By qualification Muhammad
Sabir Shaikh is a lawyer, albeit a non-practising one. By trade he is
a progressive assembler-cum-manufacturer of motorcycles. He did his
LLB from SM Law College Karachi but he has been associated with the
two-wheelers over the years working as authorized agents for all major
brands of motorcycles at the country's biggest motorcycle market,
Akbar Road Karachi. He is currently the vice chairman of FPCCI's
Standing Committee on Small Traders and Cottage Industry and is the
chairman of Pakistan Motorcycle Association. He was also the
ex-president of Karachi Motorcycle Dealers Association for many years.
He is the chief executive of Sitara Auto Impex which has technical
collaboration agreement with the Chongqing Guangjie Motorcycle
Industries (Group) of China to assemble and manufacture Guangta brand
motorcycles in Pakistan.
By Syed M. Aslam
April 15 - 21, 2002
PAGE: What
prompted you to turn to motorcycle assembling?
Sabir
Shaikh:
While working as authorized agent for all major locally produced
brands over the years I realized that rising motorcycle prices were
driving the potential buyers away from the market. This in turn was
translating into decreasing sales and at times the things were so bad
that it was hard even to meet the running expenses — not to mention
profitability because dealers usually work strictly on commission only
when they sell. That made me realize that the prices of locally
assembled motorcycles amidst the protection accorded to it from
imports vide prohibitive duties is the primarily reason for the
downturn. I also realized that under such circumstances the prices
would keep on increasing to have an adverse effect on the business due
to shrinking purchasing power.
PAGE: When
you started assembling Guangta brand of motorcycle?
Sabir
Shaikh:
We started commercial production in September last year at our plant
in SITE area on Super Highway near Sohrab Goth Karachi. At present we
are manufacturing a single model, GT 70 and hopes to produce a number
of other models in near future. In last six months we have produced
and sold some 200 directly or through a number of dealers nationwide.
Another 200 units are under assembly.
PAGE: Do
you have an approved deletion plan?
Sabir
Shaikh:
We have applied for the approval of deletion plan to the Engineering
Development Board, Ministry of Industries and Production and are still
waiting. Meanwhile we are already using 80 per cent local contents,
the minimum localization criterion set by the Board. However, we have
to pay an additional 10 per cent import duty, 30 per cent instead of
20 per cent to six other approved manufacturers, on CKDs and parts
imported from our partner in China. We are not alone, three other
Karachi-based assemblers are also waiting for the approval of their
deletion plans. Between the four of us we are producing some 500
motorcycles every month and our brands retail at half the retail price
of major producers the prices of whose products range between Rs
70,000 to Rs 80,000.
PAGE: What
approval of deletion plan means to you?
Sabir
Shaikh:
It not only means paying less import duty for us but its implications
are far more wider. We feel that access to affordable personal
transportation is a kind of basic human right. We are confident to
meet all the pre-requisites required for the approval of our deletion
plan. A timely approval will send right signal to encourage investment
in this sector, boost government's policy of encouraging small and
medium entrepreneurship, develop economies of scale which in turn will
help create direct and indirect employment. The competition will keep
prices competitive and the government will be earn a substantial
revenue.
PAGE: What
is your marketing strategy?
Sabir
Shaikh:
My years of association with the two-wheelers show that continuously
increasing prices and declining purchasing power is taking a heavy
toll on the sales of two-wheelers. We basically aim to cater to buyers
who can afford to buy used motorcycles by retailing a new product
which suits their budgets. As is, sales of used motorcycles outnumbers
that of the new ones by three to one. Some 300,000 used motorcycles
are traded in the country each year compared to about 100,000 new
ones. It is this segment of the buyers that we want to aim our
affordably priced products to. The fact is we are not competing with
the major manufacturers who already enjoy a big chunk of the new
motorcycle market. We are rather competing in the used motorcycle
segment of the market.
PAGE: What
is your biggest market?
Sabir
Shaikh:
We are based in Karachi and that should have been our biggest market.
However, the Motor Vehicle Wing of the Excise and Taxation Department
Sindh is refusing to issue licenses to our newly introduced low-priced
product although its counterpart in Punjab has no such qualms. We are
unable to understand the different approach of the two provincial
departments and thus despite being based here Punjab has emerged as
our major market. I must mention that we are paying all duties and
taxes and are ready to provide all guarantees and assurances to match
the quality standard of approved manufacturers.
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