Jan 14 - 20, 2008

Worldwide, the automobile industry forms the largest proportion in the world trade. The automobile and allied industry in the country has developed at a highly impressive rate during the last 6 years because of liberal and pro-industry policies of the government. Pakistan's auto-industry is contributing immensely in making Pakistan a fast progressive and competitive entity. The automobile and allied products sector in Pakistan has attained a vantage height aided by an unprecedented growth in the country's industrialization and its rapid expansion.

The automotive sector has shown phenomenal growth during recent years. The government's continued support to the automobile and auto parts manufacturing sector has been the key source of encouragement to the manufactures as well as after market vendors to move in and reap entrenched benefits that Pakistan has to offer. At present automobile sales are mainly driven by easy access to auto finance. Around 75% of the total sales are through auto finance lease. The increasing number of banks in public and private sectors and financial institutions has greatly boosted up to affordability, and consequently turning out benefits to auto and allied parts manufactures. Today almost every local or foreign bank is providing this facility for the easier access to the car purchase. The declining interest rates and increased auto-financing through private banks, and leasing companies have played a vital role to increase the sales like never before. In turn, financing has helped to enhance the overall auto production as it makes up a sizeable part of the total auto sales today.

Due to increased power of purchase of the costumers throughout the country and due to the readily available financing and attractive leasing schemes by financial institutions and despite the price elasticity and intensifying competition, the industry players are enjoying very healthy profit margins on their automobiles. Recent survey has revealed that more than 65 per cent of all new automobiles are being paid for through financing and leasing options.

At present more than 82 automobile industrial units are engaged in the assembly/manufacturing of cars, LCVs, trucks, buses motorcycles and tractors. There are manufacturing facilities of cars of different capacity such as 1300-1600cc, 1000cc and 800cc. Such cars are Honda(Civic), Honda(City), Suzuki(Liana), Toyota(Corolla), Nissan(Sunny), Kia(ClassicNGY0, Kia(Spectra), Suzuki(Khyber), Suzuki(Alto), Hyundai(Santro Plus), Daihastsu(Curoe), Suzuki( Mehran), and Suzuki(Margalla). The total production of these cars for the year 2006- 2007 stand at 204,212units compared to 187,436 units last year.

The different manufacturers of buses were Hino, Nissan, Dong Feng, Master and Isuzu. Their production stands at 758 with sale of 746. The total numbers of LCVs such as Suzuki Jeep(Potohar) and Sigma(Defender) , Van(Zuzuki)Bolan and Pick-Up such as Suzuki(Ravi), Toyata(Hilux), Dong Feng, Hyundai(Shehzore) and Master produced were30,354 with the sale of 30,500 in the year 2006- 2007. The production and sale of farm tractors such as Flat (New Holland),and Millat (Massey Ferguson) for 2006- 2007, stood at 43,839 and 43,365, respectively. The different types of motorcycles manufactured in the country are as Honda, Yamaha, Suzuki, Sohrab, Sihrab (Tri-wheeler), Qingqi (Tri-wheeler) and Fetah Hero. Their total production and sale for the year2006- 2007 came to 379,899 and 378,830, respectively. Though the cars production in Pakistan has increased manifolds during the last few years but Pakistan's share in global car production is negligible. It is estimated that cars per 1000 persons ratio in Pakistan is around 8 vehicles whereas it is 765 in (USA), Malaysia (641), Japan (543), 31(Philippines)25 (Sri Lanka), 23 (Iran), 21(Indonesia), 12 (India), 10 (China). At an average 28 out of 1000 Asians own a car.

Currently, there are over 1,250 industrial unit engaged in manufacturing of components, parts and accessories for cars buses, trucks, and motorcycles with an investment of $ 1.6 billion , providing employment t o about 40,000 workforce. Pakistan has registered a record 58 per cent growth in auto sector, which speaks for the country's tremendous industrial growth and its investment-friendly environment. The prices of the locally manufactured vehicles are generally less than the landed cost of imported vehicles, which is one of the major reasons why auto industry in Pakistan has not been able to make a breakthrough in the foreign markets. The country's automobiles industry presently manufacturing varieties of auto parts such as automobile engines., automobile frames and parts, brakes, die and jig fixtures, engine fitting, engine parts, garage and service equipments, pneumatic tires and tubes, power trains, rubber and plastic components for automobiles , steering and other spares parts. The local auto manufacturing industry provides employment in addition to investment, technology transfer, localization of parts and human resource development. The auto industry is the mother of the growing engineering industry with over 500 vendors and millions direct technical jobs, and around billion rupees in duties and revenues that the government itself collects every year from this sector. Additionally, a locally manufactured car has the added advantage and benefit of after sales service, easy availability of spare parts.

History of the auto industry in Pakistan is as old as the creation of the country itself. The initial work of automobile assembly in the country was started in early 1950 with Bed Ford Truck followed by Ford Perfect, Ford Cortina and Dodge Dart.

Pakistan has one of the lowest numbers of vehicles per capita among the developing countries which is around 8 cars per 1000 people and therefore offers a lot of room for demand growth. In India, China and Indonesia, this ratio stands at 12, 10 and 21 cars per 1,000 persons, respectively. In order to reach motorization levels equivalent to those of other countries in the region, Pakistan needs to cross the 500,000 units per annum threshold, provided if a long term policy supporting local assemblers and vendors is brought into effect immediately.

Import of used cars: The imports of used cars were 35,721 units for the year 2006-07, while for the year2005-06 was 54,618. Currently, a variety of different makes and models of used and reconditioned cars with eye catching colors are rolling everywhere on the roads whether it is Karachi, Lahore, Islamabad or other urban and even in villages and rural areas of the country. Changing models, improving fuel efficiency, cutting costs and enhancing users comfort without comprising quality are the most important challenges of the automobile industry in the face of a fast globalization.

On the whole, the long-term auto policy would provide the investors a predictable and transparent environment and would facilitate long-term investment, encourage growth and competition, enhance competitiveness and stimulate innovation.