PAKISTAN'S AUTOMOBILE INDUSTRY
Mar 02 - 08, 2009
The initial work of automobile assembling in the country was started in early 1950 and has gone through different phases of progress. Afterwards, through own financial resources and foreign investments, automobile and allied products sector in the country has attained a pivotal position, aided by unprecedented growth in the country's industrialization.
Automobile is the fastest growing industry in the country. The government continued support to the auto industry and auto parts manufacturing units has been the key source of encouragement to industry's players.
Pakistan's automobiles include small and medium sized cars, light commercial vehicles, two and three wheelers (motor cycles and auto rickshaws), tractors, trucks, and buses.
The increasing numbers of banks in public and private sectors in the country and financial institutions have greatly boosted purchasing of automobiles, and consequently turning out benefits to auto and allied parts manufactures.
The declining interest rates and increased auto-financing through private banks, and leasing companies had played a vital role to increase sales. Consumer financing has helped to enhance the overall auto production.
Due to increase in purchasing power of the middle class customers throughout the country, readily available financing and attractive leasing schemes by commercial banks and financial institutions, the industry players enjoyed very healthy profit margins on automobiles despite the price elasticity and intensifying competition.
A survey revealed that more than 70% of automobiles were sold through consumer financing and leasing.
According to the economic survey, there are about 65 automobile manufacturing units operating in the country and are involved in assembling and manufacturing business. The segment wise classification is as follows: Cars 7 units, LCVs 7 units, Jeeps 2 units, Trucks and Buses 5 units, Tractors 4 units, Motor cycles 39 units. There are more than 1600 vendors in automotive industry. The industry operates under financial and technical cooperation agreement with Japan, Europe, Korea, China etc.
Japanese car manufacturers control most of the country's passenger car production and sales. It supplies about 10% of the total revenue to the government. Pakistan has registered a record 58% growth in auto sector, which speaks about the country's tremendous industrial growth and its investment-friendly environment.
The production of cars, jeeps, light commercial vehicles, trucks, buses, tractors, and motorcycles stood at nearly 725,754 units during 2006-07. Economic managers of the country have envisaged producing 500,000 cars and one million motorcycles by 2011.
In spite of tremendous progress in auto manufacturing sector, the production of different vehicles for population in Pakistan is positioned at the lowest in the region. According to a report, the production of vehicles per 1000 persons is 765 for USA, 641 for Malaysia, Japan 543, UK 426, Philippines 31, Sri Lanka 25, Iran 23, Indonesia 21, India 12, China 10, and only 9 for Pakistan.
Automobile industry is currently manufacturing varieties of auto parts such as engines, frames and parts, brakes, die, engine parts, garage and service equipments, pneumatic tires and tubes, power trains, rubber and plastic components for automobiles, steering and other spares parts.
Local auto industry is the mother of growing engineering industry with over 1600 vendors and millions direct technical jobs, and around billion rupees in duties and revenues that the government collects every year from this sector.
Additionally, a locally manufactured car has the added advantage and benefit of after service, easy availability of spare parts, low maintenance costs, and much higher resale value.
Currently, a variety of different makes and models of used and reconditioned cars with eye-catching colors are rolling on roads in Karachi, Lahore, Islamabad, and 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 on quality are the most important challenges facing the automobile industry in fast emerging globalization.