan have reported a 12 percent increase jumping to over 108,000 units last year while Honda recorded an 11.8 percent raise in production (over 95,000 vehicles).

Auto production and assembly in Pakistan began only in the 1990s when successive governments endeavoured to deregulate the industry and allowed concessions in duties and levies. At present, local manufacturing seems to be headed for doom with production and distribution costs tearing off the ceiling, and the present governmentís policy of lowering taxes on imported vehicles.

Although local manufacturers have stirred a storm over the "controversial" government move, we must remember that economic progress is not solely dependent on local production. In the present scenario where the cost of steel in the country has inflated considerably in the last few years and the local currency has eroded against international currencies, a price hike was inevitable as input cost for local manufacturing increased manifolds.

The government derives a sizeable amount from the import of used cars, which is contrary to the locally manufacturing set-up. On the other hand, dealers rub their palms in anticipation of further profiteering especially since they hardly pay any direct taxes, allege some manufacturers. Historically, we have repeatedly heard of under-invoicing and over-invoicing in imported cars schemes, which multiply the incentives for dealers and a few others.

The manufacturers are justified in claiming that the government should introduce policies that generate more than just revenues. The need of the hour is the generation of employment opportunities and to support transfer of technology. They believe that in the absence of a long-term industrial policy, the system is bound to favour the importers substantially while at the same time working to their disadvantage.

Excess liquidity has been pumped into the auto market, which has choked the supply line for genuine buyers. The powers that be have taken no visible interest in discouraging such investment while no effort has been spared to damage local vendors and assemblers. Although we witness an apparent growth in sales, the profit margin for local auto manufacturing is on the decline. Therefore, most manufacturers will eventually turn into importers as this is much simpler than manufacturing and may offer higher margins of profit.

To make investment commitments and expansion plans work, the industry needs to have a well-defined long-term vision. Positive government policies should help the industry to evolve and adopt such a system.


Suzuki cars (supplied by Pak Suzuki) remained the undisputed market leader, especially in the small coupe type cars (800 to 1000cc) in Pakistan from 1983 to 2000 when new producers realised the huge potential market in Pakistan. The growing list includes Dewan Farooque, importers and distributors of BMW and Mitsubishi cars which seem to be slowly returning to the market and may pose a challenge to Honda (Honda Atlas, which commenced local production in 1994) and Toyota (Indus Motors, which entered the market in 1993) which dominates the high-price segment of the market with luxury cars (1300 to 2000cc).

Like its local rivals, Indus Motor Company undertakes progressive assembly and manufacturing of Toyota vehicles in Pakistan. Toyota Corolla is clearly and perceptibly the market leader in the upper category. Indus Motors started assembly and production of Daihatsu Coure 850cc cars in 2000. Local manufacturing also meets the demands of the OEM and the replacement market in shock absorbers and struts in the country, and manufactures chrome-plated sleeves, transmission parts, gaskets and camshafts for the local tractor industry.

Some of the more recent entrants into this effervescent market have been Chevrolet and DaimlerChrysler with the latter having expressed willingness to invest as much as $1 billion in commercial truck manufacturing and production of cars in Pakistan. Other players in the arena include Nexus Automobiles, which also recently launched Chevrolet Optra (1600 cc) in addition to Chevrolet Classic (1000 cc) already being imported.

Indus Motor Company recently lunched Toyota Camry, the current best-seller in the US market, and plans to launch more vehicles in the SUV class. Pak Suzuki Motors refused to be left behind and announced plans to launch imported models of Liana and Grand Vitara by the end of December 2005. Another key figure could be Nissan, back with renewed vengeance into the market with two models of sedans, Nissan Sunny and Nissan Cefiro and two models of Sports Utility Vehicles, Nissan Patrol and Nissan X-Trail.

These manufacturers are, however, selling fully imported cars with no local value addition or local assembly.


During the last few years, Pakistan's key macro-economic indicators have moved positively. GDP growth rate has breached 8 percent this fiscal, foreign remittances have exceeded the $4 billion mark, per capita income is more than $652, foreign investments have touched nearly $1 billion, and car leasing and financing rates have come down to 7 percent from 22 percent.

