Efforts afoot to bring $1.5 billion investment for auto industry under way: Senate panel told

The automotive manufacturers operating in Pakistan have planned to bring an investment of $1.5 billion in auto industry of the country This was stated by Amir Allahwala, former Chairman Pakistan Association of Automotive Parts & Accessories Manufacturers, while briefing the Senate Standing Committee on Industries and Production which met under the chairmanship of Senator Ahmad Khan. Allahwala told the participants that the manufacturing of Suzuki's Mehran car will come to an end within the next two months.
The panel was informed that over the past five years, Pakistan auto industry has witnessed a phenomenal growth as in 2013-14 Pakistan produced 116,000 units of car which in 2017-18 reached 218,372 units.
Suzuki had launched Mehran in 1989 in Pakistan and it has since been one of the most popular cars in Pakistan. "We have been hearing for a while that Suzuki is considering stopping manufacturing Mehran but despite all the criticism and flaws, Suzuki sold more than 42,000 units of Mehran in 2017," the panel was informed.
However, the company had officially announced in September 2018 that it will stop the production of Mehran's VX variant from April 2019. Pak Suzuki is to introduce the next-generation 660cc Alto in March 2019 which will have a price tag of Rs 850,000-900,000 (approximately) for the basic variant, though an official announcement in this regard is awaited.
Allahwala said that Pakistan is among the 40 countries of the world manufacturing major parts of various vehicles, adding that most parts of the vehicle including engines are being made in Pakistan.
He said that to further develop auto industry nine automotive manufactures are all set to bring an investment of $1.5 billion to Pakistan. He said that around 2.4 million people are associated with the automotive manufacturing industry.
Talking about the problems being faced by the auto sector, the representatives of the auto industry told the panel that various policies of the government were hurting the business especially the ban on non-filers to purchase a vehicle has seriously hurt the auto industry.
The three car assemblers produced 113,494 cars and jeeps of different engine capacity in the first six months of the present financial year but sold only 104,038 units. This can be compared with production of 107,787 units and sale of 103,432 units during the same period in the last fiscal.
Suzuki, which monopolises the 800cc and 1,000cc segments, has been the worst hit by the slump in car sales and has built up a large inventory, especially of Suzuki Mehran. The company could sell only 75pc of the 22,298 units of this popular 'middle-class' small car it produced. Indus Motor Company which is manufacturing various models of Toyota cars and jeeps in Pakistan has reduced the production target set for the ongoing year from 72,000-74,000 units to 62,000/64,000 units this year, the panel was informed.
Allahwala informed the committee that 96 percent of motorcycles are being made in Pakistan, adding that the country is exporting motorbikes to Afghanistan while cars are also being exported to Nepal and Sri Lanka.
The panel was informed that 75,000 used cars of various models are being imported in Pakistan per year which is also hurting the growth of local industry.
The chairman committee remarked that the people are forced to pay additional amount for new cars but still they have to wait for months and under such circumstances boom in sale of used cars is natural.
The Senate committee asked the concerned officials to brief the panel on the imported vehicles in the next meeting with all details.
The last three months have been tough for auto industry business as a result of the overall economic slowdown in the country during the last quarter of 2018. The significant currency depreciation forced both carmakers and motorcycle producers to drastically jack up prices which has compelled the industry to cut costs and work in two shifts a day instead of three, the panel was further informed.