The growing auto market in Pakistan is being shared
by around 8 car assemblers producing known foreign brands in economy,
medium and luxury cars.
On the back of massive financial support by the
banking and leasing companies, the demand for cars has gone up from
approximately 60,000 vehicles in 2002 to more than a 100,000 vehicles
in 2004 while the gap between demand supply suggests production may
touch the level of 200,000 soon.
Currently, over 200 vendor companies are engaged in
auto parts manufacturing, out of which about 75 were quite capable of
matching the international standards while rest of the vendors also
catching up fast. Being labor intensive industry, the local auto
sector has significantly contributed to the government revenues
besides creating job openings for over 120,000 people with an
investment of over Rs20 billion.
Since there was a big gap between demand and
supply, the profit making was quite natural as "if the honey is
there, bees will definitely come." Taking advantage of the
growing demand and short supply, the investors in collaboration with
the market mechanism and support of the influential who made fortunes
especially on account of delayed deliveries which helped them to earn
hefty premiums ranging from Rs60,000 to Rs150,000 depending on the
size and price of the cars.
Though the government in an effort to bridge the
gap between demand and supply has allowed import of cars besides
lowering duty on customs stage, yet the demand growth still offers
room for more vendors and auto producers in the country.
Obviously, the growing demand encouraged Feroz
Khan, one of the senior auto industrialist to roll out "REVO"
a Pakistani model of passenger car under the banner of Adam Motor
Company, powered by Chinese technology yet having 70 percent
Generally speaking, the companies mainly producing
different models of Japanese and Korean models have arrived at a
deletion level of 70 percent after a journey of over two decades of
working in Pakistan. The REVO, signifying revolution in auto industry,
recently launched by Adam Motors rightfully claiming to be the first
Pakistani car as it started with 70 percent deletion right from the
The first model of REVO has been designed to match
the local environment, road conditions and of course the requirement
of the customers. It is available as variant of 1050cc, electronically
fuel injected and 800cc engine size. The producers of the first
Pakistani cars were aiming to carve a place in the market by offering
attractive value-added features which they feel were bound to appeal
especially the users of small cars in Pakistan.
Prime Minister Shaukat Aziz presiding over the
launch of a new brand of economy car designed and assembled in
Pakistan but powered by a Chinese-made engine, paid tributes to the
auto sector for significantly contributing to overall economic growth
of the country.
The manufacturers of 800 cc REVO, to be produced in
Karachi, have an intention to make a debut initially with 5,000 to
make their presence felt in the local market.
Spelling out the details of the newly produced
unit, a representative of the company said that this five-door car
will cost about 300,000 rupees. The first models are expected to roll
on roads in June this year.
Speaking at the launching ceremony, Prime Minister
Shaukat Aziz said the auto sector in Pakistan is expected to produce
141,000 cars this year which indicates robust growth, the automobile
sector has achieved during in a short span of time when compared to
only 30,000 of units a couple of years ago.
Several Japanese automakers like Toyota, Suzuki and
Honda assemble their vehicles in Pakistan here but the demand for cars
is growing faster than supply. The impressive contribution towards
government revenues estimated at Rs51 billion (US$851 million, euro655
million) in 2003-2004, compared to 15 billion rupees previous year
reckons the potential of the auto industry in Pakistan.
Currently, some of the popular brands available in
the market are including Toyota Corrolla, Hilux, Daihatsu's Cuore,
Honda City Civic, Hyundai Santro Shehzore KIA Sportage, Mitsubishi
Lancer Nissan Sunny Suzuki's Alto, Baleno, Bolan, Cultus, Mehran,
Potohar and Ravi., and Chevorlet, besides a variety of other models
being imported in the country.
Though the import of cars was allowed by the
government with a good intention to ease the mounting demand
pressures, the auto assemblers, however, are generally taking the step
otherwise. They were of the view that the change in the import duty
and permission to allow cars was in fact a contradictory to the
government's claim of adhering to the commitment of consistency in its
It was the plank of the government policy that
consistency in policies was the only way to wind confidence of the
investors and to encourage more industrialization in the country
especially to develop a strong engineering base. The little change in
import duty which is being taken as a shift in the government policy
is a temporary phase and may be reversed as soon as the demand and
supply situation returns to normalcy, said a senior official of
ministry of production.
The auto manufacturers were, however, of the view
that the policy makers should evaluate Pakistan's strategic objectives
and develop a tariff structure that provides local industry a definite
advantage and act as a catalyst to further the investment in the auto
sector of the country.