Previous governments defended the imposition of a drastic hike in the prices of locally manufactured automobiles since the local industry had been coughing out handsome revenues for the national exchequer (Rs.25 billion as per 2002-03 estimates). Furthermore, since it employs over 350,000 local hands, it was considered essential to defend its interests, at the cost of the consumer.

This "protection" of the local industry, some believed, would eventually result in its complete collapse. The unprotected consumer on the other hand has never been favoured by the government or private sector dealers. Consumers are compelled to pay huge sales tax levied on local makes. However, despite all the hue and cry, the demand for vehicles continued to swell at an unprecedented rate making it impossible for local manufacturers to keep pace with their limited capabilities.

The government has finally decided to lift its grip on the import of cars by reducing import duty. It is estimated that some 100,000 cars have already been imported since the announcement. This situation poses a serious threat to auto engineering at home while consumers might be expected to save on the premium that had become part of general automobile cost owing to an unsustainable difference between demand and supply.

It has been reported that some local manufacturers have also invested in this auto bonanza to avail windfall yields and import complete units at competitive rates to fill the demand-supply disparity. While businesses cannot be blamed for being profit-oriented, it remains to be seen if the consumer will benefit from the present influx of imported vehicles in term of price and product quality.

Below is a table of prices of locally manufactured and imported automobiles in Pakistan (that have a tendency to inflate erratically and unpredictably). We leave it to the reader to compare them with international prices, and forecast the future of the industry.





Revo 800 Cc Petrol

Rs. 269,000

Revo 800 Cc Petrol Plus Cng

Rs. 299,000

Revo 800 Cc Petrol A/C

Rs. 315,000

Revo 1050 Cc Petrol

Rs. 369,000

Revo 1050 Cc Petrol Plus Cng

Rs. 404,000

Revo 1050 Cc Petrol A/C

Rs. 409,000

Revo 1050 Cc Petrol Plus Cng A/C

Rs. 439,000

Zabardast Econo 2 Ton 2600 Cc

Rs. 495,000

Zabardast Super 3 Ton 3200 Cc

Rs. 539,000

Zabardast Jeep 4x4 2800 Cc A/C

Rs. 940,000





Mehran Le

Rs. 326,000

Mehran Le Cng

Rs. 346,000

Mehran Vx

Rs. 315,000

Mehran Vx Cng

Rs. 360,000

Mehran Vxr

Rs. 345,000

Mehran Vxr Cng

Rs. 390,000

Alto Vx

Rs. 419,000

Alto Vxr

Rs. 464,000

Alto Vxr Cng

Rs. 499,000

Cultus Vx

Rs. 504,000

Cultus Vxr

Rs. 555,000

Cultus Vxr Cng

Rs. 590,000

Cultus Vxl

Rs. 604,000

Baleno Jxr

Rs. 749,000

Baleno Jxr Cng

Rs. 789,000

Baleno Jxl

Rs. 809,000

Baleno Jxl Cng

Rs. 849,000

Bolan A/C

Rs. 427,000

Bolan Std

Rs. 367,000

Bolan A/C Cng

Rs. 461,000

Bolan Std Cng

Rs. 404,000

Ravi Pickup Std

Rs. 312,000

Ravi Std Cng

Rs. 344,000

Potohar Std

Rs. 618,000

Potohar A/C

Rs. 678,000

Liana 1.6 Mt

Rs. 12,15,000

Liana 1.6 Amt

Rs. 13,15,000

**5000/= Extra For Metalalic Color





Cherry 0.8l Basic

Rs. 461,000

Cherry 0.8l Comfortable

Rs. 489,000





Corolla Xli

Rs. 879,000

Corolla Gli

Rs. 969,000

Altis Manual 1.8 Petrol

Rs. 12,19,000

Altis Automatic 1.8 Petrol

Rs. 13,09,000

Corolla 2.Od

Rs. 10,39,000

Saloon 2.Od

Rs. 12,29,000

Hilux S/C

Rs. 779,000

Hilux S/C D/Spec

Rs. 799,000





Cuore Cl

Rs. 359,000

Cuore Cx

Rs. 419,000

Cuore Cx Eco (Cng )

