AUTO INDUSTRY----A BACKGROUNDER

The auto parts industry faces a tough competition from imports, but there are examples where a few locally manufactured products are successfully competing with imported parts in terms of quality and price.

SADAF AURANGZAIB, Senior Correspondent
Mar 19 - 25, 2007

At the time of independence there was no auto industry in Pakistan. With the increasing demand of vehicles in the country the first phase of automobile assembling in Pakistan started in 1950 with Bed Ford truck followed by Ford Prefect, Ford Cortina and Dodge Dart. The indigenized parts in these vehicles did not exceed 20% with the only exception of Bed Ford trucks with a deletion level of 80%. By the end of 70's practically entire automobile assembling in Pakistan had ceased.

In 1972 the Pakistan government thought of having indigenized car manufacturing /assembling plant. The second phase of automobile assembling started in 1983 with the introduction of FX 800 cc Suzuki car. In 1989 Pak Suzuki changed the model of FX 800 with Mehran 800 cc. Thereafter in 1992 Pak Suzuki introduced Khyber 1000 cc and 1300 cc Margala cars.

In 1993 Indus Motors Company Ltd. introduced Toyota Corolla and in 1994 Honda Atlas Cars introduced Honda Civic having 1300 cc engine capacity. In 2000 Indus Motors introduced Cuore (800 cc), Suzuki introduced Cultus (1000 cc) and Honda introduced Santro (1000 cc).

The manufacturing of cars requires utilization of all the available production technologies like casting, forging, machining, stamping, rubber, plastic, high-end textiles, etc. It is not possible for a car manufacturer to make all the parts in-house and be competitive. Hence, specialist manufacturers in respective fields are required to work closely with the automobile manufacturer and give the consumers a cost effective product. A similar pattern also evolved in Pakistan with the inception of Pak Suzuki Motor Company.

While the assembly plants may represent the face of the industry, the heart firmly lies in the vendor industry. A large number of SMEs represent the supply chain feeding into the assembly plants. The vendor industry is feeling a dire need of research and development facilities as it also have to successfully achieve the quality standards set by OEMs - these quality standards are essential in order to be competitive with the imports.

In order to bridge the gap between the assemblers and auto part manufacturers, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) was formed in 1988 to provide effective link between the government, the assemblers and the auto-parts manufacturers. Its main objective is to enhance technical expertise and management cooperation amongst its respective members. PAAPAM has under its wing companies manufacturing parts for the Pakistani assemblers of cars, motorcycles, tractors, trucks and buses. The investment exceeds US$ 1 billion. It aims to safeguard the business interest of it members and achieve sustainable growth and development in the engineering sector of the industry.

PAKISTAN AUTO INDUSTRY

UNITS:

ASSEMBLERS

VENDORS

NO OF UNITS

CAPACITY IN UNITS

Cars

6

164,000

Organized Sector : 500

LCVs

6

32,500

Buses

5

3,900

Trucks

5

17,500

Tractors

3

50,000

2/3 Wheelers

22

733,000

Total

47

Employment

11,000

160,000

 

Investment

Rs. 26.5 B / $ 0.46 B

Rs. 72 B / $ 1.25 B

 

Contribution to GDP (03-04)

Rs. 129.08 B / $ 2.24 B

Rs. 24.81 B / $ 0.43 B

 

Contribution to Revenue (03-04)

Rs. 43.5 B / $ 0.75 B

Rs. 8 B / $ 0.14 B

 

Foreign Exchange Saving (03-04)

Rs. 60.99 B / $ 1.06 B

Rs. 11.25 B / $ 0.195 B

 

 


INSTALLED CAPACITY & PRODUCTION OF VEHICLES / AUTOMOTIVES

Installed Capacity

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

CARS

164,000

32,461

39,573

41,233

63,095

98,461

126,403

LCVs

32,500

7,036

7,424

9,055

12,548

14,896

25,177

Buses

3,900

1,460

1,326

1,086

1,296

1,380

1,762

Trucks

17,500

913

912

1,134

1,929

2,022

3,204

Tractors

50,000

34,559

31,635

23,801

26,240

35,770

43,200

Motorcycles*

733,000

86,959

108,850

120,627

165,105

*303,262/ (r) 360,000

*416,189/ (r)450,000

* 6 Major Players only
(r) Total production of Motorcycles in the Country including new entrants from China

 


DELETION LEVEL - AUTO INDUSTRY

Automobiles

Cars

Buses

Trucks

Tractors

Motorcycles

Jun-05

62-71

48-52

43-68

53-85

84-90

 


CARS
IMPORT TARIFFS FOR PAKISTAN'S CAR INDUSTRY

CUSTOM DUTY (2005-06 BUDGET)

1.

Raw Materials

5%

2.

Sub-Components

10%

3.

Components for sub-assemblies & Assemblies

20%

4.

CKD Kits (SRO 453(1)2004)

 

Cars upto 1600 cc

35%

 

Diesel Cars

35%

5.

CBU - Completely Built Units

 

Upto 1300 cc

50%

 

1300 to 1600 cc

70%

Upto 1500 CC

50%

 

1600 to 1800 cc

80%

1501 to 1800 CC

65%

 

Above 1800 cc

100%

Above 1800 CC

75%

 


INVESTMENT PLANS IN AUTO SECTOR

(Billion Rs.)

