AUTOMOBILE SECTOR OF PAKISTAN
Sep 14 - 20, 2009
Automobile industry constitutes the largest proportion in the global trade. Pakistan's share in the $600 billion world auto market is only $50 million. Automobile industry in Pakistan developed at a highly impressive rate during last 9 years because of liberal and pro-industry policies of the government.
Pakistan's automobile industry is contributing immensely in making Pakistan a fast progressive and competitive entity. The automobile & allied industries in the country have attained a vital height aided by an unprecedented growth in the country's industrialization and its rapid expansion.
The automotive sector has shown an increased 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 manufactures as well as aftermarket vendors to move in and reap entrenched benefits that Pakistan has to offer.
Around 70 per cent of the total sales were through auto finance and lease. The increasing number of banks in public and private sectors and financial institutions has greatly boosted up affordability, 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 played a vital role to increase sales. In turn, financing helped to enhance the overall auto production as it was a sizeable part of the total auto sales today.
Due to increased power of purchase of the customers 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 were enjoying very healthy profit margins on their automobiles.
At present nearly 25 automobile industrial units are engaged in the assembly/manufacturing of cars, jeeps, LCVs, trucks, buses, motorcycles, and tractors. The production of these items for Dec 2007 stood at: Cars, jeeps and LCVs-94,967; motor cycles-503,537; tractors-25,053; trucks-1,836 and buses-5 42.
Despite increase in car production manifold during the last few years, Pakistan's share in the 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), and 10 (China). Our auto industry has no export potential. The high production cost, lack of modern technology, tariff structure for imported units and manufacturers' greed for profits make indigenous production saleable only in the domestic market.
China exports about 40% of its bike and Thailand exports about 28%. India produces about 7.7 million units of motor bikes annually and exports nearly 7%. We produce about 750,000 units of motor cycles annually and are able to export one percent or even less.
Currently, there are over 1,270 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 to about 50,000 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. That is 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, frames and parts, brakes, die and jig fixtures, engine fitting, engine parts, garage and service equipments, pneumatic tyres and tubes, power trains, rubber and plastic components for automobiles, steering and other spares parts.
Local auto manufacturing industry provides employment in addition to investment, technology transfer, localization of parts, and human resource development. 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 collects every year from this sector.
Additionally, a locally manufactured car has the added advantage and benefit of after sales service, and easy availability of spare parts.
Import of used cars for the year 2006-07 was 35,721 units, while for the year 2005-06 it 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. Changing models, improving fuel efficiency, cutting costs and enhancing users comfort without comprising quality are the most important challenges of the automobile industry.