Much depends on the prices
By Syed M. Aslam
May 08 - 21, 2000
The year 1999 will be remembered as a year which brought the firstever
competition in the small and medium size car market in Pakistan. On January 15 the first
Kia Classic 1300 cc car rolled off the assembly line of Dewan Farooque Motors' Sujawal
plant in. Just month-and-a-half later the first 850 cc Daihatsu Cuore compact car was
launched at the Daihatsu Plant at Port Qasim. The two launching ceremonies have changed
the face of local car market offering choice of product as well as prices in a market
which is driven more by price than anything else.
The Dewan Farooque Motors, the local assemblers of Korean Kia cars,
also launched another Korean product, the Hyundai Santro Plus, cars in late February,
which was actually an extension of Hyundai light commercial vehicle, the one-ton
'Shehzore' truck, at Sindh Engineering Plant in Karachi, the state-owned plant engaged in
the assembly of Mazda cars and trucks.
The entry of Daihatsu's 850 cc Cuore and Dewan Farooque's 1300 cc Kia
Classic has resulted in the heating up of the competition in the small and medium car
market which since 1983 was virtually dominated by Suzuki in the absence of any
competition. Indus Motor Company and Honda which commenced operations in middle 1990s
posed no competition for Suzuki as they were, and are, engaged in the production of top of
line 1300 cc, 1600 cc and 2000 cc diesel models compared to 800 cc, 1000 cc and 1300 cc
cars and commercial vehicles.
Of the total 47,320 cars and light commercial vehicles produced during
1998-99, 69 per cent or 32,742 were Suzuki- 25,841 cars and 6,901 light commercial
vehicles. Toyota's share was 22 per cent or 10,169 units including 8,369 variants of
Corolla cars and 1,800 Hilux 2400 cc trucks. A total of 3,926 Honda Civic and City cars
were also produced during the same period.
The demand for small and medium car in the country is also obvious from
the fact that Suzuki Mehran 800 cc topped the production list in 1998-99. More than half
or 16,501 of the total 32,742 cars and LCVs produced by Suzuki in 1998-99 were Suzuki
Mehran and another 6,991 were 1000 cc Khyber.
The launching of 1300 cc Kia Classic and Daihatsu 850 cc Cuore compact
cars earlier this year is just the beginning of the competition as Dewan Farooque Motors
has also launched its Hyundai 1000 cc Santro Plus car and will launch 1600 Kia Shuma
variant and 4x4 Kia Sportage, a sports vehicle in the second half this year.
How the nascent competition has changed the face of the small and
medium car market is best evident from the fact that Suzuki has already come up with a new
variant of Mehran Classic.
The presence of Kia Classic, Hyundai Santro and Daihatsu Cuore besides
Suzuki, whose stay in the auto market since 1983 has made it a household name, now offer a
wider choice of potential product and price to the potential car buyers which were denied
just such a choice previously. Today the buyers have a choice to choose from a number of
makes and their variants there is 800 cc Suzuki Mehran, 850 cc Daihatsu Cuore, 1000
cc Suzuki Khyber as well as Hyundai Santro Plus, 1300 cc Kia Classic or Suzuki Baleno. The
face of small and medium car market is in the process of changing for good for the benefit
of buyers in Pakistan finally.
Cuore CL variant which carries a retail price tag of Rs 359,000 is the
lowest priced locally assembled car today. The prices of its variants, CG and CX, at Rs
379,000 and 419,000 respectively are lower than its main rival, the 800 cc Suzuki Mehran
and even 1000 cc Suzuki Khyber.
Dewan Farooque's fully loaded Kia Classic 1300 cc retails for Rs
475,000 which is Rs 9,000 less than 1000 cc Suzuki Khyber Limited which carries a price
tag of Rs 484,000 and much less than Suzuki Baleno 1300 cc car. Can the competition and
increased choice of products and prices to the potential buyers could help cut the massive
under-utilisation of the auto production capacity which has become a permanent feature of
local industry in the previous years.
This is obvious from the 1998-99 production figures Suzuki
produced 32,742 units against an installed capacity of 40,000 units depicting 80 per cent
utilisation; Toyota produced 10,169 vehicles which translated into just 50 per cent
utilisation of its 20,000 units production capacity; Honda produced 3,926 units or 80 per
cent of its 5,000 units capacity.
The annual production capacity of both Cuore and Kia plants is 10,000
units each annually. The question is will these two new car assemblers be able to make use
of their respective production capacities economically or would it also result in the huge
under-utilisation of it like their competitors who have been in business for years.
Observers say that much will depend on the prices of the cars as the
nominal rate of growth of the local auto industry has primarily been blamed on sharp
increases in prices in the past. On their part, the manufacturers have blamed numerous
devaluation and sharp increases in the cost of inputs such as power, gas and petroleum and
particularly heavy taxation for the sharp price increases.
|The emerging small and medium
3,500 in first
5-6 per cent
the later years
850 cc Cuore
5,000 units in
the initial year
*Under Construction near the interim functional plant at
Sujawal, District Thatta