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Competition heats up

  1. The budget 2000-2001
  2. Agriculture in 2000
  3. Saline agriculture
  4. Fertilizer: The demand
  5. Energy sector
  6. Foreign trade
  7. Automobiles
  8. Ports & Shipping
  9. Sugar industry
  10. Textile sector
  11. Soap industry
  12. Drug prices
  13. National Highway Authority

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 car market



Annual Production Capacity

Actual/Planned Production

Pak Suzuki

Suzuki (Cars/LCVs)

40,000 units

32,742 units (1998-99)

Dewan Farooque

*Kia Classic 1300 cc

10,000 units

3,500 in first year and

. . .

5-6 per cent growth in

. . .

the later years


850 cc Cuore Compact

10,000 units

5,000 units in the initial year

*Under Construction near the interim functional plant at Sujawal, District Thatta