Like other auto makers around the world, Tata Motors is also contending with declining demand, both for its bread-and-butter commercial vehicles in India and its luxury brands, Jaguar and Land Rover. The company reported its first quarterly net loss in seven years in the October-December 2008 quarter, and saw its debt rating cut by ratings firms. More immediately, Tata Motors faces a June deadline to repay $2 billion in loans related to its Jaguar-Land Rover acquisition from Ford Motor Co. last year, according to the Wall Street Journal.
The automobile industry in India—the tenth largest in the world with an annual output of 2 million units last year—is expected to become one of the major global automotive industries in the future. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and reduced restrictions. The monthly sales of passenger cars in India exceed 100,000 units, according to a related Wikipedia entry.
In comparison with the rest of the world, the Chinese market for automobiles appears to be relatively robust. Monthly auto sales in China surpassed those in the U.S. for the first time in January, but automakers and industry watchers say the news may tell us more about the troubles in the U.S. than about China's growing car market, says a report published in San Francisco Chronicle.
Data released in February by the China Association of Automobile Manufacturers shows 735,000 new cars were sold in China last month, down 14.4 percent from the record of 860,000 set in January 2008. U.S. sales, meanwhile, fell 37 percent to 656,976 vehicles — a 26-year low.
In Pakistan, Engineering Development Board (EDB) is attempting to increase the GDP contribution of the automotive sector to 5.6%, boost car production capacity to half a million units as well as attract an investment of US$ 3 billion and reach an auto export target of US$ 650 million.
In addition to the growing defense industry, auto industry can become a driving force for the much needed manufacturing industrial base in Pakistan to create significant employment opportunities for its large population. Last year, the auto sector contributed US$ 3.6 billion, only about 2% of the GDP, to the national economy, and employed about 192,000 people.
Pakistan's auto parts manufacturing is a billion US dollars a year industry. Sixty percent of its output goes to the motor cycle industry, 22% is for cars, and the rest is consumed by trucks, buses & tractors.
After a significant growth spurt in 2002-2006, the auto sector is feeling the pain of economic slow-down in Pakistan. The industry is continuing in a slump which began in the previous financial year and according to Business Monitor International's recently published Pakistan Automotives Report, the industry’s performance this year will get worse. In FY08, which ended in June 2008, total vehicle sales fell by 6.2%. The downturn carried over into FY09, with sales for the first half of the year (July to December 2008) down by 48% year-on-year to 52,927 units for cars and light commercial vehicles (LCVs), while compared with November, sales for December were down 55%. These results support BMI’s forecast for a drop in sales of cars and LCVs to around 112,000 units in FY09. BMI expects the total auto market in Pakistan to contract by over 32%, with the worst damage done in the car and bus segments, which is forecast to fall by 45% each. Pakistan’s Economic Co-ordination Committee (ECC) is to consider a tax cut of 10% for domestic car manufacturers, which has been proposed by the Ministry of Industries and Production. However, the plan is not without its opposition, as the Federal Board of Revenue is reportedly against supporting individual sectors as this would prompt other industries to seek help. Moreover, with just five carmakers producing locally, the automotive industry is relatively small. On the other hand, the industry is also largely self-sufficient as the majority of its output is sold within Pakistan; this reduces the country’s reliance on imports and raises issues such as the protection of local jobs and the industry’s contribution to the overall economy.
Among the automakers, Indus Motors and Pakistan Suzuki reported positive earnings: The two leading car assemblers PSMC and INDUS posted positive earnings for 2008. PSMC reported operating losses of Rs 399 million. However, increase in other income by 77 percent offset their losses helping PSMC post positive earnings of Rs 26 million, according to Daily Times. Honda posted a loss after tax of Rs 190 million for the period July-December 2008 after a decline in net sales by 5 percent and a massive surge in operating expenses over the corresponding period last year.
The poor state of the industry is reflected in BMI’s Business Environment Rating for the automotive industry in Asia Pacific, where Pakistan is in last place on a score of 42.4 out of a possible 100. The market is held back by low production growth potential and an average rating for sales growth. However, as a signatory to the Trade Related Intellectual Property Rights Agreement (TRIPS) under the auspices of the World Trade Organization (WTO), the country’s regulatory environment scores well. A number of free trade agreements also contribute to this criterion, although forming FTAs with non-Asian countries would improve this rating further. Despite low marks for bureaucracy and corruption, the market does score well for its long-term economic risk and policy continuity.
With just a handful of manufacturers, Pakistan’s competitive landscape remains narrow. Japanese car manufacturers control most of the country’s passenger car production and sales. Figures for FY08 show that Suzuki-brand models represented 62% of total Pakistani passenger car production and 51.7% of sales. Toyota is gaining, however, with Corolla becoming the country’s best-selling model in the first half of FY09.
According to Daily Times, as many as 60,000 workers and staffers in Pakistan's auto sector have lost their jobs from July, 2008 to January, 2009 due to falling demand for cars. More jobs cuts are feared with continuing weakness in demand.
Given strong underlying growth dynamics in South Asia, the negative feedback effects of the global financial crisis are expected to be temporary. A relatively rapid rebound is expected in 2010, with a projected revival of GDP growth to 7.2 per cent. The long term prospects for the auto industry in the continent of Asia appear to be quite favorable. As the current financial crisis ebbs, there will be significant pent-up demand for automobiles in Asia, including India, Pakistan and China, that will drive the growth in auto industry.
Related Links:
Pakistan Automobiles Report 2009
Auto Pakistan Expo 2009
Automobile Technology in Pakistan
A Review of Global Road Accident Fatalities
Pakistan Automotive Report
China Surpasses US in Auto Sales
Auto Industry in India
India's Global Shopping Spree
65 comments:
I would like to point out one potential impact of the Nano (if it is a success), that will do a great deal of damage if the government doesnt step in. That is its impact on the livelihoods of the autowallah's and taxi driver's across India. A typical Indian family will use the Nano not for day to day trips to the office but for the trips out to a relative or dinner. This service used to be provided by the taxis and autos, but if people have a cheap car then they will use the car instead.
The government should actually somehow subsidize the Nano for the auto/taxi drivers, so that they have a chance of remaining competitive.
Vikram,
It seems to me that the transportation needs in India will continue overwhelm the available means.
Besides, Nano factories should also create many better paying new jobs in the manufacturing sector.
My concern is mainly with the potential negative impact on the environment as both Chinese and Indians start buying a large number of cars. Already, I have seen the impact in Beijing and Shanghai where cars have replaced bicycles.
Nice Article Riaz
i wish Nano can reach out to masses of people from
developing world
Tata will be a great success for india
and it aims to sell atleast 1 million cars from 2010-2011
i wish ,pakistan allows joint ventures with tata ,and it can really help pakistan local automobile industry or vendors to grow
The way to look at the relative sizes of industrial sector in different nations is by its contribution to GDP. Here are some figures:
India 19.3%, Pakistan 26%, EU 27.3%, US 20.4%, Germany 29%, UK 25.6%, Brazil 38%,...
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composit ion
Pakistan is now using domestically and exporting CNG kits to various countries including China, Brazil and Italy. Almost 2 million vehicles on the country's roads have dual fuel options with Suzuki having the highest in quantity. According to various reports, India significantly lagging Pakistan in clean energy and CNG usage with far fewer CNG stations and smaller gas pipeline infrastructure than Pakistan.
http://www.riazhaq.com/2009/12/pakistan-leads-south-asia-in-use-of.html
Political turmoil in Pakistan, in tandem with the global economic downturn, have delivered a double
whammy to car sales and production in the country, reports BMI research.
Sales of new vehicles in Pakistan underwent a decline of 34% y-o-y in fiscal year 2008/09 (July-end
June), with total sales registered at 163,479, compared to 247,160 in fiscal year 2007/08. This was largely
in line with the forecast that we made last quarter (just under 167,000 for the fiscal year).
Although data from the Pakistan Automotive Manufacturers Association (PAMA) for July 2009 shows a
rise in sales of passenger cars and light commercial vehicles of 33% y-o-y (to a total of 9,896 units), data
for the month was reportedly distorted by a production discrepancy related to the discontinuation of a
model. Nonetheless, it appears that auto sales in the country have bottomed out, looking at data on a
month-on-month view over the last few months. Indeed, the July figures show the fifth consecutive m-om
rise in sales. Compared to June, vehicle sales rose by 9%.
More from BMI auto report:
Two key factors appear to be supporting
sales: the removal of a 5% Federal Excise Duty on cars of 850cc and above, and a reduction in prices by
Pak Suzuki on cars falling into the sub-850cc bracket. However, the supportive effect of both these
factors is temporary, and is likely to dissipate as we move later into what is still, at the moment, a very
fresh fiscal year. Moreover, economic growth remains very sluggish – the latest forecast by our Country
Risk team is that Pakistan’s economy will grow by just 2.5% in real terms in FY2009/10. More to the
point, we forecast that private consumption growth is likely to decelerate this fiscal year, to 2.5%, from a
relatively buoyant 5.2% in FY2008/09. With that in mind, we remain cautious about the trajectory of new
vehicle sales in Pakistan in FY2009/10 and currently predict a rise of 2.4% y-o-y to 167,424 units.
Production of new vehicles in FY2008/09 was down 33% y-o-y, as output of CBUs registered 165,158,
compared to 247,036 in FY2007/08. This cliff-fall figure is reflective of the performance of domestic
sales, as Pakistan’s auto production is largely geared toward serving the home market, with exports
accounting for only a small proportion of output. We would expect production in FY2009/10 to lag
domestic sales, with a fall of 6.1%, to a total annual production volume of just above 155,000 CBUs. This
is due to CBU inventories being built up during FY2008/09. Although production and domestic sales
volumes were very close in numbers last fiscal year, unsold locally produced cars accumulated, as while
exports of Pakistan-produced cars are low, while the demand for new imported models – largely to cater
for the luxury end of the market – is moderately high.
Recently, Mark Mobius of Franklin-Templeton Funds explained that for "our (Franklin Templeton's) Asia growth funds, we have been buying Pakistan Telecom, MCB Bank, and Indus Motor, which is a Toyota (TM) assembler and distributor". All three of these companies are listed on Karachi Stock Exchange.
Nice Post. I Like it.
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Here's a sad story about Tata Nano that reminds me of Ford Pinto of yester years:
Then there was smoke. And then there was fire.
Minutes after the software engineer's wife and five-year-old son clambered out of the back seat, smoke from the engine, located in the Nano's rear, erupted into flames that engulfed the tiny car.
His ordeal showed just the latest problem with the low-cost Nano - raising fresh questions about safety and quality as top Indian carmaker Tata Motors sets its sights on global expansion and aims to ramp up production of the Nano with a new factory next month.
"My wife now doesn't want to buy any car," Sawant said by phone from his home in northern Mumbai on Thursday. "She doesn't even want to go for a Mercedes."
Starting around US$2,500, the Nano has been heralded as the world's cheapest car, and was meant to usher in a safety revolution, which would get millions of families off dangerous motorbikes and into the cool comfort of an affordable car.
Tata Motors, which also owns Jaguar and Land Rover, plans to start selling versions of the Nano in Europe in 2011, and later, in America.
Tata Motors spokesman Debasis Ray said the company is investigating the incident but believes it to be a one-off problem rather than the result of faulty design or manufacture.
"We believe it was a one-off stray incident," he said. "It did catch fire. We're trying to figure out what may have caused it."
This is not the first time there have been customer complaints about the Nano, which has been feted with rave reviews and awards since its launch a year ago.
Last fall, three customers in India complained that their Nanos started smoking.
Tata Motors attributed that to a faulty electrical switch and said it had changed suppliers and done additional tests to rule out a recall or redesign.
Ray said Thursday that the incidents are not related.
The switch problem, he said, "has been comprehensively addressed."
"Safety has never been an issue with Tata cars," he added. "They are one of the safest cars on Indian roads."
But some say the Nano's smoke and fire problems are symptomatic of pervasive quality control issues at India's number three carmaker, which must be addressed before Tata can successfully take its brand global - especially in the wake of Toyota's massive recalls of more than six million vehicles around the world, which have left car buyers jittery about safety standards.
"As of today, is Tata good enough to take on the world? I would say no," said Deepesh Rathore, an auto analyst at IHS Global Insight in New Delhi. "On quality standards, Tata barely makes the cut."
