Rashid Ibrahim's association with Pakistani auto industry dates
back over fourty years. A DAE (Diploma Associate Engineer) from
prestigious Karachi Polytechnic at Site, he worked for the Atlas
group of companies for almost 24 years in various senior
management capacities. He was instrumental in setting up Honda
motorcycle plant at Karachi and a number of its other projects
in the country as well as former East Pakistan. The association
helped him obtain training at Honda plants in Japan and Thailand
related to manufacturing of auto components. He helped set up
Yamaha motorcycle project at Uthal and carried out various
expansion programmes for Honda, the last one being die casting
shop and machining facilities for manufacture of engine
components and other parts. He worked on project for assembly
cum progressive manufacture of Mitsubishi Pajero. He served as
member of the sub committee of the Engineering Development
Board, Ministry of Industries and Production for deletion of
components for both two-wheelers and cars. The hands-on
technical experience and close relation to the auto vending
industry allows him to speak about the auto industry with
PAGE: What are the major issues faced by the local
Pakistani auto industry does not lack from dearth of professional human
resources or innovative ideas. However, the heavy dependence on imports
— both parts, accessories and raw materials — and high duties and
taxes they are subjected to, incessantly increasing prices of utilities,
and absence of economies of scale are pushing the prices of locally
produces automobiles to unaffordable levels. This is true for both
two-and the four-wheeler vehicles. All these factors have pushed the
production costs to deprive the industry to meet its real potential by
discouraging sales due primarily to high retail prices.
PAGE: What's the overall impact been like?
The high retail prices are
resulting in low sales volume. The collective production capacity of the
auto industry, particularly the car, remains under-utilized. With fixed
overhead costs this collective under-utilization of the production
capacity is pushing the prices which have seen no signs of slowing down
over the years.
PAGE: Are these the only reasons responsible for the
More or less, yes. However,
it may be realized that while the interests of both the government and
the auto producers are protected the same is not true for the consumers.
Duties and taxes make-up the biggest portion of the retail prices of the
automobiles and motorcycles while high profits also makes a bad
situation worse. Without rationalizing the prices auto sales would
remain depressed despite growing demand and active role the leasing
companies are playing to push the sales to a respectable volumes.
PAGE: The local auto industry has been accorded
protection against imports vide excessive high duties? What would be the
impact when Pakistan has to open its market for the imported autos under
the WTO two years from now?
The absence of genuine
competition has let the local industry to dictate the market in terms of
both prices and the quality. Pakistani auto industry is looking at an
extremely difficult time in the years to come. It is imperative for the
foreign principals to reduce their prices of Completely Knock Down kits.
The local auto vending industry should also be allowed to play a greater
role to reduce dependence on imported parts and accessories.
PAGE: What restricting the vending industry to
First of all the auto
vending industry which employees over 100,000 persons directly and
indirectly is not treated like an industry for purpose of loans by the
banks and financial institutions. The vending industry primarily
comprises of small and medium entrepreneurs who has limited funds. Auto
vending industry require heavy investment, particularly for the
manufacture of engine and precision-engineered parts. While the small
and medium entrepreneurs just don't have the means to invest such heavy
funds some of the big investors who have the means don't see it
economical to invest due to low volumes which don't justify the
investment. In addition, a small number of chosen few are allowed to
import the tools and equipments needed by the vending industry and they
have seen it fit to sell the items at excessive prices.
PAGE: What about the government policies?
The inconsistent policies
of the successive governments, particularly those related to deletion,
have taken a heavy toll on the auto industry. They have been detrimental
to the local vending industry to produce inexpensive local substitutes,
particularly the high-priced precision engineered parts. This in turn,
has pushed the prices to unaffordable levels to limit the overall
performance of the industry depriving it of increased sales.