Anwar Iqbal


By Syed M. Aslam
July 07 - 13, 2003



ANWAR IQBAL has a diversified experience comprising a range of industrial and business including petroleum, banking, pharmaceutical, fast moving consumer products and most of all the automobiles. He did his Master of Arts from the University of Karachi and did Master of Business Administration in Marketing and Management from the US. He started his career in 1982 with US multinational petroleum company, Esso Eastern Inc.  and has since worked with a number of other multinational companies including Union Texas Petroleum, Squibb Pakistan and Singer Pakistan. He was also associated with a number of prestigious national companies including Bankers Equity, Jaffer Brothers, etc. He has been actively involved with the automobile sector since 1990 and has been associated with Raja Group of Industries and also helped establish Fateh Motors where he entirely conceived and executed Hero motorcycle. Presently, he is working as the Chief Operating Officer of Dewan Motorcycles Limited, the producer of Star brand two-wheelers.

PAGE: Two-wheeler production in Pakistan was heading for a record level in the fiscal 2002-03 ended last month. What can explain the tremendous increase in production and sales of two-wheelers?

ANWAR IQBAL: Two-wheeler production in the country would touch record 200,000 units during the last fiscal. And yet it would fall far short of the 'real' demand which I have all along insisted always remained between 500,000 to 700,000 units. However, the 'real' demand has remained suppressed over the years primarily due to monopolistic tendencies on the part of the three traditional producers of Japanese motorcycles resulting in excessively high prices. Two-wheeler prices have remained on discouragingly high to shy away middle-income and salaried segments of the society for whom motorcycle should offer an inexpensive mode of transport. 

PAGE: But the traditional producers have slashed the prices substantially recently. Would they be able to retain the market?



ANWAR IQBAL: I feel that the move came too late and that too involuntary in the face of increasing competition from locally produced Chinese counterparts. Otherwise what could explain the indifference of these assemblers to reduce the prices in last three years when the dollar lost a substantial portion of its value. The fact is, the traditional producers chose to operate on extremely high profits counting on the monopoly they enjoyed to remain comfortably indifferent to the hardship it meant for the buyers.

PAGE: So the locally assembled Chinese motorcycles have been able to make inroads into the market. Is the growth sustainable?

ANWAR IQBAL: Certainly. The overall share of the Chinese motorcycles in the local market is on a continuous increase. Presently they have been able to take away over 27 per cent share of the market. Five of these producers, including Dewan Motorcycles' Star are collectively producing over 7,000 two-wheelers a month. In addition to 5 existing producers of Chinese motorcycles another three are in the pipeline and I expect that during 2003-04, the collective production of Chinese brands would touch 200,000 units to match the combined productivity of traditional producers.

PAGE: Leasing has provided great boost to the local auto industry boost. What stops the two-wheeler industry to get a similar boost from leasing?

ANWAR IQBAL: There are two primary reasons for the non take-off of leasing in the two-wheeler segment of the market. Number one, the high rate of snatchings and thefts of the two-wheelers, particularly the market-leading brand. And number two, the negligible, nay almost zero, rate of recovery of two-wheelers compared to 40 per cent for cars. Number three, the leasing companies were unable to tap the rural areas, particularly the Seraiki Belt in Punjab which makes up the biggest market of two-wheelers and also interior Sindh, due to lack of staff and absence of buyers' profile. In addition, high prices combined with high mark-up rates pushed monthly installments to levels which were unaffordable and high down payments made leasing an unworkable option thereby negating the very concept of financing.

PAGE: But things have changed for better at present.



ANWAR IQBAL: Yes they have. The heating up of the competition and the reduction of the prices due primary to growing presence of Chinese two-wheelers and the substantial reduction in the mark up rates at present makes leasing a viable option presently. The Dewan motorcycles would be announcing a big package soon to offer leasing at low down payment and mark up. The most salient feature of the package is that it would be offered through designated dealerships instead of leasing companies. The buyers, thus, would deal directly with the dealers instead of leasing company.

PAGE: Can the prices be slashed even further?

ANWAR IQBAL: Yes, the prices of two-wheelers can be further reduced provided the duty on the import of CKD kits is reduced. There is an anomaly: The commercial rate of duty on CKD kits is 10 per cent less than that for the kits imported under the deletion programme. I personally feel that there should a zero duty on producers whose deletion programme is approved for the benefit of salaried and middle income segment to bring the prices to more affordable level.