GROWING DEMAND OF CARS
AUTO SECTOR REBOUNDS ON FARMER'S DISPOSABLE INCOME, SAYS CEO DAEWOO PAK MOTORS
May 17 - 23, 2010
The disappointing phase of the automobile sector spanning over almost three years seems to have come to an end as was depicted from demand growth during ten months of the current financial year 2010.
It is heartening to see that as a key positive indicator for broader macro recovery, the light commercial vehicles (LCVs) have also started to regain momentum with 130 per cent YoY growth.
A new trend is also emerging in the auto sector with the potential exports of passenger buses to Saudi Arabia and Emirates. If this gains momentum then it is sure to lend a strong support to the overall economic growth on one hand and broaden engineering base on the other, which is the key for sustainable growth.
Daewoo Buses carrying international Korean brand with the label of Made-in-Pakistan are already enjoying a respectable place in the transportation sector from Karachi to Kashmir on the back of their quality, durability, and comforts
Nam, Young-Koo, the Chief Executive Officer of Daewoo Pak Motors said in an exclusive interview that Daewoo Pak had now started producing a wide range of Daewoo class business including Daewoo Luxury Buses for Inter-city and CNG Buses for Urban Operation under a joint venture arrangement with Afzal Motors for Domestic and Export Market in Pakistan.
Nam said that at present the production capacity of Daewoo Pak is 1500 buses for a wide range of customers. Mass production of Daewoo buses has now been started after injecting new capital investment besides introducing new technology in shape of machinery, equipments and skill of human resources.
When asked whether Daewoo Motors is operating in neighboring India being the larger consumer market, Nam come out with an encouraging answer that before going for investment Daweoo surveyed the region and decided to choose Pakistan as the destination for investment.
Prior to arrival in Pakistan we heard a lot about security risks and law and order situation in Pakistan however the situation on the ground was quite different from what it being perceived. In fact, Pakistan is an attractive place for doing business, Nam said and added that he would ask his fellow investors in Korea for investment in Pakistan.
Due to its strategic location the exports of Korean Buses carries an edge for saving freight charges from Korea. He said that Daewoo buses being produced in Pakistan are equipped with Euro-II Diesel and CNG engines.
Meanwhile the government is actively considering to reduce duty on import of cars with a view to check the rising prices of all makes in vogue in the country.
It is amazing to see that despite rising trend in car prices even of the smaller segment the demand for cars depicted an increase of 57% to 10,223 units in April 2010 as compared to 6,511 units in the same month last year.
He attributed rise in demand to the strong agriculture crops which improved the disposable income of the farming elite. It is learnt that the government has an intention to reduce import duty on cars. The auto industry however looks quite undaunted of the possible reduction in duty rather supporting the duty reduction especially on the bigger cars probably because the auto makers are sailing in the two boats as they are equally involved in imports of car besides producing locally.
Meanwhile rise in numbers of car sales indicates recovering economy, rising personal income and availability of car financing from banks are driving notable revival in domestic auto sales. It will be interesting to note that the car sales remain 47 per cent higher YoY at 88,808 units as compared to 60,583 units in the comparable period of last year.
However with the exception of Indus Motor, most assemblers witnessed a decline in MoM car sales during ten months of the current financial year. It may be noted that n April 2010 car sales of Indus Motor were recorded at 4,885 units, up 5 per cent MoM and 33 per cent YoY.
Actually growth in INDUS car sales was driven by higher sale of Corolla, a leading brand in 1300cc & above segment, which increased by 10 per cent MoM to 4,558 units versus 4,147 units in March 2010 which in a way affected the sales of its popular Cuore.
On the other hand, car sales of Pak Suzuki stood at 4,265 units down 5 per cent over 4,482 units sold in the month earlier. Sales of Swift, newly launched 1.3L car by Suzuki is shedding since last month. In April 2010 Swift unit sales dropped 32 per cent to 279 units as against 408 units sold in the preceding month.
The sales of Mehran, Cultus and Liana also declined 4 per cent, 8 per cent and 34 per cent MoM at 1,802, 1,104 and 78 units, respectively. However sales of Alto were up by 13 per cent MoM to 1,002 units in April 2010.