There are fewer than 30,000 Nanos on the road today, which means on a percentage basis the problem rate is fairly high, he said.
"The Nano is a wonderful product, but these incidents really tarnish the image of the car as well as the company," Rathore said. "This is the time for Tata to have a deep look at quality."
He said the recent addition of Carl-Peter Forster, former head of General Motors in Europe, as group chief executive is a step in the right direction.
"They've got a guy running the show now who knows how the industry should work," he said. "How soon will the effects be seen across the Tata product range? Well, that will take time."
Meanwhile, Uruvashi Shah, manager of Ashapura Travel World, which runs a high-end taxi service, said she has gotten rid of all the Tata models in her fleet because they needed too much repair work.
She prefers Toyota.
"Corolla is quite good. There is a comfortable feel but the mechanical side is good too," she said.
Here's a Daily Times report about Pakistan exporting buses to UAE:
KARACHI: The export of buses to the United Arab Emirates (UAE) by Hinopak is starting and the first batch of 25 buses will be shipped in the current month to the Emirates Transport, UAE primarily for transportation of schools.
Hinopak Director Sales and Marketing Muhammad Irfan Shaikh said this while addressing the export ceremony of the first batch of 25 units of Hino AK8J Buses to UAE. .
Irfan said that by successfully meeting international standards in export quality, Hinopak in collaboration with its principals, is continuously striving to tap other prospective markets such as Saudi Arabia, Qatar, Oman, Kuwait, Egypt, Bahrain, UAE, Jordan and many inquiries are in the pipeline from Panama, Mozambique, Cost Rica and Sub Sahara countries. He mentioned that Hinopak has invested huge amount of money to renovate its body operation plant by keeping in view the expected orders of export from different parts of the world.
Provincial Transport Minister Akhtar Ali Jadoon said that the Sindh government is planning to operate 100 diesel buses in Karachi soon under the Benazir Transport Programme. He said that CNG bus project with 400 units would also start soon.
Trade Development Authority of Pakistan Chief Executive Mohibullah Shah appreciated Hinopak’s efforts and highlighted that for the past several years the economy of Pakistan has been undergoing a slump, marred by both international and domestic factors directly affecting the trade sector very badly.
He further added that this export segment would not only bring honour and fame, but would definitely strengthen the image of Pakistan around the world and help the country in narrowing down the trade imbalance.
Hinopak Managing Director and CEO Hideya Iijima said that these buses are especially designed considering the geographic, climatic and economical conditions of the destined country. He also said that one of the key features of Hinopak buses is the option of massive customisation in all aspects of the bus body from layouts, seating arrangements to various colour schemes.
Pakistan leads the world in the number cng vehicles and cng stations. Now, a report says that Landi Renzo Pakistan will export CNG Kits:
In Pakistan, Italian CNG kits manufacturer Landi Renzo, which commenced its assembling operations there in 2007, is planning expansion of production to enhance deliveries to growing export markets. Currently annual production exceeds 45,000 units. Corrado Storchi, External Relations Manager for Landi Renzo, confirmed the reports to NGV Global News, adding that “South-West Asia and South America are very important export countries for us”, with shipments also being made to China, Far Eastern and European countries.
Storchi confirmed that Landi Renzo has over 90 percent market share of CNG kits in Pakistan. It supplies to Indus Motors for Toyota and Daihatsu cars and Pak Suzuki Motor Company for its range of cars and vans, and other dealers and wholesalers.
Storchi also confirmed a report by The News that Landi Renzo intends to gradually increase the percentage of locally made components, currently at 20% but with the possibility of building to 100% as full quality and safety requirements are satisfied. A testing laboratory has been set up in Karachi, where all components are tested prior to assembly.
In the report, Landi Renzo Pakistan Chief Executive Officer Alberto Barbiery apparently warned that the safety and quality of the CNG kits, manufactured in Pakistan or imported, should be only installed by registered and certified dealers. Landi Renzo will soon launch an awareness campaign about safety and precautions regarding CNG kits.
Barbiery also encouraged the take-up of natural gas in the currently largely unexploited heavy duty vehicle market. “If heavy vehicles convert to CNG, the country would save precious foreign exchange being spent on diesel imports and environmental pollution would be reduced,” he said.
Excerpts from KPMG reports on Pakistan's auto sector:
Total auto sales in Pakistan in 1H-FY2010 increased by 16.37% to 61,021 units from ... The auto industry was operating at 37% of its installed capacity of 273 thousand units per annum in FY2009 and it is expected that 20% YoY growth ... units in FY2009. Market players Honda Atlas, Pak Suzuki, Indus Motors, Mitsubishi, Dewan ...
Here's a BBC report on plunging Tata Nano car sales in India:
Sales of Tata Motors' Nano, the world's cheapest car, plunged by 85% in November compared with a year earlier, the Indian carmaker has said.
It blamed the slump on the difficulty potential customers had in accessing loans to buy the car.
However, analysts pointed out that a series of fires in the Nano, as well as price rises, had also affected sales.
Tata said its total sales across all models in November were 54,622, a rise of 1% on a year earlier.
The carmaker also said that sales of its Jaguar Land Rover-branded models "continued their upward trend".
Fire hazard
However, the company said it had sold just 509 Nanos during November.
During the month, Tata offered free safety upgrades for the model, which went on sale last year.
This came after owners of the hatchback reported about half a dozen fires since April last year. There were no injuries.
The Nano was introduced to India in April 2009 and there are now about 70,000 of them on the country's roads.
The basic Nano costs about 100,000 rupees ($2,205; £1,414).
Here is an excerpt from a recent Wall Street Journal artcle on CNG:
Of the 11.4 million natural-gas vehicles currently in use world-wide, most can be found in the developing world, according the International Association for Natural Gas Vehicles, an industry body. Pakistan led with way with 2.3 million as of December 2009, while Iran, Argentina, Brazil and India together accounted for six million more. In China, the number has more than doubled since 2007 to around half a million.
There is a network of 1500 CNG stations in Pakistan to fuel the 2.3 million CNG vehicles.
Not only is Pakistan self-sufficient in building cng kits for domestic use, it is also exporting these kits.
Here's a Tribuneindia report from 2008 titled "India lags behind Pak" in gas infrastructure:
New Delhi, May 5
India is way behind Pakistan in terms of its gas pipeline network, with the neighbouring country’s network stretching around 56,400 km against its 10,500 km, connecting only 20 cities compared to Pakistan’s 1,050, industry body Assocham said.
Pakistan’s pipeline density, at present is 1044 km/mmscmd (million metric standard cubic meter per day) per day compared to 116 km/mmscmd of India, Assocham said in its paper on gas sector ‘A Comparison between India and Pakistan’.
The neighbouring country has created a 31,000 km distribution network to serve its domestic and commercial consumers in large locations, against the 11,000 km network that have so far been build in India to serve the needs of its consumers in limited pockets, the report said.
While Pakistan has nearly 1,600 CNG stations, India has 380. The gas throughput in Pakistan is 38 mmscmd per day as against 8.5 mmscmd gas in India.
The number of gas customers and vehicles running on CNG in Pakistan is about 19 lakh and 15.6 lakh respectively, while in India the number is 5.50 lakh and 4.60 lakh.
“The gas availability in Pakistan is undoubtedly quite large, compared to India but given the imports of gas and even its domestic availability in India, its pipeline network is extremely poor and the main reason attributed for the low and limited pipeline network in India is because this sector has been thoroughly regulated which has now been opened for competition,” Assocham president Venugopal Dhoot said.
The paper added that since the pipeline network in India does not reach out to most of the potential demand centres, a number of industrial projects, which would ideally run on gas, have to depend on much more costlier and more polluting alternative fuels.
As food prices and farm incomes rise, Pakistan is seeing record tractor sales in rural areas, according to The Nation newspaper:
LAHORE - Millat Tractors Limited set a new record of highest ever sales of 41,500 tractors in the calendar year 2010, improving upon its previous year sales of 37,537 tractors.
Out of these 41500 tractors, a record 5000 tractors have been produced and sold in the month of Dec, 2010.
This has been outcome of Company’s commitment to provide maximum number of tractors to increase farm productivity and accelerate the pace of farm mechanization in the country, according to a Press release.
Millat Tractors has further taken steps to increase productivity and quality of tractors in order to provide timely delivery to its customer in future.
Here's another report from Dawn on increasing rural sales of bikes:
Motorcycle and car sales enjoy over 50 per cent and 40-45 per cent market share in rural areas as country’s 60-65 per population lives in the rural areas.
After witnessing decline in August, many car and bike makers had registered recovery in sales in September.
Total car sales in July-September 2010 (including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009.
In the category of 1,300cc and above, Honda Civic and City sales in September 2010 rose to 548 and 832 units as compared to
492 and 688 units in August 2010. However, sale of these cars had plunged in August 2010 as compared to July 2010.
In July-September 2010, sales of Civic and City had risen to 1,558 and 2,274 units from 1,308 and 1,955 units in the same period of 2009.
Toyota Corolla sales slightly went up to 3,070 units in September 2010 as compared to 2,901 units in August 2010 while its July 2010 sales were 4,400 units.Overall Toyota sales in July-September 2010 increased to 10,371 units as compared to 8,951 units. Suzuki Swift sales rose to 252 units in September 2010 as compared to 226 units in August 2010.
In 1,000cc segment, a total of 1,106 units of Suzuki Cultus were sold in September 2010 as compared to 1,050 units in August 2010 while Alto sales slightly fell to 1,047 in September 2010 from 1,141 units in August 2010. The overall sales of Cultus and Alto in July-September swelled to 2,860 and 2,819 units from 2,852 and 2,365 units in the corresponding period of 2009...
Here's a BMI report on Pakistan's auto sector in 2010-2011:
Final data for 2010 (calendar year) passenger car sales within Pakistan show that a total of 134,757 passenger car units were sold from January-December 2010 period, and passenger car production was 130,625 in total for the calendar year.
Looking at trends at the halfway stage of FY10/11 (July to end June), total vehicle production was 106,810 units, an increase of 9.2% y-o-y on the 97,788 units produced over the same period in FY09/10. This is made up of 62,952 units passenger car production, 1,432 units truck production, 242 units bus production, 504 units jeep production, 8,961 units pick-up production and 32,719 units farm tractor production.
Total vehicle sales for H1FY09/10 were 102,469 units, an increase of 6.2% y-o-y on the 96,440 vehicles sold over the first half of FY09/10. This is made up of 59,646 passenger cars sold, 1,384 trucks, 243 buses, 381 jeeps, 8,072 pick-ups and 32,743 farm tractors.
All of which bodes well for the evolution of Pakistan’s auto sector over the current fiscal year. Our current forecasts are for total FY10/11 production to reach 221,583 units, with sales to reach 224,160 units. Considering the strong start to this fiscal year, there could be some upside risk to these forecasts. However, with car prices continuing to rise and continuing weak economic backdrop in the country, we refrain from making any changes to our forecasts this quarter. Moreover, a recent extension of the age of imported new cars allowed into Pakistan could also hit new car sales (see Page 6 for further information). Considering this mixed outlook for new car sales therefore, we shall await further data from the third quarter of FY10/11 before deciding if any further changes need to be made to our forecasts.
Certainly, the start of FY10/11 saw new car sales fall by 31.6% month on month (m-o-m), to 9,796 units in July, as customers felt the impact of an increase in General Sales Tax (GST) and with heavy flooding causing displacement of people and severe disruption to business across the country. However, this poor monthly performance did not mark the start of a negative trend, with the remaining five months of the calendar year all showing positive growth.
This upwards sales trend came as a surprise to most industry analysts, who had expected a combination of a weak rupee and falling income and demand from flood-affected areas to have sent car sales lower. It may be, however, that with the Pakistan rupee and consumer demand both set to remain weak into 2011, customers chose to buy new cars early in the current fiscal year, for fear that they will continue to increase in price over the coming months. Certainly, local media have speculated that this is what car dealerships have been doing, buying cars in at current prices to hedge against future likely price rises. Increase in imported used cars to meet demand
In January 2011 the Pakistan cabinet passed legislation extending the age limit on imported used cars from three years to five years as it tries to open up car ownership to poorer Pakistanis. The move follows the release of a report by the country’s Economic Coordination Committee which stated that the current import regime of about 30,000-40,000 cars a year was proving insufficient to meet growing demand for private vehicles.