Rs. 459,000

Cuore Cx A/T

Rs. 459,000





City I-Dsi Mt

Rs. 835,000

City I-Dsi Cvt

Rs. 885,000

Civic Exi Mt

Rs. 1,002,000

Civic Exi Pt

Rs. 10,42,000

Civic Vti Mt

Rs. 11,47,000

Civic Vti Mt Sr

Rs. 11,97,000

Civic Vti Pt

Rs. 12,37,000

Civic Vti Pt Sr

Rs. 12,87,000

**40,000/= Extra For Leather Seat





Santro Club

Rs. 559,000

Santro Club Cng

Rs. 609,000

Santro Exec

Rs. 639,000


Rs. 649,000

Grace Std12 Seat


Grace Dual12 Seat

Rs. 12,80,000

Grace Dual12 Seat


Grace Sear 12 Seat

Rs 13,55,000

Grace Van (Diesel)

Rs. 11,99,000





Classic Lx Ngv (Cng)

Rs. 575,000

Classic Sx Ngv (Cng)

Rs. 529,000

Spectra M/T

Rs. 749,000

Spectra A/T

Rs. 799,000

Spectra Cng

Rs. 759,000


Rs. 15,49,000





Optra Sx (Semi Loaded)

Rs. 1,095,000/-

Optra Ls Manual


Optra Ls Automatic



Rs. 515,000

Ls Exclusive

Rs. 555,000





Uno Plus

Rs. 649,000

Uno D/Ltd

Rs. 664,000





Lancer Gl 1300cc

Rs. 9,69,000

Lancer Glx M/T 1300cc

Rs. 9,99,000

Lancer Glx A/T 1300cc

Rs. 10,39,000

Lancer Glx M/T 1600cc

Rs. 11,49,000

Lancer Glx M/T S/R 1600cc

Rs. 11,99,000

Lancer Glx A/T 1600cc

Rs. 12,69,000

Lancer Glx A/T S/R 1600cc

Rs. 13,29,000

Galant M/T 2000cc

Rs. 23,99,000

Galant A/T 2000cc

Rs. 24,99,000

Galant Diesel M/T 2000cc

Rs. 25,99,000

Galant A/T Vr 2500cc

Rs. 2,999,000

Galant A/T Vr Sports 2500cc

Rs. 3,099,000

Pajero Gls M/T D 2800cc

Rs. 4,249,000

Pajero Gls A/T D 2800cc

Rs. 4,699,000

Pajero Gls A/T Ltd App 2800cc

Rs. 4,799,000

Pajero Gls A/T V6 P 3800cc

Rs. 5,349,000

Pajero Gls A/T V6 Ltd P App 3800cc

Rs. 5,399,000

Mini Bus L300 2500cc

Rs. 1,149,000

Mini Bus Dx300 2500cc

Rs. 1,499,000





Rexton Rx-270 Diesel M/T

Rs. 2,795,000

Rexton Rx-270 Diesel A/T

Rs. 3,195,000

Rexton Rx-270 Diesel (Top Of The Line)

Rs. 3,595,000

Rexton Rx-320 Petrol (Top Of The Line)

Rs. 3,395,000

Chairman Cm 400s Gasoline A/T

Rs. 3,875,000

Chairman Cm 500s Gasoline A/T

Rs. 4,375,000

Chairman Cm 600s Gasoline A/T

Rs. 5,375,000





Sunny 1300cc M/T Exs

Rs. 11,25,000

Sunny 1300cc A/T Exs

Rs. 11,85,000

Sunny S 1600 Cc M/T Exs

Rs. 13,65,000

Sunny S 1600 Cc A/T Exs

Rs. 14,50,000

Sunny 1600cc S/Saloon A/T

Rs. 15,33,000

Cefiro 2300 Cc A/T

Rs. 33,10,000

Xtrail 2200 Cc Diesel (Le-6f) M/T

Rs. 29,97,000

Xtrail 2200 Cc Diesel (Slx-6f) M/T

Rs. 35,70,000

Xtrail 2500 Cc Petrol (Le-5f) M/T

Rs. 27,80,000

Xtrail 2500 Cc Petrol (Slx) A/T

Rs. 31,15,000

Patrol Td42 Sgl Grade M/T Diesel

Rs. 55,72,000