In recent times a lot has been said and written about the auto industry. The Government of Pakistan has constituted committees to determine if we need this industry to exist and flourish or to die away due to vested interest.
We, as a Nation, have always been tuned to quick fix formulas. Patience and perseverance has been lagging.
It is our tendency to equate engineering with other low value added industries operating in Pakistan.
World wide the automobile industry is considered the mother of all industry. If you look at the world's five largest companies you would find three of them are from automobile sector.
The manufacturing of cars requires utilisation of all the available production technologies like casting, forgings, machining, stamping, rubber, plastic, high end textiles etc.
It is not possible for a car manufacturer to make all the parts in-house and be competitive. Hence, specialist manufacturers in respective fields are required to work closely with the automobile manufacturer and give the consumers a cost effective product.
A similar pattern also evolved in Pakistan with the inception of Pak Suzuki Motor Company.
In the last twenty years the vending base has grown from zero to eight hundred fifty strong units making parts for the state of the art vehicles duly modified to suit our climatic and road conditions.
The progress made by the automobile industry can be judged from the projected figures for June 2004.
If the industry is allowed to grow with the current policies in place the projection for 2010 are:
The consistent automobile policy of last five years has resulted in achieving Government growth targets as:
The industry employs engineers, diploma holders, technicians and highly skilled labour force. It has the potential to cater to the livelihood of Three million people.
The question that needs to be asked whether we need to create employment and investment opportunities in Pakistan or abroad?
Are we Price Competitive?
One comparison that defies all logic is the comparison of new cars with the used cars. The countries with established auto industry ban import of used cars (also referred to as re-conditioned cars).
Some developed countries allow imports but require destructive testing after payment of all government taxes.
PAAPAM did a price comparison study between the Indian and Pakistan car prices:
Cars in Pakistan are lower priced compared to India with the exception of Mehran. Please note that volume of Mehran in India is 10 times higher then ours.
The automobile industry is very unique as it is simultaneously technology as well as labour intensive. To remain competitive most the world's leading part manufacturers are re-locating there manufacturing activities in the low cost areas.
Pakistan, with the presence of world class Manufacturers stand a good chance of luring them. We see Pakistan becoming part of the OEM's global supply chain management; however, the name of the game is consistency in Government policy.
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Key Financial Figures June 2004
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Description Cars Motor Cycle Tractors Vendors Industry
120,000 400,000 26,000
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Contribution to 84.00 30.00 15.08 24.81 153.89
GDP Billion Billion Billion Billion Billion
Revenue to GOP 28.00 11.00 4.50 8.00 51.50
Billion Billion Billion Billion Billion
Employment 5,000 3,500 2,000 160,000 170,500
Investment 17.00 5.50 3.50 72.00 98.00
Billion Billion Billion Billion Billion
Import US$ 1,370 US$ 278 US$ 380 US$ 371 US$ 2,400
Substitution Million Million Million Million Million
Foreign Exchange US$ 590 US$ 170 US$ 297 US$ 195 US$ 1,252
Savings Million Million Million Million Million
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Key Financial Figures June 2010
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Description Cars Motor Cycle Tractors Vendors Industry
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300,000 1,000,000 40,000
Contribution to 210 75.0 23.20 60.00 368.0
GDP Billion Billion Billion Billion Billion
Revenue to GOP 70.0 25.0 7.00 19.00 121.0
Billion Billion Billion Billion Billion
Employment 12,500 8,750 3,100 265,000 290,000
Investment 42.50 13.75 5.50 171.0 233.0
Billion Billion Billion Billion Billion
Import US$ 3,425 US$ 695 US$ 585 US$ 900 US$ 5,605
Substitution Million Million Million Million Million
Foreign Exchange US$ 1,475 US$ 425 US$ 457 US$ 471 US$ 2,830
Savings Million Million Million Million Million
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Industry's Price Levels
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Indian Rs Price US$ Pak Rs Price US$ Difference $
(Ex-showroom Price
Prices - Mumbai)
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Suzuki
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Mehran 217,708 4,822 297,000 5,097 +275
Baleno 597,000 13,222 739,000 12,684 -638
Alto 384,078 8,506 464,000 7,964 -542
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Honda
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City 731,911 16,211 795,000 13,645 -2,566
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Toyota
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Corolla 992,049 21,977 1,169,000 20,065 -1,921
(1.8 liter - (Registration charges of 126.546 = US$ 2.803 additional)
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Hyundai
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Santro 446,211 9,885 499,000 8,565 -1,320
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