Pak Suzuki Motors (PSMC) to gain from Punjab govt's yellow cab scheme, according to The News:
KARACHI: Pak Suzuki Motor Company (PSMC) stands to gain from the Yellow Cab Scheme announced by the government of Punjab in its budget for 2011/12, analysts said.
The provincial government has announced that a grant of Rs4.50 billion has been allocated for the scheme, which will partly finance 20,000 vehicles.
Contrary to the yellow cab scheme, the Nawaz Sharif government introduced in 1992/93, this scheme relies on locally-made vehicles.
‘Mehran’ and ‘Bolan’, the two most popular makes of Pak Suzuki, have been short-listed for the scheme.
The analysts said the ultimate beneficiary will be the PSMC, which has been suffering from appreciating yen, relaxation in import policy and production constraints since a tsunami-hit Japan.
Gross profit margin of the company has squeezed to mere two percent in 2010, which was around four percent a year back, they added.
Details of the scheme are yet to be unveiled, but it is expected that the vehicles would be 50 percent financed by the government of Punjab, while the buyer would have to pay the rest.
There are concerns of possible lack of transparency in financing.
Besides, there is a lack of clarity about the time period over which the scheme would be spread.
Furqan Punjani, an analyst at the Topline Research, said that there are possibilities that out of 20,000 only 12,000 to 15,000 units will go in the said scheme and the rest might fall victim to corruption.
An analyst at Arif Habib Research said that it is believed that PSMC’s car volumes would spike by nine percent and 16 percent in CY11E and CY12F.
Consequently, the earning pershare (EPS) of the company would improve by 75 percent and 116 percent in CY11E and CY12F, respectively, he said.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=53955&Cat=3&dt=6/23/2011
India's transport system is the most dangerous in the world costing hundreds of thousands of innocent lives each year, but it's hunger that takes the biggest toll with over 7000 dying of hunger every day.
Here's a story from the Guardian titled "Indian roads officially the most dangerous in the world":
It is an unenviable statistic but India's chaotic roads are now officially the most dangerous place to drive in the world.
Last year road accidents claimed more than 130,000 lives – overtaking China, which has seen fatalities drop to fewer than 90,000, and prompting a government review into traffic safety that until now has been best summed up by local drivers as "good horns, good brakes, good luck".
Ministers are considering a range of new measures, such as making airbags and anti-braking system mandatory in all cars. Trucks may also be fitted with speed breakers in a bid to bring down fatalities.
However, many experts say that new laws will have little effect in India, where seat belts are rarely worn and where no one can anticipate with any certainty the behaviour of the average road user.
Nor can most road users guess what type of vehicle they will face – Delhi alone has 48 different "modes of transport" including cows, elephants and camels as well as cycle-rickshaws and SUVs.
Rohit Baluja of Delhi's Institute of Road Traffic Education says "the real issue is not car design but road design. About 85% of all deaths on the roads are pedestrians and cyclists not drivers. We do not design traffic management systems to separate different streams of traffic. In America this began in 1932".
http://www.guardian.co.uk/world/2008/oct/10/india
Pakistani car sales rose 61% in July, according to The Nation:
LAHORE - The new fiscal year has kicked-off on a positive note for the car manufacturers. As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), country’s auto sales surged by a significant 61 per cent to 17,563 units in July 2011 against 10,942 units in the same period of last year. On monthly basis, the volumetric sales improved by 134 per cent compared to 7,517 units sold in June 2011.
This significant improvement is primarily attributable to deferred sales from June to July as buyers opted to take advantage of 2-3 percent cut in prices on account of reduction in sales tax by 1 percent and other measures announced in Federal Budget FY12
Company wise breakup shows that, PSMC led the increase with 116 percent rise to 11,997 units compared to mere 4,503 seen in same period last year, while sales for INDU declined by 9 percent to 4,551 units compared to 4,999 units in July 2010.
An auto expert Furqan Punjani observes that July sales are not an actual depiction of the sector’s fundamental and they are expected to ease down going forward. Furthermore, amid absence of aggressive consumer financing due to higher markup rates and nominal growth in agriculture economy the volumetric sales for FY12 will only show an improvement of 5-10 percent.
Despite improved volumetric sales, he maintained ‘Market-weight’ stance on the sector on account of strained margins amid continuous appreciation of Japanese yen and high regulatory risk.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/12-Aug-2011/Car-sales-jump-by-61pc-to-17563-units-in-July
Car sales in Pakistan rose 61% and fell by 16% in India in July 2011.
Car sales in India, the world's second-fastest growing major auto market after China, fell 16 percent in July, their first drop in two-and-half years, after rising a breakneck 30 percent in 2010, according to Reuters:
NEW DELHI, Aug 12 (Reuters) - India's largest carmaker Maruti Suzuki expects to post single-digit sales growth this fiscal year, a far cry from its 25-percent rise last year, as rising interest rates and prices in Asia's third largest economy force consumers to tighten their purse strings.
Car sales in India, the world's second-fastest growing major auto market after China, fell 16 percent in July, their first drop in two-and-half years, after rising a breakneck 30 percent in 2010.
The Indian car market is now expected to grow by just 10 to 12 percent this fiscal year, down from an earlier forecast of 16 to 18 percent, the Society of Indian Automobile Manufacturers said last month.
"If you ask me, we will not reach a double-digit," Chairman R.C. Bhargava told reporters, referring to both Maruti and the India car sector.
Maruti, which sells nearly half of all passenger cars in India, posted a record 25-percent slump in July sales.
The company, 54.2 percent owned by Japan's Suzuki Motor , has cut production of most models in August, including its best-selling model Alto, as inventories were rising and there was no place to store cars, marketing and sales chief Mayank Pareek said.
Maruti is facing intensifying competition from the likes of South Korea's Hyundai Motors , the second-largest car maker in India, as well as domestic rivals.
SECTOR TO REV UP
Bhargava said he expected the Indian car market to pick up speed in two to three months as the festive season kicks in.
The Indian festive season peaks in November, during the Hindu festival of Diwali, when it is considered auspicious to buy big-ticket items and when most employees get their annual bonuses. But sales are also driven by discounts at that time of year.
India's population of 1.2 billion and the common sight of families of four riding motorcylces creates potential for massive demand, but the pressure is sure to remain in an industry spurred by a burgeoning and aspirational middle class that relies mainly on loans to buy cars.
India's central bank has raised interest rates 11 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt car purchases, most of which are financed through loans.
Still, Bharghava was optimistic. "Fundamentals here are very strong. There is still a huge domestic potential demand," he said.
http://www.reuters.com/article/2011/08/12/maruti-india-idUSL3E7JC2FR20110812
Here's a news report on India's slowing car sales:
Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.
In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.
SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.
Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."
Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.
Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.
"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com
No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.
http://www.moneycontrol.com/news/business/discounts-galore-as-passenger-car-sales-hit-speed-bumps_592863.html
Here's a Dawn report on Pakistan auto sales July-Sept 2011:
KARACHI: While sale of cars, two and three wheelers and light commercial vehicles remained brisk from July-September 2011, production by a leading tractor assembler remained suspended between second week of July 2011 and September 2011.
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Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.
Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.
Pak-Suzuki Motor Company Limited (PSMCL) raised the prices by Rs14,000-30,000 followed by two to four per cent by Indus Motor Company (IMC).
Honda City also became costlier by Rs25,000 while Civic price was raised by Rs38,000.
Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.
Overall sale of costly cars (1,300cc and above) rose to 16,936 units as compared to 14,949 units.
Sale of Honda Civic, Honda City and Toyota Corolla stood higher at 1,710, 2,562 and 10,682 units as compared to 1,558, 2,274 and 10,371 units respectively. Suzuki Swift sales also surged to 1,826 units from 673 units.
In 1,000cc segment, overall car sales jumped to 7,343 in July-September 2011 from 5,679 units in the same period of last year in which sales of Suzuki Cultus and Suzuki Alto swelled to 3,710 and 3,633 units from 2,860 and 2,819 units respectively.
Increase in Suzuki Mehran sales to 8,415 units from 5,356 units made a positive impact on overall sales of 800cc and below 1,000cc cars which rose to 13,786 units from 9,402 units.
Sale of Daihatsu Cuore and Suzuki Mehran went up to 1,282 and 4,089 units as compared to 1,136 and 2,910 units.
A leading car assembler said he checked with many banks who intend to cut interest rates from Nov 1 after Central Bank`s decision to lower interest rates.
He said car financing by banks now enjoys 20 per cent share in overall car sales and this share may go up slightly after cut in interest rates.
From July onwards, the buyers especially on cash basis had resumed purchases and it was evident from sales trend in the first quarter of the current fiscal year.
Rising farm income also encouraged farmers and growers to purchase more new bikes, thus pushing up Honda bikes sales to 152,605 units in July-September 2011 from 126,701 units in the corresponding period of 2010.
Sale of Suzuki bikes also increased to 5,506 from 4,588 units while sale of Ravi and Habib bikes (Chinese two-wheelers) improved to 6,680 and 7,707 units from 5,971 and 4,053 units.
Qingqi and Sazgar three-wheeler sales reached 5,193 and 3,901 units from 2,787 and 2,976 units.
In pick-ups, a total of 4,586 units of Suzuki Ravi and 856 units of Toyota Hilux were sold in July-September 2011 as compared to 3,129 of Ravi and 285 units of Hilux in the same months during 2010.
In heavy vehicles, sales of only Master trucks rose to 110 units from 82 units while sales of Hino, Nissan and Isuzu trucks plunged to 231, 33 and 36 units from 422, 102 and 119 units.
In buses, Hino bus sales dropped to 56 units from 110 units and Isuzu bus sales also came down to 12 units from 23 units........
http://www.dawn.com/2011/10/11/tractor-heavy-vehicles-sale-dip.html
SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.
Rising prices are usually something auto makers welcome. Not in India.
As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.
But thanks to rising interest rates, buyers are hitting the brakes.
Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...
http://online.wsj.com/article/SB10001424052970203499704576624454021313240.html
Here's more from Reuters:
NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.
The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.
"If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued," S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.
Indian car sales last grew in single digits in 2008/09, at 1.39 percent.
Demand for cars in the world's second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.
Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.
However, sales of commercial vehicles, a key pointer to the country's economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.
India's central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.
The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.
Maruti Suzuki , India's largest car maker, and 54.2 percent owned by Japan's Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.
"The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it's nowhere close to what it was in the last two years," said Vineet Hetamasaria, auto analyst at Mumbai's PINC Research.
SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.
"Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent," SIAM's Sandilya said.
http://www.reuters.com/article/2011/10/10/india-autos-forecast-idUSL3E7LA1J320111010
Some commentators have bragged about passenger car ownership figures in India vs Pakistan. The latest available World Bank data (2006-7 shows that they are pretty close: 9 per 1000 in Pakistan vs 10 per 1000 in India.
http://data.worldbank.org/indicator/IS.VEH.PCAR.P3
I believe it does include dangerous contraptions like jugaads often seen plying on Indian roads.
Here's a report in The Nation newspaper on Pakistan's auto parts industry:
The auto sector has taken initiative to organize the show for local auto part vendors to look for more export opportunities. Praising the efforts of local vendors in developing the engineering base and enhancing the skill sets of local engineers, they said that it is for the efforts of OEMs that local auto manufacturers have achieved 60 percent localization.
The auto sector is fully committed to localization process and has already developed 60 vendors and has arranged 34 technical assistance agreements for transfer of technology. In this regard, the IMC has invested Rs13 billion in development of internal infrastructure which includes Press Shop, Engine Shop and Paint Shop.
The OEMs have invested over Rs75 billion in local auto industry and it contributes more than 5 percent annually towards the national exchequer. Moreover OEMs and auto parts manufacturers employ around 200,000 people and supports employment of over 1,392,000 persons throughout its supply chain of vendors, suppliers and dealers.
The auto industry experts expressed confidence that the show will attract local and foreign investors and that the local auto industry will get support from government and policy makers which will help open doors for exploring foreign markets.
The local car manufacturers including the Indus Motors Company are the platinum sponsor for Pakistan Auto Parts Show (PAPS 2011) aimed to provide a platform for local engineering firms to introduce their products.
