AUTOMOBILE AND ALLIED INDUSTRY
DR. S.M. ALAM
Nov 15 - 21, 2010
Pakistan's auto-industry is contributing immensely towards making Pakistan a fast progressive and competitive country. The automobile & allied products sector in the country has attained a vital position aided by an unprecedented growth in the country's industrialisation 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 the manufactures as well as aftermarket 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 70 per cent 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 affordability, and consequently turning out benefits to auto and allied parts manufactures.
At present, nearly 25 automobile industrial units are engaged in the assembly/manufacturing of cars, jeeps, LCVs, trucks, buses, motorcycles, and tractors. Though the cars production in Pakistan has increased manifolds during the last few years, but Pakistan's share for the year 2007, in the global car production is low and it was 11 cars per 1000 persons, whereas for some other countries were: 314 (Argentina), 653 (Australia), 556 (Austria), 482 (Bahrain), 539 (Belgium), 38 (Bhutan), 198 (Brazil), 698 (Brunei Darussalam), 597 (Canada),164 (Chile), 32 (China), 622 (Cyprus), 559 (Finland), 600 (France), 623 (Germany), 384 (Hungary), 773 (Iceland), 76 (Indonesia), 16 (Iran), 537 (Ireland), 305 (Israel), 677 (Italy), 595 (Japan), 137 (Jordan), 338 (Korea Rep), 291 (Libya), 558 (Malta), 150 (Mauritius), 244 (Mexico), 872 (Monaco), 61 (Mongolia), 71 (Morocco), 503 (Netherlands), 729 (New Zealand), 572 (Norway), 188 (Panama), 451 (Poland), 724 (Qatar), 245 (Russia), 149 (Singapore), 159 (South Africa), 601 (Spain), 58 (Sri Lanka), 28 (Sudan), 523 (Sweden), 569 (Switzerland), 52 (Syria), 103 (Tunisia), 131 (Turkey), 140 (Ukraine), 313 (UAE), 527 (UK), 820 (USA), 147 (Venezuela), 13 (Vietnam), 35 (Yemen Rep), 18 (Zambia), and 106 (Zimbabwe).
Currently, there are over 1,270 industrial unit engaged in manufacturing of components, parts and accessories for cars, buses, trucks, and motorcycles. The automobile industry has been an active and growing field in Pakistan for a long time. Most cars in the country have dual fuel options and run on CNG (compressed natural gas) which is more affordable than petrol in the country. Passenger vehicles include 1) Suzuki Mehran 2) Suzuki Alto, 3) Suzuki Cultus, 4) Suzuki Ravi, 5) Suzuki Bolan, 6) Suzuki Liana, 7) Toyota Corolla, 8) Honda Civic, 9) Honda City, 10) Nissan Sunny, 11) Diahatsu Cuore.
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 wake of a fast globalisation. Varieties of auto parts are manufactured: 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, steering and other spares parts. The local auto manufacturing industry provides employment in addition to investment.
Pakistan produced total 218,300 vehicles in fiscal year 2009/10, up 32.2 per cent from 165,158 in fiscal year 2008/09, according to figures from the Pakistan Automotive Manufacturers Association (Pama). The 2009/10 aggregate production figure is inclusive of 121,647 passenger cars, 3,425 trucks (category 1), 628 buses, 4,053 trucks (category 2), 1,172 jeeps, 15,768 pick-ups and 71,607 tractors. Meanwhile, sales of new vehicles in 2009/10 registered 221,720 units, inclusive of 123,957 passenger cars, 3,620 trucks (category 1), 657 buses, 4,277 trucks (category 2), 1,201 jeeps, 16,496 pickups and 71,512 tractors. The aggregate 2009/10 sales represented a rise of 36 per cent year-on-year.
However, while the vehicle sales and production figures in 2009/10 may have appeared impressive in percentage terms, they were less impressive when viewed against historical figures. Political turmoil in Pakistan, in tandem with the global economic downturn, delivered a double whammy to car sales and production in the country over FY08/09. Sales of new vehicles in Pakistan fell 34 per cent during that fiscal year. The 163,479 new vehicles sold in Pakistan in 2008/09 compared very unfavorably with the 247,160 in fiscal year 2007/08 and, of course, the 2009/10 aggregate sales figure remained considerably below the 2007/08 base.
Meanwhile, production of new vehicles in FY2008/09 was down 33 per cent, from the 247,036 units produced in FY2007/08. As with sales, the year 2007/08 remains a high watermark for vehicle production in Pakistan's car industry, as aggregate production in 2009/10 remained nearly 12 per cent below the level of two years earlier.
In the first six months of the calendar year, Pakistan produced a total of 67,673 passenger cars. Sales of new passenger cars, meanwhile, registered 68,788 units compared with full-year forecast of 117,428.
Although a replication sales and production performance would result in current full year forecasts for both variables being surpassed, sales (and hence production) momentum is likely to slow in the coming months, due to the government increasing General Sales Tax (GST) from 16 to 17 per cent in the budget. As a result, new car sales in July fell 31.6 per cent month-on-month to 9,796 units, from 14,320 units in June (consumers had rushed to complete purchases towards the end of year, in anticipation of the rise in GST).