Mar 02 - 08, 2009

The auto industry of Pakistan especially the motorcycle industry has shown significant improvement in term of investment, employment, capacity enhancements, and management etc. These were achieved by the motorcycle industry, because of the opportunity created by the Japanese assemblers by creating high price market by them and the consumers. Another reason is due to the low price CBU's , CKD's and spare parts by the Chinese suppliers into the local market at considerably low price and bringing the motorcycle into an easily affordable package for the consumers in Pakistan and all over the world. The three Japanese brand assembler after the entrance of Chinese assemblers they decreased the prices of their motorcycle considerably to stay in and to maintain the major share of the market. This race between the Japanese assemblers and the Chinese assemblers passed a significant benefit to the consumers. This could be observed by the market demand increasing year by year till 30th June 2008.

"One very interesting point to be noted is that what so ever the local and global conditions were in the last 7 years, the selling trend of the motorcycle was continuously increasing." However, from the July 2008 and onward a sudden sharp decline in the performance of auto industry is being witnessed mainly due to some important factors which are hitting the industry badly:

1- Devaluation of Pak Rupee

2- Sales tax increased by 1% to 16% and plus 1% more Special Excise Duty (S.E.D)

3- Increased ingredients of inefficiency including electric load shedding, gas load shedding, law and order situation and undue pressure by government departments since Last year.

4- The correspondent increase in price of parts and components by the motorcycle vendors.

5- All motorcycle OEMs increased prices of their brands almost 10% to 30%

The present decreasing trend in the automobile sector together with global recession and high inflationary factor is also seriously affecting the motorcycle industry which had invested billions of rupees in capacity enhancement in the wake of investment plan (AIDP) jointly launched by the government (EDB) and all big OEM's but not SME's of motorcycle sector.

Karachi Office: APMA House, 1, Rabia Manzil, Plot # 341-P,AM-18, Akbar Road, Karachi (Pakistan) P. Code-74200, Tel : 021-2732255, Fax: 021-2732655


In past government policies have provided a spacious room to the new Chinese brand motorcycle assemblers. It is quite evident that EDB registered more than 50 motorcycle assemblers upto December 2007 and again registered 07 motorcycle assemblers in the last year of current government. Please note that 03 Japanese assemblers namely Honda, Yamaha and Suzuki are working in Pakistan since last 40 years. The protection of motorcycle industry was overlooked and left at its own to redress its problems according to its own muscular power. This can be easily understood by following two examples

1 According to AIDC decisions motorcycle parts listing shows gradual decrease in the CKD rate of duty. This incentive to the assemblers was allowed that NO ROLL BACK of the existing localized components will be made and further indigenization of the CKD parts will be made. But the vendors not developed quite numbers of the parts included in the list, and still many of these components imported by the commercial importers and assemblers. This led to a discouraging localization of motorcycle parts and new importable lists must be made by EDB and motorcycle OEM's. Please also note that the first time importable list made by EDB and others are not correct and small and medium motorcycle assemblers are not happy with those lists.

2 SRO 656 /2006 Amendment Dated: 11th June 2008. According to this SRO "that assembler or the manufacturer shall directly import the components as per the duly approved list by the EDB but EDB is not providing approved lists for import to all assemblers every year and at the end of the year EDB provide approved lists and next year EDB demanding input records from the assemblers as per approved importable lists how it is possible because EDB approved lists in the Last month of financial year and the assemblers are importing parts between the year .And other than importable parts must be procure from a sales tax registered local firm or manufacturer such components and will maintain record accordingly". As per EDB DGM Tariff and Manager Tariff TBS-II assemblers are breaching the law and procuring these parts from the commercial importers. Who will ask them that you are not issuing them approved importable list at the start of the new fiscal year.

Pg # 2 of 3

Karachi Office: APMA House, 1, Rabia Manzil, Plot # 341-P,AM-18, Akbar Road, Karachi (Pakistan) P. Code-74200, Tel : 021-2732255, Fax: 021-2732655


Approximately there are 5.5 million motorcycles of Japanese and Chinese brands running on the roads all over the Pakistan. Commercial importers are playing a strong role and hold in the after market by supplying parts according to the budget and affordability of every type of customers including Honda, Yamaha, Suzuki and Chinese excluding the body parts. All of the engine and electrical parts are coming from China for Honda, Yamaha, Suzuki and Chinese Brands.

According to Japanese assemblers the commercial importers are engaged in under invoicing and misdeclaration, in some cases the imports of the motorcycle parts are done by fictitious importers which are not traceable after some time. According to Honda in Pakistan another very interesting factor is that the market is flooded with smuggled parts and it cannot be substantiated with customs import record, a massive loss to the exchequer.

What is the future? The survival of the motorcycle industry greatly depends upon:

> Consistent and industrial friendly policies by the Govt. of Pakistan

> Execution of SRO 656/2006 Amendment in favor of SME's of motorcycle industry

> NO ROLL BACK of the indigenized parts for motorcycle assemblers

> Buildings close interaction with EBD, Customs, MOI, AIDC and motorcycle OEM's.

> Discouraging unethical players specially the Smugglers.

> It is advised that if EDB support APMA (Association of Pakistan Motorcycle & Rickshaw Assemblers) for the execution and follow-up of SRO 656/ 2006, only the genuine players will be left into the business.


It is the need of the time that the motorcycle assemblers must realize the current situation and do utmost to increase interaction with the policy makers. Penetration into local market and after market (and export business) is a must without losing business from local consumers; "Otherwise the outlook of the Motorcycle Industry won't be different from the Textile Industry of Pakistan .

Muhammad Sabir Shaikh

Chairman APMA

Association of Pakistan Motorcycle Assemblers

Tel: 021-2732255, Fax: 021-2732655



The Secretary Industries, Production and Special Initiatives

The CEO EDB / Chairman AIDC