The auto sector in Pakistan is committed to play its role in the development of engineering base of the country. So, sponsoring ‘PAPS 2011’ is a step in this direction, which will showcase the achievements of Pakistan auto industry.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/24-Oct-2011/Pakistan-Auto-Parts-Show-opens-today
Here are some excerpts from a Bloomberg report on increasing auto sales and profits at Indus Motors in Pakistan:
Car sales in Pakistan increased 26 percent to 38,065 units in the quarter ended Sept. 30 from a year earlier, the Pakistan Automotive Manufacturers Association said Oct. 10. Indus sold 12,820 cars in the period, rising from 11,792 a year earlier, according to the association.
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Oct. 25 (Bloomberg) -- Indus Motor Co., Toyota Motor Corp.’s affiliate in Pakistan, posted a 62 percent gain in first-quarter profit as rising incomes boosted sales.
Net income climbed to 937.5 million rupees ($11 million), or 11.93 rupees a share, in the three months ended Sept. 30, from 577 million rupees, or 7.35 rupees, a year earlier, the Karachi-based company said in a filing today. Sales gained 20 percent to 17.1 billion rupees.
Sales of the Cuore, Corolla, and Hilux models assembled by Indus increased more than 9 percent during the three months, according to Shahbaz Ashraf, an analyst at Arif Habib Ltd. Remittances to Pakistan gained 25 percent to $3.3 billion in the period, the nation’s central bank said Oct. 10.
“Rising remittances and farm incomes helped pushed sales for the company,” Ashraf, who has a “buy” recommendation on the stock, said by telephone from Karachi before the company’s announcement.
Indus, Pakistan’s second-largest carmaker, didn’t provide reasons for the profit increase in its filing.
Shares of Indus climbed 2.5 percent to 199 rupees as of 1:24 p.m. on the Karachi Stock Exchange, paring the stock’s decline this year to 21 percent.
Higher crop prices boosted farmers’ incomes in Pakistan by 342 billion rupees in the 12 months through June 30, more than the annual gain of 329 billion rupees in the preceding eight years, according to an economic survey published by the Ministry of Finance.
http://www.businessweek.com/news/2011-10-25/pakistan-s-indus-posts-62-profit-gain-as-sales-rise.html
Here's a report on Pakistan starting to export rickshaws:
Lahore: After exporting the motorcycles now Pakistan is ready to export CNG rickshaws to eight countries.
Chief executive, Sazgar engineering company, Mian Asad Hameed said that in the phase they were exporting around 150 rickshaws to eight countries and will increase the numbers gradually.
“We have delivered 22 rickshaws to Nigeria whereas we have received order for 40 rickshaw from Egypt,” he added.
He further said, “we are reviewing the possibility of export the vehicle to Srilanka and Indonesia.”
It is to be mentioned here that due to the prolonged outbreaks in Pakistan, industry faces severe crisis but this step would have positive impact on exports.
http://www.thenewstribe.com/2011/10/15/pakistan-all-set-export-rickshaws-to-8-countries/#.TqbmdtSXOSo
Here's a Pakistan Today report on motorcycle manufacturing in Pakistan:
Karachi - To effectively cope with domestic market of over 1.5 million units and after successful launch of their products in global markets, the local motorcycle producers are now planning a further investment of $100-150 million in their existing units.
The motorcycle industry analysts have pointed out that despite numerous hiccups faced by the economy in recent years, growth in motorcycle production has been robust at 15 per cent. “A decade back, the total motorcycle production in Pakistan was around 100,000 units, now the largest player alone is rolling out half a million units while total production of two wheelers has crossed 1.5 million. They said that the encouraging aspect in this regard is that industry is on the path to sustained growth. The local demand for motorcycles is likely to exceed 2 million units within a year or two,” they added.
“The global response to our quality motorcycles indicate a sustained and healthy growth in exports as well” they opined, adding that in fact, the industry experts are seeing themselves as the largest exporters in the engineering sector. A sustained growth is only possible due to regular investment and up-gradation of technology in the motorcycle industry. “The growth we see in motorcycle production would not have been possible without investment”, they added.
In this regard, Fahad Iqbal CEO, HKF Engineering, makers of Ravi motorcycles said that the industry now has to fulfill the growing demand in both domestic and global markets and for this, it needs to invest over $100 million in the next couple of years to keep abreast with market needs and demands. He said that all the motorbike producers having production of 50,000 units or above are now planning to expand their capacities to cope up with the market demands.
“There are almost a dozen players that have achieved this production level” he said, adding that even if each of them invests $10-15 million, the total investment would cross $150 million. These units have been regularly making investments to increase their market share but now they have reached a level where they have to invest in high-tech parts to ensure that instead of having 90 per cent local components, Pakistani bikes are produced by 100 per cent local parts, he added.
Market analysts urged that in such an encouraging situation, the government should refrain from taking steps that might jeopardise this investment. He said that an investment of $150 million by local players without any government concession is better than vying for similar investment over a period of 10 years from a foreign company. The current players, from Italy, China and Japan, are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said. However, he added, they were not offered any relief even on imports of the environmentally friendly Euro 2 components, which have already been introduced in local bike production.
“Capacities exist in the country in areas like sheet metal parts and there is a huge investment need in areas such as die casting for parts like crank cases and crank covers, electronic parts such as CDI units, engine parts like ACG, clutch, pistons, shock absorbers (cushions), plastic parts such as emblems” said Arshad Awan CEO General Engineering and added that even capacity enhancement and thus investment will be needed in low-tech parts like head lights, tail lights etc.
http://www.pakistantoday.com.pk/2011/08/bike-manufacturers-plan-heavy-investment/
Indian auto sales continue to drop by double digits, according to India Today:
October's festive cheer failed to revive car sales during the month as higher interest rates and rising fuel prices kept potential buyers away.
Leading car maker Maruti Suzuki India Ltd (MSIL), reeling under the workers strike, was the hardest hit with sales falling to less than half of last year's level for the month.
The firm's domestic sales dipped by 52.16 per cent at 51,458 units in October 2011, from 107,555 units sold in October, 2010.
MSIL's small car sales (M800, A-Star, Alto and WagonR) fell by 54.86 per cent to 25,009 units against 55,404 units in October, 2010. The compact segment (Estilo, Swift and Ritz), posted a 56.09 per cent dip in sales to 10,859 units.
Sales of DZiRE decreased by 48.14 per cent to 5,001 units and SX4 fell by 83.81 per cent to just 320 units. MSIL sold only three units of its luxury sedan Kizashi.
India's number two car maker Hyundai Motor India Ltd (HMIL) reported a 4.95 per cent drop in sales to 33,001 units from 34,720 units in October last year.
"We have seen that sales get a boost in the festival season, but this year, sentiment has been tepid. We don't expect a major upswing in the near future, the challenging economic environment is affecting industry," Arvind saxena, director (marketing and sales), HMIL, said.
In the A2 segment (Eon, Santro, i10 and i20), the company sold 41,204 units, while in the A3 segment (Accent and Verna), sales stood at 6,929 units. While the new Santa Fe SUV attracted 190 buyers its small car Eon has received more than 9,000 bookings till date.
Tata Motors saw a marginal 2.64 per cent increase in its passenger vehicles sales in the domestic market at 25,124 units in October, from 24,478 units sold in October 2010. While the Indica family sales stood at 10,812 units, up 11 per cent, the Indigo family recorded drop in sales by 24 per cent at 6,268 units. Sales of Sumo, Safari and Aria grew by 23 per cent to 4,176 units and Nano sales recorded 26 per cent increase at 3,868 units....
Read more at: http://indiatoday.intoday.in/story/october-car-sales-dip-costly-fuel-higher-interest-rates/1/158264.html
Pakistan auto sales up 24% in October, reports Daily Times:
KARACHI: Pakistan Automotive Manufacturers Association (PAMA) has released local automobile industry’s sales and production numbers for the month of October 2011. As per data, auto sales of the industry witnessed a substantial growth of 24 percent year to year (YoY) to 58,576 units in four months of fiscal year 2012 (FY12) as against the sales of 47,143 units in the corresponding period last year.
The main reason behind this substantial volumetric growth seems to be incentive given by the government to local auto manufacturers in terms of removal of Special Excise Duty (SED) of 2.5 percent on imported and manufactured vehicles coupled with reduction in General Sales Tax (GST) from 17 percent to 16 percent in addition to the low base effect. Pak Suzuki Motor Company Limited (PSMC) witnessed a 38 percent YoY growth to 34,877 units in 4M FY12 as against the sales of 25,279 units in same period last year.
Highest growth was observed in the sales of Suzuki Swift of 140 percent YoY to 2,328 units as against 969 units in the same period last year.
Liana under the domain of 1300cc and above segment also witnessed a handsome 37 percent YoY jump in its sales to 168 units in comparison of 123 units in the same period last year.
Ravi, the pickup, experienced a massive 23 percent growth to 5,722 units versus 4,665 units same period last year. Indus Motor Company Limited (INDU) witnessed a 7 percent YoY growth in sales to 17,806 units in 4M FY12 as against 16,622 units in same period last year. Hilux, under pickup segment led the growth in sales of the company with a gigantic 135 percent YoY to 1,099 units as against 647 units in the same period last year.
Toyota Corolla posted upsurge in sales by 6 percent YoY to 15,175 units as against 14,622 units in the same period last year. Cuore remained as the only segment of the company, whose sales experienced a decline of 19 percent YoY to 1,532 as against sales of 1,893 units in the same period last year. Honda Atlas Cars Pakistan Limited (HCAR) also showed a handsome growth in its sales of 14 percent YoY to 5,893 units in 4M FY12 as against the sales of 5,172 units in 4M FY11.
The main reason behind growth was low base effect. The City, the most liked segment of consumers post 20 percent YoY growth to 3,647 units as against sales 3,041 units in same period last year.
Civic another product of the company in 1300CC and above segment posted a modest rise of 5 percent YoY to 2,246 units in comparison of 2,131 in corresponding period of last year.
As far as the market share is concerned, PSMC leads the market with 60 percent market share followed by IMC and HCAR with 30 percent and 10 percent market share in 4M FY12.
http://www.dailytimes.com.pk/default.asp?page=2011\11\15\story_15-11-2011_pg5_2
India car prices rising as Indian rupee hits record lows, reports Wall Street Journal:
NEW DELHI – Several auto makers in India have decided to increase their vehicle prices in January due to rising raw material costs and a fall in the local currency’s value, which has made imports of parts more expensive.
The local units of Hyundai Motor Co., General Motors Co., Ford Motor Co. and Toyota Motor Corp. will increase vehicle prices on Jan. 1. Suzuki Motor Corp’s unit already increased prices of its diesel models last month.
The Indian rupee is the worst-performing Asian currency this year, with the U.S. dollar rising nearly 16% against the local unit. Auto makers, especially the local units of foreign companies, import large amounts of parts and the rupee’s weakness has driven up their costs.
They have also been hit by higher prices of key raw materials such as steel and aluminum.
Raising vehicle prices could further damp demand for vehicles, which has remained weak since June due to rising fuel costs and higher interest rates on loans.
Hyundai Motor India Ltd.’s director of sales and marketing, Arvind Saxena, said factors such as inflation and the rupee’s depreciation have “compelled us to look at a price increase.”
The company will increase the prices of all its vehicles by 1.5%-2.0%.
Maruti Suzuki India Ltd. raised prices of the diesel variants of four models by up to 10,000 rupees ($195), and it will consider a similar increase for gasoline-powered vehicles after December as an appreciation in the Japanese yen has made parts imports expensive, India’s largest car maker said on Dec. 1.
The company expects its operating profit margin to shrink 1.0 percentage point during October-March due to the currency effect.
Ford India will raise prices of all vehicles by up to 3%, while General Motors India will increase prices of most models by 1%-2%.
P. Balendran, vice president for corporate affairs at GM India, said it will increase the price of the diesel variant of its Beat small car by 15,000 rupees as it is currently being sold at introductory rates.
Toyota Kirloskar Motor Pvt. Ltd. also said it will lift prices by up to 3%.
Honda Siel Cars India Ltd., however, said it isn’t considering raising prices right now. “Our immediate priority is to make sufficient cars to meet demand,” said Jnaneswar Sen, senior vice president of marketing and sales.
