TEN Major Talking Points On Pakistan’s Auto Industry

“My analysis here is that, in 10 years’ time, we should be selling at least a million cars”

DESPARDES — Ten major observations and responses were made at a recent meeting of the National Assembly Standing Committee on Industries and Production:

  1. There had been a decline of 60% in Indus Motor’s car sales , and some carmakers were operating at 40-45% production capacity.
  2. 40% of the total retail price of a car went to the government in the form of taxes aka indirect taxes. Example: On a Rs4m car, the auto firm pays Rs1.6m to the government as tax recovered from the car sale.
  3. The engines of cars assembled/manufactured in Pakistan are mostly Euro-II compliant as the petrol available in Pakistan is of Euro-II standard.
  4. According to the Engineering Development Board (EDB), the local car manufacturers were reportedly following manufacturing standards of their principals. EDB does not monitor whether local auto firms are following the standards or not, as it was the domain of another organization
  5. “Pakistan’s car assemblers did not meet international standards — there was a massive difference between interiors of imported five-year-old used cars and newly assembled Pakistani cars.”
  6. A present, the EDB or the Ministry does not test the standards of auto parts and accessories. The official suggested the Ministry/EDB is recommending a laboratory to do so.
  7. The EDB, in its written reply on the use of air bags and anti-lock braking system in vehicles, said the organization did not have the mandate to regulate and monitor vehicle quality, standards, road worthiness, pricing, etc.
  8. The Ministry of Industries and Production and its attached organization, the Engineering Development Board (EDB), were alleged to have minted billions of rupees from the auto sector and compromising quality standards of locally assembled cars.
  9. Top official of Ministry of Industries and Production refuted the corruption charges, saying “I have heard about briefcases but never saw them with own eyes. I do not think anybody is engaged in corruption.”
  10. If a Pakistani invests Rs3 million or Rs4 million to buy a car, he does not have any other choice due to monopoly of three Japanese car companies.

‘Local car sales to hit a million mark in 10 years’

The rupee has lost 49% of its value since December 2017, following which the auto companies massively hiked car prices. A slowdown in the economy, rising inflation and declining purchasing power of consumers have dented profit margins of all the three major players (3 Japanese auto firms), which has been reflected in their latest financial results.

Meanwhile, at least three new global brands-KIA Motors with Lucky group, Hyundai with Nishat Group and Renault with Al Futtaim group- have set up local manufacturing operations in Pakistan.

Asif Rizvi, CEO of KIA Lucky Motors Pakistan points out: 1.65 cars were sold in Pakistan per 1000 people in 2018. India is selling 4 cars per 1000 people. “My analysis here is that, in 10 years’ time, we should be selling at least a million cars”.

Find out here if a salaried individual — in private or in government (Grade 17 thru upward) — has the purchasing capability for a car through outright sale or in installments based on his/her monthly disposable income.

1 thought on “TEN Major Talking Points On Pakistan’s Auto Industry

  1. I fully agree with all observations. I have been associated with industry from last 26 years as MD or COO.
    Major culprit is Min if Ind and Production and EDB.
    There is a need to have separate Automotive Ministry to plan and implement policy. I have written a lot that existing combustion including hybrid engines will die and replaced with Electric automobiles.

Comments are closed.