PAKISTAN'S AUTO INDUSTRY IN 2007

The local economy has been further boosted by the news of a number of international ventures signing on to invest and manufacture international auto brands in the country

HUSSAIN TALIB
Jan 29 - Feb 04, 2007

Having doubled in size in the last year alone, Pakistan's auto industry has the prospects of becoming the country's most economically viable sectors.

Over that period of time the industry has largely been driven by not only an increase in demand from the consumer sector, but has also gained a lot of impetus from increasing investments that have been directed into the auto sector by an increasing number of players, buoyed by the increasing returns from investing in Pakistan.

One of the major policy boosts that the sector has received during that time has been the nullifying of all forms of duty on the import of inputs for part manufacturing. This has had the effect of encouraging investors from across the world to give serious thought to Pakistan as a destination for auto manufacturing.

The decision to invest in Pakistan has been further cemented by the fact that the country has some of the best infrastructure as well as a highly talented and innovative human resource pool in the auto sector. The importance of this continued flow of investment has been further highlighted by the fact that estimates put the employment ration of the auto industry up at 250,000 by 2010. This increasing investment has also augured well for a number of downstream industries that are affiliated as suppliers to the auto manufacturers, including industries as diverse as textile, plastic, rubber, fabricating metals, and even advertising and media, which have benefited from the increasing interest amongst consumers and suppliers.

The coming year also augurs well for the auto industry in Pakistan, with one of the earliest signs of a possibly improving economic scenario in the country having come with the announcement of a decrease in fuel prices in the very first month of the year, being the first downward move in pricing that this particular commodity has seen in some time. Though this does not directly indicate an improving demand for automobiles, what it will result in is the increasing confidence in investors, as well as consumers in the recovery of the Pakistani economy, as well as building faith in the impacts of the current policies put into place and consisted with by the current government. An indirect effect that it will have is the lowering of prices for various other commodities as well, thus eventually have a trickle down affect on improving the consumers' ability to buy.

The local economy has been further boosted by the news of a number of international ventures signing on to invest and manufacture international auto brands in the country. This is expected to go a long way towards furthering the county's attempts to diversify it industrial base from traditional industries like leather and textile to the engineering industry which will add value, create jobs and ask for a more diversified skill set from the local workforce. One of the most prominent additions to the international auto manufacturers investing in Pakistan include Tata Motors, India's largest auto firms, which has announced its entry into Pakistan through its subsidiary Tata Daewoo Commercial Vehicle Co. with the commissioning of a new truck and bus assembly unit in Karachi. The technical assistance pact made with local manufacturers, Afzal Motors Pvt Ltd., will see the making of a plant which has a capacity to produce 3,000 vehicles a year assembling heavy duty trucks of TDCV and buses from the Daewoo Bus Company.

Another piece of news of national importance has been the announcement by the Roma Motor Company to start local trial productions of its Roma Mini Truck at the works of Sind Engineering Limited. The locally produced trucks will be available for delivery from end January / early February 2007. Additionally, organizations like the China National Heavy Duty Truck Corporation (CNHDTC), one of the largest heavy duty truck manufacturers in China, have shown interest in investment in the automobile sector of Pakistan.

All this complemented by the fact that total production of locally assembled car units and light commercial vehicles (LCVs) for the current financial year is projected up to 240,000 units, as compared to 187,000 units in the 2005-06, and we can come to the safe conclusion that Pakistan's auto sector is on the verge of becoming one of Pakistan's most reliable economic strongholds in the near future.