The company has been forced to cut production due to a shortage of parts from Thailand following heavy floods there.
A Tata Motors Ltd. spokesman refused to comment, while executives at Mahindra & Mahindra Ltd. couldn’t be contacted.
http://blogs.wsj.com/drivers-seat/2011/12/07/car-prices-to-rise-in-india/
Excerpts from The News on Pakistan auto makers' contribution to economy:
The local auto industry manufacturers and vendors had paid total revenue of Rs64 billion last year while the industry saved foreign exchange of $500 million during the same period, said a presentation of the Indus Motor Company (IMC) to visiting journalists on Saturday.
With total investments of Rs92 billion and 0.4 million job opportunities, the local auto manufacturing industry has contributed substantially in the growth of national economy.
Despite some challenges and regulatory issues, the local auto industry has been flourishing and it is one of the important contributors in the country’s gross domestic product (GDP) growth, it added.
However, the local auto industry is a victim of government’s anti-industry policies like the import of used cars which are not only hurting the industry but also depriving the government of huge revenues in terms of duties.
Besides, the local auto manufacturers are fighting with the misperception that they charge exorbitant prices for vehicles while the quality is also not good. Yet, most of the facts once known would easily make the public to change perception about the industry.
The prices of cars have been increased by only 14 percent in last 2 years whereas the price of steel has increased by 16.5 percent, aluminum by 50.5 percent and polypropylene by 127 percent, minimum wage has increased by 75 percent, electricity and gas increased by 51 percent and 43.6 percent respectively during the same period.
Besides this, the depreciation of Pakistani rupee also played its role in increasing pressure on the industry, like the US dollar increased by 20 percent, Japanese Yen by 66 percent and Thai Bhatt by 22 percent.
Moreover, the duties on completely knocked down units (CKD) in Pakistan are much higher than other regional countries which contribute to high car prices. CKD duty in the country ranges between 32 to 50 percent, while in Thailand it is 30 percent and in India it ranges between 10 to 30 percent.
One of the major players of local auto manufacturing industry, IMC, while nullifying the stereotype image of the industry, has contribution of 1.5 percent/year to the national economy growth and maintained its image of quality production with plausible prices.
In addition, it has increased its production capacity from 20 units per day in 1993 to 210 units per day in 2011.
The company also created huge job opportunities as its number of direct employees increased from 496 in 1993 to 2,180 in 2011.
While commenting on IMC’s performance, CEO IMC, Parvez Ghias said that the buyer’s trust on the quality of the company’s products can be gauged by the fact that the company’s unit sales increased from 11,000 in 1993 to 51,000 in 2011.
Similarly, its units’ production increased from 2,930 in 1993 to 50,759 in 2011.
He said that IMC has been contributing heavily to the localization.
It is pertinent to note here that a total of 582 Corolla parts and assemblies are produced locally, while the company’s vendor-base has increased from 21 in 1993 to 60 in 2011 and these vendors are employing over 0.2 million people.
He said that on the part of dealership, the company’s 3S dealership increased from 21 in 1993 to 24 in 2002 and 34 in 2011 and of the total 34 3S dealership, 8 are in north region, 16 in central region and 10 in south region.
The company’s 3S dealership will increase to 66 till 2016.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=88793&Cat=3
Pakistan car sales up 20.5% July-Dec 2011, reports Dawn:
Car sales in the first half of current fiscal year went up by 20.5 per cent amid negative developments including the government’s decision to impose a ban on CNG kits and cylinders, suspension in production of Honda Civic and City and increase in prices of all vehicles.
According to figures shared by the Pakistan Automotive Manufacturers (PAMA), consumers purchased 12,240 more cars in July-December 2011 to 71,886 units as compared to 59,646 units in the same period of 2010.
Increase in production of Suzuki Mehran and Suzuki Bolan for onward supply to Punjab government’s Yellow Cab Scheme was the main reason that averted the negative impact of ban on CNG kits and cylinders and production halt of Honda cars on the overall production figures.
However, local assemblers are still perturbed over the government’s decision of imposing ban on CNG kits and cylinders. In this regard, Pak Suzuki Motor Company Limited (PSMCL), which holds over 50 per cent market share, may suffer more as it used to roll out 80 per cent CNG fitted vehicles out of its total production. Assemblers added that six months sales had risen due to previous orders and the impact of government’s decision would be visible in coming months. It must be noted that Toyota Corolla, which also launched CNG fitted vehicles few months ago, might also be affected by this decision.
Sarfaraz Abbasi, an analyst at Summit Capital, linked the growth in auto sales to removal of 2.5 per cent special excise duty and cut in the rate of General Sales Tax (GST) from 17 to 16 per cent.
Car sales in December 2011 plunged due to 92 per cent decline in sales of Honda Cars and flat sales of Indus Motor Company.
Honda Atlas Cars has suspended Civic and City production for December 2011 to January 2012 owing to non supply of parts from Thailand. Civic and City sales in December 2011 were recorded only 49 and 22 units as compared to 369 and 528 units in November 2011 respectively.
Nauman Khan of Top Line Securities said December 2011 sales declined as buyers preferred to defer orders due to year end phenomenon.
“Despite launch of new variants by the company in 1600cc segment and CNG vehicles (Eco), Toyota Corolla sales showed a decline on account of reduced farm income amid falling cotton prices,” he added.
Mehran leads: According to PAMA figures, production and sales of Mehran stood at 15,343 and 17,014 units as compared to 11,995 and 11,591 units in July-December 2010. Production and sales of Bolan rose to 8,052 and 8,848 units as compared to 6,978 and 6,483 units.
While other manufacturers suffered production and sales in December 2011 as compared to November 2011, production and sales of Mehran in December 2011 surged to 2,697 and 2,880 units as compared to 2,262 and 2,720 units in November 2011.
The production and sale of Bolan in December 2011 recorded at 1,603 and 1,968 units as compared to 1,380 and 1,369 units in November 2011.
Daihatsu Cuore continued to suffer as its production and sales plunged to 2,060 and 1,884 units in July-December 2011 as compared to 3,051 and 2,959 units in the corresponding period of 2010 due to reports of closure of its production in Pakistan from March this year.
Sale of Suzuki Cultus and Alto rose to 7,034 units in the last six months as compared to 5,599 while sale of Alto increased to 6,779 as compared to 5,762 units.
In 1,300cc and above, a total of 2,664 units of Honda Civic and 4,197 units of Honda City were sold in the last six months as compared to 2,918 and 3,957 units in the same period of 2010.
Suzuki Liana sales slightly stood at 199 units as compared to 188 units while Swift sales improved to 3,247 from 1,472 units.
Toyota Corolla sales grew to 20,020 units from 18,717 units.
http://www.dawn.com/2012/01/12/car-sales-surge-by-205-per-cent.html
German tuck maker MAN setting up manufacturing in Pakistan, according to Express Tribune:
To explore new business avenues in the agricultural sector, German farm minister will arrive in Pakistan in a couple of months while a German auto giant is making huge investment by establishing a manufacturing plant in Pakistan, says German Embassy’s Commercial Section Head Samy Saddi.
Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday, Saddi said German auto giant MAN is putting up a truck and bus manufacturing plant which would not only create a large number of job opportunities but would also send positive signal to investors in other developed countries.
The diplomat said other German companies were also planning to make investment in alternative energy to help Pakistan overcome the energy crisis.
Saddi spoke about measures being taken by the German government to strengthen bilateral economic relations and said the upcoming visit of agricultural minister was very much part of these efforts.
LCCI President Irfan Qaiser Sheikh said continuous fall in bilateral trade called for appropriate sector-specific, result-oriented measures by both sides as the existing trade volume of $1.9 billion did not correspond with the great potential the two countries had.
http://tribune.com.pk/story/340386/german-minister-to-visit-pakistan/
Here's a Japanese report on auto industry in Bangladesh:
TOKYO (Kyodo) -- Local companies in Bangladesh are aggressively diversifying into heavy machinery industries, offering a new window of opportunity for Japanese manufacturers in a promising Asian market with a population of some 160 million.
Topping the list of such firms is the Dhaka-based home electronics maker Walton High-Tech Industries Ltd., which is planning automobile production. The company, which started production in 2006 as the first domestic electronics manufacturer, said it hopes to begin making cars at its new plant next year.
Walton executives say they want to put three or four passenger car models on the market in the near future, possibly by tying up with some Japanese companies and gaining their technical support.
Walton is among the local companies rapidly expanding and growing into major exporters in Bangladesh, where the textile business has been the main industry and imported products have commanded large shares of the domestic market.
While grabbing a large market share in the domestic home appliance market with its low-priced products, Walton has expanded into motorcycle production.
Bangladesh has been seeing annual economic growth of around 6 percent in recent years and its government is seeking development of industrial clusters by setting up special economic zones.
Hoping to beat foreign rivals in establishing a presence in the promising market, a Japanese economic delegation led by the government-backed Japan External Trade Organization, known as JETRO, visited Bangladesh in February. Officials from about 40 Japanese companies including electronics and auto parts makers took part in the program, reflecting Japanese firms' growing interest in the country's cheap labor and economic growth.
Fast Retailing Co., which operates Uniqlo casual clothing stores in Japan and in some major cities abroad, is among the Japanese companies already operating in Bangladesh.
Some of the officials who visited the country cited concerns about lagging infrastructure development, but voiced hope for business potentials arising from gaining a foothold before more companies from around the world come into the market.
The head of JETRO's office in Bangladesh said the number of Japanese companies contacting the trade-promoting organization for information and advice about the Bangladesh market has doubled since around 2006.
Other rapidly growing industries in the country include shipbuilding. Propelled by technologies and business know-how brought by Bangladeshi-born engineers with overseas working experience, Western Marine Shipyard has been winning a series of orders from Europe and elsewhere for small vessels.
http://mdn.mainichi.jp/mdnnews/business/news/20120310p2g00m0bu043000c.html
PSMC to post PAT of Rs413mn (EPS 5.02), up 351% YoY, 237% QoQ, reports Investorguide360.com
The company is expected to announce PAT of Rs413mn (EPS Rs5.02) in 1QCY12, up by a massive 351% YoY. The gigantic rise in the profitability is mainly due to 31%YoY increase in unit sales coupled with 9%YoY increase product prices. Moreover, the other income of the company is also estimated to have helped in boosting up the bottomline of the company as it registers a healthy growth of 49%YoY to Rs196mn in 1QCY12. In the light of historical payout trend, we do not expect any cash dividend from the company with the results.
Company’s bottomline is also expected to jump 237% on QoQ basis due to 23%QoQ primarily due to increase in company’s sales volumes. As the customers prefer to book vehicles with the new year registration, therefore, during the last quarter company’s unit sales remained dull. As such, the other income of the company is also expected to decline (income comes from the customers’ advances).
At current levels, the company scrip is trading at a PE of 5.5x and 6.1x based on CY12 and CY13 earnings estimates, respectively. We recommend ‘Buy’ on the scrip with our revised Jun-12 target price of Rs92/share.
http://investorguide360.com/lucky-cement-3qe-gm-at-3-yr-high-pak-suzuki-motors-pat-up-237-qoq-investcap/
Here is a News story on Pakistan's textile-based exports:
Leading economists and entrepreneurs from other sectors at a discussion program titled ‘What is wrong with Pakistan’s economy?’, regretted the textile-specific approach of Pakistan’s economic planners that had led to the exclusion of other more lucrative sectors like engineering, information technology, mining and fuel, and agricultural products.
“Pakistan should look beyond textiles to ensure sustained exports and economic growth,” they claimed “as textiles, with only a 5.6 percent share in the total global trade, limit the opportunities for broad based growth. And textiles are also the first casualty in a recession.” Engineering entrepreneur Almas Hyder appealed to the government to have a wider vision and make a paradigm shift in its industrial policy. He said that attention should now be focused on sunrise industries like engineering, chemicals, bio-technology, IT, agriculture-livestock and pharmaceuticals.
Almas said that the government should realign its economy as well as its resource allocation to ensure uninterrupted growth. If these sectors had been given equal importance as that given to textiles, it would have shielded the economy from the ups and downs in a global economy. He said that in a recession, the first expense that people cut down on is of clothing, which is the reason that the textile trade has always come under stress in case of a global or regional recession, as the one being witnessed in Europe these days.