CARS

 

Indus Motor Co

4.0

FY 05-06

New Assemblers & Vendors

4.0

Current Vendors

10.2

Sub Total

18.2

( $ 307 M)

OTHERS

 

HINO PAK (Trucks & Buses)

0.7

FY 06-07

Yamaha (Motorcycle)

0.6

FY 05-06

Suzuki (Motorcycle)

0.2

FY 05-06

Sub Total

1.5

( $ 25 M)

Total

19.7

( Approx $ 332 M)

 


TOP 50 VENDORS

S.#

COMPANY NAME

REGION

TURNOVER (RS.)

1.

General Tyre

South

2,800,000,000

2.

Thai Engineering Limited

South

2,700,000,000

3.

Agriauto Limited

South

1,500,000,000

4.

Exide Pakistan

South

1,288,628,000

5.

Procon Engineering

South

1,224,000,000

6.

Sanpak Engineering

North

1,100,000,000

7.

Avitronics Limited

South

1,051,000,000

8.

PMTF

South

926,000,000

9.

Atlas Battery

South

960,000,000

10.

Balochistan Engineering

South

900,000,000

11.

KSB Pumps

North

900,000,000

12.

Ravi Autos

North

770,000,000

13.

Razi Sons

South

720,000,000

14.

Loads Limited

South

700,000,000

15.

Allwin Engineering

South

693,000,000

16.

Bolan Casting Limited

South

650,000,000

17.

Balochistan Wheels Limited

South

600,000,000

18.

Mannan Shahid Forgings

North

600,000,000

19.

Jawed Metal Industries

South

530,000,000

20.

Bahawalpur Engineering

North

502,860,000

21.

Alson Auto Parts

South

500,000,000

22.

Techo Pak Telecom Limited

South

487,000,000

23.

A.S.A. (Pvt.) Ltd.

South

414,000,000

24.

Automate Industries

South

410,000,000

25.

N.A.C.

North

368,000,000

26.

Aftab Technologies (Pvt) Limited

South

360,000,000

27.

SuperTech Engineering

South

360,000,000

28

Omer Jibran Eng. Limited

South

336,000,000

29

Allied Precision Engineering Products

South

330,000,000

30.

Yusuf Industries

South

301,000,000

31.

Foraz Industries

South

300,000,000

32.

Plastec Auto Safe (PA.) Ltd.

South

300,000,000

33.

AB Engineering (PA.) Ltd,

South

256,000,000

34.

Rastgar Engineering

North

250,000,000

35.

Rubatech ManuFacturing

South

240,000,000

36.

Synthetic Products (Pvt.) Ltd.

North

231,000,000

37.

Karachi Luminar

South

230,000,000

38.

Unik Fabrics

South

221,000,000

39.

Ata Muhammad Enterprise

North

180,000,000

40.

Adamiee Engineering (Pvt.) Ltd

South

180,000,000

41.

Techno Fabric (Pvt.) Ltd

South

178,000,000

42.

Excel Engineering

North

171,600,000

43.

Metaline Industries

North

150,000,000

44.

Noor Engineering

South

150,000,000

45.

Hawks Engineering

North

145,000,000

46.

Hussain Engineering Works

South

144,000,000

47.

A.E.K. Industries

South

125,000,000

48.

Rakson Engineering

North

120,000,000

49.

Transmission Industries

South

120,000,000

50.

Pecs Industries

North

120,000,000

Source: Hanover Guide (TUSDEC)/PAAPAM Directory/PAPS application
E. & O.E.

INDUSTRY OVERVIEW

OEM's

CARS

1. Pak Suzuki Motor Company Ltd.
2. Honda Cars Ltd.
3. Indus Motor Company Ltd.
4. Dewan Farooq Motors Ltd.
5. Ghandhara Nissan Ltd.
6. Raja Group of Industries

MOTORCYCLES

1. Honda Motor Cycle Ltd.
2. Dawood Yamaha Ltd
3. Suzuki Motor Cycle Ltd.
4. Kohenoor Motors Ltd.

TRACTORS

1. Millat Tractors Ltd.
2. Al-Ghazi Tractor Ltd.
3. G.M. Tractors Ltd.

TRUCKS/BUSES

1. Hino Pak Ltd.
2. Sind Engineering (Pvt.) Ltd.
3. Volvo Pakistan Ltd.

Federal Minister for Industries and Production Jahangir Khan Tareen, while speaking at the Pakistan Auto Parts Show-2007, said that the auto industry has to expand production to meet the growing demand for cars. "If they cannot do it, the government will continue to allow import of vehicles so that consumers should not suffer," he declared.

The auto parts industry faces a tough competition from imports, but there are examples where a few locally manufactured products are successfully competing with imported parts in terms of quality and price.

The boom in demand was seen as a positive indication but it also gave birth to a number of problems like delayed deliveries and practice of premium pricing. However, the industry has started to deal with such issues and there are reports that delivery schedules are improving as some manufacturers have increased output. However, the government's decision to allow import of used cars has slowed the industry's growth. The consumers have cut down booking cars as they hope that the price of used/reconditioned cars would be much less. Accordingly the car manufacturers are reported to have reduced their production rate, besides slashing their plans for further enhancing their capacities.