So far the car segment is dominating the auto-industry but the time has come to accord priority to other segments, particularly buses and trucks.

Mar 19 - 25, 2007

Federal Minister for Industries, Production and Special Initiatives Jehangir Khan Tareen challenged the local producer of Toyota cars and trucks - Indus Motors - to "take on" the leading car producer of the country Suzuki. Speaking as chief guest at the Pakistan Auto and Parts Show-2007 in Karachi last month, he asked the local producers of Toyota that "it must enhance its capacity to produce 100,000 cars a year" to live up to its name of being one of the world's top car producers.

Mr. Tareen's advice to Toyota should be seen in the background of five-year auto policy that aims to increase production of local cars to 500,000 by the year 2011-12. It may be mentioned here that in last fiscal 2005-06 a total of 160,642 cars were produced in the country that showed an almost four-fold increase over 40,601 units produced just four years ago in 2001-02.

In 2002-03, a total of 62,893 cars were produced in the country that depicted a healthy growth of over 50 per cent over 40,601 units produced in the previous year. The growth was further consolidated in 2003-04 with the production of 99,263 units, 126,817 units in 2004-05 and finally a record of 160,642 units in last fiscal.

The current fiscal 2006-07 has already witnessed the production of 100,000 vehicles by the leading car producer of the country, Pak Suzuki, which rolled out its 100,000th vehicle on November 22 last year. It was for the first time in the history of the country that a company produced 100,000 vehicles in a year. Pak Suzuki also sold a record 113,000 cars in the calendar year 2006.

While the five-year auto policy envisions to push the local car production to 500,000 units by fiscal year 2011-12, the production has already shown signs of deceleration. According to the State Bank of Pakistan's first quarterly report for the year 2006-07, "production in the automobile sub-group saw a deceleration during the first three months of FY07 (ended September 30, 2006). Specifically, the automobiles sector registered a growth of only 11.1 per cent which is not only lower than the strong growth of 33.1 per cent in the same period in the preceding year but also the lowest during the last six years".

The report attributed the slow-down on "capacity constraints, rise in interest rates, and import of used vehicles as the main reasons to slower growth in demand for local automobiles. In particular, the production of cars and jeeps slowed to 14.9 in the first quarter as against a high growth of 25.7 per cent during the same period of the previous year".

This slow-down in the car production segment of the auto industry becomes all the more serious because it has come amidst the slowing down of the used car imports which the local car producers have been blaming as the major threat to the local industry. In Budget 2006-07 the government restricted the import of used cars to vehicles less than five years old that has brought the flow of used cars into the country to a trickle.

During the first half of the current fiscal ended December 31, 2006 just 10,953 used vehicles- cars, jeeps, vans and pick-ups- were imported in the country and sources say that they believe that no more than 22,000 used vehicles would be imported in the country this fiscal. It may be mentioned here that in fiscal 2005-06 almost 48,000 used cars were imported in the country.

During the first seven months of the current fiscal (July 2006- January 2007), a total of 86,992 cars were produced in the country. That indicates that if production does not increase in the remaining five months the overall car production in the country will be heading for a fall this fiscal over the previous fiscal.

Though the five-year or less restriction imposed on the import of used cars has halted their imports the fact that the imports still continue clearly shows that there is a niche for them in the local market that comprises three distinct groups- local made cars, completely built-up new imported cars and used cars.

While the car segment of the auto industry has witnessed a phenomenal growth in the last five years since 2001-02 the performance of the public transport vehicles such as bus and truck has remained less than satisfactory with more priority given to imports than local production.

In calendar year 2006 a record of 4,708 trucks were produced in the country which was more than double the 2,222 units produced in 1992-93. So while it took the truck segment of the auto industry a good 14 years to double its production, this period was marred by inconsistent performance.

And the performance of the bus-producing segment of the auto industry has been even worse. In calendar year 2006 just 940 buses were produced in the country- 352 less than the 1,177 units produced 14 years ago in 1992-93. In a country reeling from acute public transport problems where commuters have to face extreme hardships day in and day out there is little or no priority given to ensure that the base of bus production is increased.

The failure to lay down solid foundation to encourage bus and truck production in the country has left the country heavily dependent on imports and that too is not seem to be coming as the decades old rickety public transport vehicles, buses in particular and mini-buses in general, keep on playing havoc with the lives of people as well as being the single biggest source of air pollution in all urban areas of the country.

Though the present government has taken measures to modernize truck fleet operation in the country and its National Trade Corridor (NTC) for Transport Modernization is aimed at boasting not only domestic but also export trade activities.

Just how neglected the public transport and goods carriage sectors have remained is obvious from the data compiled by National Transport Research Center that shows that of the total 6.8 million 'on the road' motor vehicles in the country in fiscal 2005-06 only about 103,000 or a mere 1.5 per cent were buses and only 2.2 per cent or 151,800 were trucks. There were more tractors in the country i.e. 812,100 to be exact.

The acute shortage of public transport buses and goods carrying trucks necessitate the need that policy makers accord due priority to this vital segment of the auto industry.

So far the Pakistani auto-industry has completely been led and dominated by the car segment but the time has come that other segments should be accorded the priority that they deserve. Travel is a barometer of economic prosperity and the easy and timely movement of people and goods is a must for the economic development of the country. It is said that "Harkat mein barkat hay" and an auto policy that fails to include all the segments of the auto industry- private, public and goods carrying vehicles- would never achieve the results that it aims to achieve.