Senior Economist Naveed Anwar Khan pointed out that manufacturing and engineering goods account for 67.50 percent of the total global trade, while mining and fuel account for over 12 percent, agricultural products 10 percent and non-ferrous metals 1.8 percent. Instead of giving attention to around 94 percent of the global trade, Pakistan was only concentrating on the 5.6 percent textile’s trade.
He averred that this preference and attention bestowed on this sector, in the form of energy and power, has not paid any dividends as Pakistan’s share in the total global textile trade remained less than 2 percent. And that even Bangladesh, which had entered the textile sector in the early 1990s, had higher textile exports than Pakistan. He summed up that while the textile sector should be facilitated by the state, other sectors should also be given equal importance.
“Value addition in engineering goods is much higher than the value addition in textiles” stated Iftikhar Ali Malik, former president Federation of Pakistan Chambers of Commerce and Industry. He elaborated that auto parts made from plastic, steel or even cardboard fetched a much higher price than the cost of their raw materials. While 70 percent of the input cost was cotton in yarn manufacturing, in a car filter or a plastic or steel auto part, the cost of the card board, plastic or steel was10-20 percent and the value addition was high.
He regretted the fact that the engineering goods manufacturers were not facilitated by the state in the same way as textiles were by them. The added that the engineering industry has a long gestation period and is more entitled to concessional credit than textiles.
http://www.thenews.com.pk/Todays-News-3-114084-Preferential-treatment-of-textiles-decried
Here's a report on rising auto & tractor sales in Pakistan:
As per the latest available data of auto sales, recently released by the Pakistan Automotive Manufacturers Association (PAMA), car and LCV sales witnessed a 15.1% YoY growth in 11MFY12. Segment-wise break-up reveals that the economy segment (less than 1,000cc) led the growth with sales increasing by 24.9% YoY during the period under review. This was followed by the 1,000-1,300cc segment, which witnessed sales growth of 19.2% YoY to 26,734 units. The high-end segment (1300cc+) meanwhile remained the sector’s laggard and sales grew by a meager 2.1% YoY to 58,458 units. This lackluster performance can mainly be attributed to the suspension of production at Honda Atlas Car’s (HCAR) plant from Dec-11 to Mar-12, and single-digit sales growth of Corolla. Sales of LCV’s and 4×4’s registered a healthy 27.4% YoY growth in 11MFY12, mainly due to a jump in Bolan (PSMC), Ravi (PSMC) and Hilux (INDU) sales.
Pakistan Suzuki Motor Company Limited (PSMC) witnessed a 31% YoY improvement in sales in 11MFY12 to 100,805 units. PSMC has benefitted from the Punjab Government’s Yellow Cab Scheme, which has resulted in sales of Mehran and Bolan to increase by 39% YoY and 54% YoY respectively. Sales of Swift, Cultus and Alto meanwhile, increased by 67% YoY, 23% YoY and 15% YoY respectively in 11MFY12. Total units sold by the company in May-12, increased by 20% MoM to 10,608 units. On a YoY basis, this figure is 34% higher than May-11’s sales of 7,920 units.
Sales of Indus Motor Company Limited (INDU) decreased by 7% MoM in May-12 to 4,846 units. The primary reason behind this decline is the discontinuation of Coure, with only 63 units being sold during the month. During 11MFY12, the company sold a total of 48,907 units, which is 6% higher on a YoY basis. Hilux has remained at the forefront (with respect to sales growth), and its sales are higher by 56% YoY to 3,625 units in 11MFY12. Sales of Corolla during 11MFY12 increased by 9% YoY to 41,720 units.
Honda Atlas Cars Pakistan Limited (HCAR) reported a 53% MoM increase in total units sold to 1,150 units. The company’s endeavors to clear the backlog of orders of its City model resulted in sales of the model to jump by 533% MoM to 1,050 units. In 11MFY12 however, the company was only able to sell 9,901 units (33% lower YoY) owing suspension of production due to floods affecting its primary parts supplier in Thailand last year.
Al-Ghazi Tractors Limited (AGTL) registered a healthy 20% MoM sales growth to 2,743 units in May-12, helping the segment attain an overall performance improvement of 10% MoM to 6,913 units. On a YoY basis however, the sector recorded 33% lower sales owing to the imposition of GST last year, which resulted in demand for the product drying and production being suspended as a consequence. Millat Tractors Limited meanwhile, reported a 4% MoM improvement in sales to 4,170 units. On a YoY basis, sales of AGTL and MTL declined by 42% and 28% respectively during 11MFY12. This was mainly on account of the suspension of production mentioned above..
http://investorguide360.com/11mfy12-auto-sales-register-15-yoy-growth-lies-ahead-budget-ahl-research/
Here's an ET report on potential GM investment in Pakistan:
The Adviser to Prime Minister on Industries Muhammad Basharat Raja said that talks were held with delegations of Korean Company and General Motors (GM) to motivate them to invest in Pakistan and he hopes for positive results.
Raja told the National Assembly that the government is considering giving more incentives for investment in car manufacturing in the country. He added that presently one hundred and fifty thousand cars are being manufactured in the country and fifty thousand are being imported annually which are not sufficient to meet requirements.
General Motors, the world’s largest automaker based on sales has brands like of Cadillac, Chevrolet, GMC, Opel and Vauxhall under its belt. In Pakistan, General Motors markets its products through Nexus Automotive Limited, the exclusive importer and progressive manufacturer of the automaker’s products in the country. Nexus started manufacturing Chevrolet Joy in Pakistan in December 2005 whereas other GM products sourced from the global GM network are also planned for introduction to the local market. Nexus uses idle capacity at the Ghandhara Nissan Limited plant at Port Qasim to assemble Chevrolets, under the GM contract assembly agreement.
The project estimated value is $15 million and GM-Chevrolet has provided full support to ensure that the local components and the car assembled here meet GM quality standards and customer expectations.
Auto sales in fiscal 2012 stood at 157,325 units according to the data released by the Pakistan Automotive Manufacturers Association. In terms of car sales, Pak Suzuki Motor Company is leading with 95,142 units followed by Indus Motor Company and Atlas Honda.
http://tribune.com.pk/story/408082/exploring-avenues-pakistan-seeks-to-attract-general-motors/
Here's a Daily Times report on motorcycle industry in Pakistan:
Pakistan motorcycle industry sector is vibrant, flourishing and exemplary, as it achieved 95 percent localisation through latest technology transfer, billions of rupees investment and hundreds of thousands of skilled workers.
The sector progressed tremendously so far due to consistent policy of the government, while it gave protection to local investors to expand its businesses locally as well as globally.
The sector is apparently standing on its feet as it is not only able to meet the local demand but also capable of exporting various models to various countries, resulting in becoming a strong foreign exchange earning arm of the country.
Motorcycle production in Pakistan has increased in past 12 years. It has increased from a mere 100,000 units at the start of the century to around 2.0 million this fiscal. No other industrial sector has shown high and sustained growth during the past one decade. In fact Pakistan has emerged as global leader in production of 70cc motorcycles. He said that now even new 125cc bikes are also being exported.
However the proposed abrupt change in policy has badly shaken the confidence of investors and local manufacturers, following Board of Investment (BoI) ill-conceived initiatives to incentivise a Japanese bike maker to re-enter the Pakistani market at zero rate.
The plan to allow a new investor to import all motorcycle parts at zero duty will be negation of the previous policies and will encourage all original equipment manufacturers (OEMs) to bypass vendors and parts made locally, a representative of OEM said. The U-turn of policies will be worrisome and against the interest of the country and future industrialisation, he added.
Pakistan needs foreign investment! However, the country should not be so desperate in attracting investment by catering to unit specific investment proposals so as to destroy its most vibrant sectors where existing domestic and foreign are already investing. Such a case is that of the motorcycle industry.
The projection of this bike maker as a new investor conveniently ignores the fact that the same brand was being produced and marketed for decades in Pakistan and was forced to wind up on failure to compete with either other brands especially the Chinese bikes. Industry experts are dismayed at the constant pursuance to grant special status to this OEM on its re-launch and even more so by insisting that a supposed, and highly misleading, $150 million investment figure will be made.
The local industry, based on the projection of increase in demand, has already embarked on capacity enhancement plans and by the end of current fiscal year will have invested around $100 million out of which a size able amount is already invested while plans for rest are already submitted.
The proposal given to the government reflects that the OEM’s investment is hardly a couple of million dollars in the initial years. The remainder is merely a commitment to reinvest the tax so saved in the form of exemptions granted, when all other motorcycle manufacturers have readily agreed to pay high duty on the import of parts that are not being produced in Pakistan.
Another surprising aspect in this regard is the government wants to allow the Japanese manufacturer to import parts from anywhere but most probably from China. The claim that the new investment would bring new technology is an eyewash as the existing players have all introduced latest Euro 2 engines into the market without any special incentive.
Current players are even willing to import hybrid and EFI based engine without special incentives.
http://www.dailytimes.com.pk/default.asp?page=2012\07\17\story_17-7-2012_pg5_12
Here's an ET report n Toyota's rising sales and profits in Pakistan:
Global automobile giant Toyota’s affiliate in Pakistan announced that the 2012 financial year was its most profitable ever in the country, earning Rs4.3 billion in net income, a 57% increase over the previous year.
Indus Motor Company – a company that is 37.5% owned by Japan’s Toyota – announced its annual results on Thursday. The company’s revenues rose by nearly 25% to reach Rs75 billion, largely on the back of increased car sales, though higher prices were also a factor. The company sold over 55,000 cars during the financial year that ended on June 30, 2012, its highest ever for a single year. Both revenues and profits were the highest in the company’s history in Pakistan.
Investors in Indus Motors are likely to be pleased by the management’s decision to announce a Rs24 per share dividend, bringing the total annual payout to Rs32 per share. Given the company’s earnings per share of Rs54.74, that comes to a payout ratio of 58.5%.
Indus Motors assembles the Toyota Corolla, easily the most popular sedan in the Pakistani market, made even more attractive by the company’s wide network of dealerships and after-sales service points, which help the car retain a high resale value. As incomes in Pakistan’s urban middle class have recovered after the 2008 financial crisis, sales of the sedan have bounced back to pre-crisis levels.
Nonetheless, analysts point to several dangers to the company’s business. “Demand for new cars in Pakistan will decline, going forward,” said Atif Zafar, a research analyst at JS Global Capital, an investment bank. “Local car manufacturers are expected to remain under pressure from competition with imported used cars.”
Nonetheless, sales figures for new cars have been improving, reaching a four-year high of over 157,000 units in 2012, an almost 23% increase over the previous year. Indus Motors share of that is almost 35%.
Officials at Indus Motors concurred with JS Global’s assessment that new car demand had slowed in recent weeks, largely due to an expectation among car buyers that the government will relax rules on the import of used cars. Low demand is forcing local manufacturers to cut back on production, they said. Indus suspended its production for four days in July and plans six off-days in August to offset the problem of slow demand.
The largest carmaker of country, Pak Suzuki Motors, is also expected to see a hit in its sales this year. This year, the Punjab government has allocated fewer funds for the Punjab taxi scheme so one can expect that Pak Suzuki may get less orders compared to last year’s order of 20,000 units, Zafar said.
While car importers vow to double car imports this year, local carmakers are continuously pressuring the government to reduce the age-limit of used car imports from the current five years to three years. Pakistan imported 55,000 cars in fiscal year 2012, a massive increase over the 18,000 cars in previous fiscal year.
http://tribune.com.pk/story/419836/profits-at-toyotas-pakistan-affiliate-hit-all-time-high-in-2012/
Here's an African news report on Pakistan building tractor rebuild factories in Nigeria:
The Pakistan High Commissioner in Nigeria, Ambassador Ahmed Ali Sirohey said a Pakistani agricultural technology company is set to establish a tractor rebuild factory in Nigeria to refurbish tractors at low cost. He said they have discovered about 60,000 disabled, damaged and grounded agricultural tractors during his research for investment opportunities in Nigeria.
The high commissioner made this known in a statement where he disclosed that "the company had completed arrangement for the establishment of tractor rebuilt factory in Gombe and will finalise it this month to be followed by another in Kano."
Sirohey also added that his country has expressed interest in the signing of trade and investment treaty with Nigeria to further boost economic and investment cooperation between both countries.
