The events of September 11th have wrought mass havoc
on world economies, resulting in slumps, downturns and recession.
Pakistan, which has the dubious honor of being one of Afghanistan's
closest neighbor's, has borne the brunt of this economic devastation.
However, the same cannot be said for the country's automobile industry
which has defied all odds and seen tremendous growth over the past year.
During the last twelve months, Pakistan's automobile industry posted a
growth of 20 percent and the demand for new cars has increased by an
incredible 50 percent.
Due to the limited market size, the production
volumes have been fairly low but the industry has undoubtedly entered a
new era as it produces eight international brands in various models. In
order to meet rising demand the automobile industry has considerably
increased its production capacity. Indus Motors, brought forward its
delivery date by six months for its latest model of Corolla. Other car
manufacturers also followed suit. Recently in order to discourage
'speculators', the government has made registration in the name of car
booker mandatory, which would not be transferred before six months.
Perhaps the greatest achievement of the industry over
the last year has been breaking away from the production of automobiles
that are solely Japanese. As a matter of fact, Korean and European cars
have made big waves in the market and local entrepreneurs have already
unveiled plans to manufacture Chinese models as well. The past year also
saw the emergence of new manufacturers such as Dewan Farooque, Daihatsu
and Hyundai Motors in the market with a number of new product lines. The
intense competition created by these companies has completely changed
the paradigm of the automobile industry in Pakistan.
The automobile industry has made a lasting impression
on the domestic vendor base by making it more export oriented. The
system works so that before the domestically manufactured parts are used
by domestic manufacturers, they are tested by the original manufacturers
at their facilities abroad and given a certification of quality. In
addition, domestic production has facilitated competitive pricing which
has encouraged exports.
The auto industry has also provided a number of
employment opportunities in the country and has the capacity to generate
more employment. In total this industry employs 125,000 persons
including technicians, engineers and management staff. The Indus Motor
Company provided jobs to some about 625 persons till 1998-99, Pak Suzuki
with 619 persons and Honda Atlas Cars with 348 persons in 1998-99. Total
numbers of jobs in vending industry is about 135,000. If the auto
industry is supported by government then it can generate more employment
in the country.
Inspite of its many benefits for the economy of
Pakistan, the automobile manufacturing sector has developed slowly
mainly due to a flawed regulatory framework and short-sighted policies.
Smuggling of fully conditioned cars and car parts was carried out rather
casually in Pakistan for a very long time. Additionally, from time to
time, the government has allowed the import of used and reconditioned
cars, a measure which dramatically decreases demand for domestically
The post September 11th scenario has given rise to
increased vigilance on all fronts, providing increased checks on
smuggling. And since black money networks are being closely watched by
the developed countries and the Middle East, the automobile industry has
While the auto industry seems to be racing ahead,
critics are of the opinions that ground realities just do not seem to
justify this sudden surge in auto sales. They say that developments such
as withdrawal of economic sanctions, comparatively greater access to
markets for Pakistani exports, rescheduling of foreign debt and flow of
aid, loans, grants and assistance may be creating a new class of