"A trade treaty would engender mutual benefits for Nigeria and Pakistan especially in crucial areas of agricultural equipment, improved seed technology, health technology and education," he said
The envoy also noted that there was need for endorsement of a Preferential Trade Agreement (PTA) to facilitate easy access to Pakistani and Nigerian markets by industrialists from both countries, saying it would boost joint ventures in areas of irrigation, farming, home gas technology and power generation.
http://www.afriquejet.com/agribusiness-nigeria-pakistan-to-establish-tractor-rebuild-factory-2012081543303.html
Here's BMI report on vehicle sales in Pakistan:
Pakistan’s auto industry suffered mixed fortunes over FY12, which ended in June 2012. Passenger carsales and production were both up strongly, while the commercial vehicles sector continued to lag. EndFY12 sales figures released by the Pakistan Automotive Manufacturers Association (PAMA) showed thatpassenger car sales were up by 23% y-o-y, to reach 157,325 CBUs. Jeep and pick-up sales were up by17.6%, at 21,472 CBUs. This was slightly ahead of BMI’s forecasts and reflected the robust nature ofdemand in the new car market. The past year also saw a one-off boost to sales from the Punjab Province’s‘Yellow Cab’ taxi purchasing scheme, which saw Pak Suzuki deliver some 20,000 Bolan and Mehranmodels. Total vehicle sales for FY12 stood at 231,545 units, an increase of 6% year-on-year (y-o-y).
Breaking down the headline figure, sales of passenger cars with engine size less than 1000cc increased by41.6% y-o-y, to 61,528 CBUs. Mid-size engine cars (1,000-1,300cc) saw sales growth of 28.3% overFY12, to reach 29,981 CBUs, with larger engine cars (1,300cc+) showing the smallest growth, up just7.6%, at 65,816 CBUs.
Over FY12, long-time market leader Pak Suzuki retained its dominance of the Pakistani new passengercar and pick-up sales market, selling 112,166 units for a market share of 62.7%. Indus Motor retained itsposition as the second most-important player in the local market, with sales of 54,477 CBUs over FY12,up by 9.9%, for a market share of 30.5%, with Honda Atlas suffering a 22.2% annual decline in sales,down to just 12,119 CBUs, for a market share of 6.8%.
Turning to commercial vehicles sales, sales of trucks were down by 18.6%, at 2,394 units, while bus saleswere up by 13.1%, at 609 units. The worst performing sub-segment of the industry over FY12 was farmtractors, whose sales fell by 28.1% y-o-y, to just 49,745 units. This reflected the collapse in demandduring H1FY12, following the government’s decision to implement a 16% general sales tax on tractorpurchases, which was later reduced to 5% as of January 2012. Since this time, tractor sales haverebounded strongly, from a year-low of just 369 tractors sold in January 2012, back up to 8,368 tractorssold in June 2012. However, with the government still planning to increase GST on tractors to 10% in2013 and then to 16% in 2014, it remains to be seen what effect these staggered tax hikes will have ontractor sales over the medium term.
Turning to production, passenger car production stood at 154,255 CBUs for FY12, an increase of 15.1%y-o-y. This was a strong performance, given the disruption to supplies suffered by Honda Atlas over theend of 2011 and the start of 2012. Indeed, Honda did not produce any cars in Pakistan between December2011 and February 2012. Pak Suzuki remained the dominant producer, producing 107,736 passenger carsand pick-ups. In second place was Indus Motor, on 54,917 passenger cars and pick-ups, with Honda Atlasin third place, on 12,484 passenger cars (Civic and City models).
Looking forward, BMI is targeting new vehicle sales growth of 3% for FY13, to reach 238,491 units,with production set to increase by 5%, to reach 235,689 units.
http://www.marketresearch.com/Business-Monitor-International-v304/Pakistan-Autos-Q4-7131013/
Here's Nigerian Observer on tractor imports from Pakistan:
MAIDUGURI -The Borno State Government has planed to import 1,000 heavy duty tractors from Pakistan to harness the agricultural potential of the state.
Gov. Kashim Shettima who made this known while speaking with newsmen in Maiduguri.
Shettima explained that an agreement had already been signed by the Pakistani government and the Borno state government for the supply of the tractors.
“We are just coming back from a working visit to three countries - Pakistan, Turkey and India.
“The visit was aimed at exploring avenues for partnership with these countries on agricultural development.”
Shettima said the manufacturers of the tractors had agreed to supply them in a few months time.
“We are trying to see how we can tap from the experience of these countries to empower our people.
“Our farmers are still using hoes and cutlasses when other countries are busy using advanced technology in farming.”
Shettima said the tractors would be distributed to farmers across the state to boost agricultural production.
He said the objective was to enhance food production and fight poverty among the people.
“We have realised that the best way to tackle the current insurgency in the state is to develop agriculture and provide jobs for our employed youths.
“We believe that once we empower the youths the problem of the insurgency will be tackled.”
Shettima said the government would also collaborate with the Chad Basin Development Authority (CBDA)
toward cultivating the 70,000 hectare South Chad Irrigation Scheme (SCIS) in the state.
“We are going to partner with the CBDA toward cultivating the 70,000 hectares of land at the SCIS.
“We are going to supply fertiliser, and other implements to farmers to encourage them.”
http://nigerianobservernews.com/16102012/news/Other%20News/othernews14.html
Here's a description of JS Business & Global Venture, a tractor exporter from Pakistan:
JS Business & Global Venture was established in 1999. The company is one of the pioneers in Pakistan for exporting the Tractors, Agricultural Machinery and a range of Implements.
Agriculture sector being the dominant sector of Pakistan’s economy, as a market of material products contribute substantially in and outside the country. The JS Businesses & Global Venture has the endowment to fulfill the multidimensional needs of National and Multinational customers.
The company is exporting the agricultural products almost to the whole world, especially to Holland, England, Kenya, South Africa, Nigeria, Dubai, Jordan, Sri Lanka and Bangladesh etc. etc.
With the support of it’s highly qualified and Professional team developed and maintain highest service standards in the company, and of course with an ever increasing customer support JS Businesses & Global Venture showed an unprecedented growth within very short period of time.
We believe that each customer is a long term business partner and strive to meet their requirements swiftly and professionally.
We are main dealer for Millat, Massey Ferguson Tractors in Lahore, Pakistan. We also have a long range of Agricultural Implements, Millat Electricity Generators, Millat Prime Movers and Fork Lift Truck (Fork Lifter).
Following Tractor’s models are available MF 240, MF 260, MF 375, MF 385, and MF 385 4WD.
http://www.jsglobalbusiness.com/
Here's a Daily Times story on Honda launch of a new motorcycle:
KARACHI: Pakistan will be amongst top 5 countries producing and exporting high quality motorcycles in next few years, T Oyama senior Managing Director Honda Motor Company Japan said at the launch of new model ‘Pridor’.
With the hard work of associates, Atlas Honda today stands at the turning point from where the sales and production will touch the ever highest in the history of the country, he said.
It is encouraging after investing $35 million this year, Atlas Honda has increased its motorcycle production capacity to 750,000 vehicles annually keeping in mind the growing local demand, one of the largest motorcycle markets in the world and export potential to regional countries, he said. The leading motorcycle manufacturer is currently conducting a study for an expansion to 1 million units’ production capacity, which is estimated to cost around an additional $50 million. He said the seed of relationship sown by Atlas Group Pakistan’s Yusuf Shirazi and Suichiro of Honda Japan is today the oldest joint venture of Honda Motor Company anywhere in the world i.e Atlas Honda Ltd.
By launching yet another state of the art model Pridor, surpassing all available technologies in the country, Atlas Honda has also proven its commitment to Pakistan’s market, he said.
http://www.dailytimes.com.pk/default.asp?page=2012\11\04\story_4-11-2012_pg5_8
Here's PakistanToday report on Pakistan's motorcycle exports:
Lahore - The domestic Motorcycle Industry has registered a remarkable recovery during the four months ending July 2011 as it has started taking its roots in international markets and exported around 10,500 units to different countries during the four months. The sources at industry said that after a steep drop in exports of around 135 percent from a peak of $3.5 million in 2009-10, the high-quality and low-priced locally produced bikes have effectively checked imports. They commended the industry efforts as the exports have picked up appreciably during April-July 2011 to 10,500 units.
They confirmed that during the said period, the industry has exported in excess of 2,500 units per month which is against an average export of around 1,200 units per month last year. If the trend continues, Pakistan will easily be able to double its motorcycle exports this year.
Motorcycle exports stood at $786,310 and surged to $3.5 million in the next year on the strength of $50 per unit Research and Development facility provided by the Government of Pakistan. The facility was withdrawn in 2010-11 after which the exports nosedived by 135 percent to $1.34 million, they said.
“The decline in exports would have been much higher but the prudent marketing strategy adopted by large motorcycle players controlled it”, said Mr. Fahad Iqbal CEO, HKF Engineering, makers of Ravi motorcycles. He said that the exports of motorcycles averaged over 2,500 units during the last four months which is a good sign for the industry. This, he added, is double the monthly export of 1,200 units in 2009-10 when record exports were witnessed. He said that the trend is expected to continue and Pakistan will easily be able to double its motorcycle exports this year.
Last year exports experienced a steep decline after a major policy shift by the Government when the Research & Development (R&D) facility was withdrawn from the motorcycle industry. The experts from the industry said that this massive recovery by motorcycle exports is testament to the resilience of this sector. The progress this sector has made over the last ten years or so is a proof that Pakistani entrepreneurs can compete with the best in the world if consistent policies are in place. Exports from Pakistan are textile dependent for the most part. Motorcycle industry provides a viable option as the next emerging export from Pakistan. “The industry is aiming to export half a million units annually by the year 2016” one expert said. “In export markets success builds on itself, especially, in motorcycles where establishment of an after sale service network and that of a secondary market creates the ground for a successful brand. Growth in sales will multiply as brands get established”, he said.
Experts pleaded that the current policy regarding motorcycles should not be disturbed as with its huge forward and backward linkages, the motorcycle industry moves the wheel of the economy. High employment creation and technology transfers make it an ideal sector for a country like Pakistan.
Growth in this sector means that upstream businesses such as part making in industries like steel, rubber, electronics and plastics etc. also get a boost. Investment comes in and jobs are created in all these industries. Similarly, this industry pushes up investment and creates additional jobs in downstream avenues like motorcycle dealerships for new and old bikes, repair and maintenance workshops and spare-parts businesses. The multiplier effect of this industry is huge.
http://www.pakistantoday.com.pk/2011/09/13/news/profit/pakistan-aims-to-double-motorcycle-exports-by-next-year/
Here's an ET report on the opening a new assembly plant for trucks and light commercial vehicles in Karachi:
Prime Minister Raja Pervez Ashraf said on Saturday that it is the government’s policy to promote the private sector so that it can play a leading role in the development and prosperity of the country.
Addressing a function after formally inaugurating Al-Haj FAW Motors’ automobile assembly plant on the National Highway in the vicinity of Bin Qasim Port, the premier said the private sector is the key to economic prosperity and development of a country, and this government fully realises this.
“It is a great pleasure for me to see that our industrial group has started this very important automobile facility in partnership with China,” he remarked, and hoped that this project would prove a milestone for the automobile industry in Pakistan.
Sindh Governor Dr Ishratul Ebad Khan, Federal Minister for Defence Syed Naveed Qamar, the Chinese consul general in Karachi and a group of other provincial ministers were also present.
With the launch of its assembly line, Al-Haj FAW Motors said that the company is all set to significantly increase its market share in Pakistan in both trucks and pick-ups.
“After making a respectable impression in the trucks market of Pakistan, our company is ready to gain a share in the pick-up market also,” Al-Haj FAW Motors Chief Executive Hilal Khan Afridi told The Express Tribune on the launch day of its only plant in Karachi.
The company said that it had completed construction of its assembly line near Karachi with an investment of Rs1 billion. The plant will be capable of producing trucks, prime movers, light commercial vehicles and passenger cars.
The company has already been assembling two 1,000cc vehicles at the plant since June 2012. Afridi said that his company has sold a few hundred pick-ups assembled at this plant over the last few months.
Al-Haj FAW Motors – a joint venture between the largest and oldest Chinese vehicle maker First Automobile Works (FAW) Motors and Al-Haj Motors, an established commercial importer of heavy vehicles in Pakistan – has been importing completely built units (CBU) from China for the last few years.
With its assembly plant in action, the company is now targeting to launch new vehicles and passenger cars of 1,000-1,500cc engine capacity within the next few years. It has been assembling trucks since October 2011 and plans to produce 6,000 trucks and 12,000 light vehicles every year.
However, the company’s ambitions may be tempered by the economics of demand and supply. The truck market has slowed over the last few years in Pakistan, a representative of Hinopak Motors – the largest truck maker in Pakistan – said.
Industry officials say that the decline in overall economic activity and continuous disruptions in Nato supplies to Afghanistan have resulted in significantly low sales of trucks in Pakistan.
The installed capacity of Hinopak Motors is 5,000 trucks, but it produced only 1,237 trucks in fiscal 2011-12. The historical high figure of truck production in the country’s history is 4,993, achieved in fiscal year 2007-08, according to the Pakistan Automotive Manufacturers Association (PAMA).
Al-Haj FAW Motors claim that they are now number two in the list of truck producers in Pakistan, assembling around 700 trucks annually in the country. However, their claim is difficult to prove as they are currently not members of PAMA –the representative body of vehicle manufacturers in Pakistan.
There are four truck assemblers currently operational in Pakistan. With the addition of Al-Haj FAW Motors to that group, five truck assemblers will now vie for the Pakistani market – all operating from their bases in the port city of Karachi.
http://tribune.com.pk/story/463957/al-haj-faw-motors-inaugurates-automobile-assembly-line/
"Al-Haj FAW Motors – a joint venture between the largest and oldest Chinese vehicle maker First Automobile Works (FAW) Motors and Al-Haj Motors, an established commercial importer of heavy vehicles in Pakistan – has been importing completely built units (CBU) from China for the last few years.
With its assembly plant in action, the company is now targeting to launch new vehicles and passenger cars of 1,000-1,500cc engine capacity within the next few years. It has been assembling trucks since October 2011 and plans to produce 6,000 trucks and 12,000 light vehicles every year."
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Dr. Haq,
We have been discussing the GOP 2011-12 report elsewhere.
http://www.finance.gov.pk/survey/chapter_12/03-Manufacturing.pdf
Take a look (again) at Table 3.11 on page 46.
On an annualized basis, the operating-level statistics in 2011-12 can be calculated as follows:
Cars: 60% of Installed capacity
LCVs: 45% of Installed capacity
Buses: 10% of Installed capacity
Trucks: 10% ofInstalled capacity
This is MASSIVE overcapacity, even by standards of developed countries.
So would you explain why we are opening even more capacity with this Chinese FAW assembly plant?
The only way this makes sense is if there is a political motive from GOP to "kick-out" the Japanese players (Hino etc) and replace them with Chinese ones (FAW etc).
Is that what this is about? Is it a BFF thing?
Please comment.
Thank you.
Dr. Haq,
This is a good graph you have published of production levels in 2007-2008 (just before the coronation of Malek Zardari):
http://1.bp.blogspot.com/_dj7hueuj-U0/ScVPb_DOr7I/AAAAAAAAA98/chBrKd5TI7Y/s1600-h/auto-volume-2007-08.jpg
2007-2008 Production Levels seen in Riaz Haq's published graph:
Trucks - 4,993
Buses - 1,146
LCV - 21,354
Cars - 164,710
FIVE YEARS LATER, here are the current production levels for 2011-12:
Trucks - 2,200
Buses - 500
LCV - 19,000
Cars - 140,000
Source:
http://oica.net/category/production-statistics/
http://oica.net/wp-content/uploads/hcv-2011-august-2012.pdf
http://oica.net/wp-content/uploads/bus-2011-august-2012.pdf
http://oica.net/wp-content/uploads/lcv-2011-august-2012.pdf
http://oica.net/wp-content/uploads/cars-2011-august-2012.pdf
This is not a normal market up & down (business cycle). This is a COLLAPSE.
What are your views?
Please comment on this phenomenon.
Thank you.
HWJ: "This is not a normal market up & down (business cycle). This is a COLLAPSE."
No, it's not.
There was a collapse but it happened from 2007-8 to 2009-9, and the auto mfg has since rebounded to 158,000 cars and 829,000 motorcycles, according to PAMA. These figures do not include production ad sales by companies like Al-Haj FAW which are not members of PAMA.
It seems you love the world COLLAPSE and readily apply it to anything to do with Pakistan.
http://www.pama.org.pk/statistical-information/historical-information/annual-sales-production
Here's an Automotive World story on Pakistan restricting used car imports:
With local policy aimed at making Pakistan a favourable trading country, rather than a manufacturing one, the significant inflow of used cars into Pakistan has, in the past, constricted the local automotive industry. This may be about to change, however, following a decision by the country’s Economic Coordination Committee (ECC).
The ECC has decided to reduce the age limit of used car imports into Pakistan to three years, from the previous limit of five years, according to The News International. This directive will come into effect on 15 December 2012.
The Economic Coordination Committee is a cabinet-level body responsible for final decisions pertaining to Pakistan’s economy. Set up under the Chairmanship of the country’s Central Finance Minister, the committee comprises ministers in charge of the country’s economic ministries.
This decision has drawn mixed reactions from the various automotive industry bodies in Pakistan. The Pakistan Automotive Manufacturers Association (PAMA) has welcomed this decision, as it favours local vehicle manufacturers. The association’s Chairman, Parvez Ghias, feels that this move is in the greater national interest.
The All Pakistan Motor Dealers Association (APMDA), on the other hand, has called this move unfair and unjust, as it is a setback to the import of used cars. Chairman HM Shahzad says this cut in age limit, along with the depreciation policy in force at present, will push the prices of cars significantly.
Earlier, Daily Times, citing industry experts, said the government lost nearly Pakistani Rs16.5bn (US$171.79m) due to the import of 55,000 vehicles. Around US$371m were reportedly spent on the import of used cars last year. According to Shahzad, though, this move to restrict import of used cars into Pakistan will result in a Pakistani Rs32bn loss to national exchequers
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The report stated that there were more than 100 vehicle assemblers in the country. These companies assemble cars, buses, trucks, two- and three-wheelers and tractors. The number of automotive parts manufacturers, however, totals approximately 1,700.
Japanese companies lead the list of vehicle assemblers in Pakistan, while local companies form the bulk of the country’s parts manufacturers. This is compounded by a weakness in terms of manufacturing systems and technology in the supply industry, which the report attributes to a lack of competition brought on by localisation requirements.
....
http://www.automotiveworld.com/articles/manufacturing-logistics/ecc-move-to-restrict-import-of-used-cars-brings-cheer-to-assemblers-in-pakistan/
Here's a News story on Linde expansion:
KARACHI: Linde Pakistan on Tuesday officially inaugurated its new flagship air separation plant installed at the Sunder Industrial Estate in Lahore, according to a statement.
This new state-of-the-art plant is now the largest air separation plant in Pakistan, capable of producing 150 tons per day of gaseous oxygen, nitrogen and argon for the merchant gases market, it said, adding that the investment value of the plant, along with the related supply chain equipment is more than Rs2 billion.
Yousuf Mirza, chief executive of Linde Pakistan, said: “Our new air separation plant in Lahore represents a milestone for our business as this is Linde’s fourth and largest air separation plant in Pakistan.”
“The additional supply from this plant significantly enhances our ability to respond quickly and effectively to meet the gases requirements of our customers in the North and further reinforces our position as the leading industrial gases player in Pakistan.”
http://www.thenews.com.pk/Todays-News-3-145263-Linde-starts-Pakistans-largest-air-separation-plant
^^RH: "Pakistan's auto parts manufacturing is a billion US dollars a year industry. Sixty percent of its output goes to the motor cycle industry, 22% is for cars, and the rest is consumed by trucks, buses & tractors."
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Dr. Haq,
I just found the figures from SBP for export of Auto Parts:
http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity_arch.xls
FY 12 Exports: 24.5 Million%
This is not bad, but we need to do MUCH better to match our neighbor: 43.4 billion$ in FY12:
http://alturl.com/qjkfc
Something to blog about.
Thank you.
Here's a Forbes piece on Millat tractors in Pakistan:
Almost a year after floods devastated Pakistan, swamping 5.8 million acres of farmland and displacing millions of people, Ashaq Malik, who grows cotton, sugarcane and wheat on 865 acres in Punjab province, has reason to feel optimistic. After nearly a third of his land was inundated, today he is seeing a strong harvest. "As soon as the water level fell down, we started reconstructing the houses and working on the fields," says Malik. "Today there is no problem with the crops."
Companies that service the agriculture sector are also thriving in the rebound, none more than Millat Tractors of Lahore, which also manufactures other farm gear. Last year Millat earned 2.3 billion rupees ($29 million) on sales of $263 million, a 40% increase from the previous year. In the first quarter of 2011 profits grew 52% from the same period a year earlier..
To buy his 150,000 shares, Ansari--then a 39-year-old general manager--sold a plot of land, liquidated his retirement funds and borrowed money from his father. "It was a lot of money to me back then," he says. "Today it's like a lottery coming your way. The value has increased many, many fold since then."
Today the public, including Millat's 1,600 employees, owns 42% of the company; management and kin 28%; and banks and other institutions the rest. Employees are prosperous because of stock dividends and their salaries. Most of Millat's employees pay income tax--a sign of affluence in Pakistan--and have their own cars.
..
http://www.forbes.com/global/2011/0912/best-under-a-billion-11-millat-tractors-pakistan-after-flood.html
Here's a Daily Times report on a new steel mill starting production in Karachi:
Pakistan’s largest steel producing mill in private sector Tuwairqi Steel Mills Limited (TSML) is ready for commercial production in the first week of January 2013.
It would cater not only the steel needs of the country but would be able to export value-added products to other countries.
The setting up of such a mega project would entice foreign investors in the country despite the fact that local investors are also shifting their entities abroad because of bad law and order situation and energy crisis.
TSML mega project over $350 million is mainly sponsored by Saudi Arabian-based Al-Tuwairqi Company (ISPC) and Posco of South Korea.
TSML Director Project Zaigham Adil Rizvi at a seminar on Monday said this state-of-the-art Direct Reduction route of Iron (DRI) making plant would be starting commercial production but financial crunch put the project so late.
Posco-South Korean steel giant have invested $16 million to make this mega project keep going.
A revolution of industrial growth is in the offing as TSML is ready for commercial production in coming January. It is Pakistan’s first private sector integrated environment-friendly steel manufacturing project.
TSML will serve as a catalyst for the industrial growth in the country as steel has basic and vital role in the economic development of any country.
He said DRI technology is the latest in the world and is being used in not only developed countries but also in our region like Iran and India, so consistent highly quality of product can be achieved through this state-of-the-art technology, he said adding that this technology is environment-friendly.
Rizvi divulged TSML’s DRI plant after commercial production, would not only meet country’s steel requirements but would also create job opportunities for technical and skilled labour force for local people.
He said his team along with Posco delegates has started searching raw material in Balochistan and hoped they would not spend huge foreign reserves in importing raw material rather they would use the local material.
He claimed country’s workforce, especially the youth was not only dedicated and committed but also hard work, so the future of Pakistan was very bright.
Pakistan’s largest steel capacity of 1.28 million tonnes per annum plant would not only cater country’s requirements but also provide job opportunities to skilled and unskilled people.
Other countries including Korea wanted to purchase total production of TSML but TSML management has decided in principal that we would prefer to distribute all our products within the country and in this regard we have selected Lahore-based Shajarpak Company, as our sole distributor.
Khawaja Usman of Shajarpak said currently Pakistan was depending on imports for the production of heavy mechanical structures and engineering goods but after producing high-quality steel at TSML plant, Pakistan would be able to manufacture such heavy equipment locally.
India is giving more importance to its industrial sector while concerned authorities in Pakistan are least bother in this regard.
He hoped raw material from Balochistan would help steel industry to sell its products on low price.
http://www.dailytimes.com.pk/default.asp?page=2012\12\18\story_18-12-2012_pg5_7
Here's a Nation report on Japanese investor interest in Pak auto sector:
Huge potential exists between Pakistan and Japan to further strengthen economic ties as Pakistan offers a big market for investment in different sectors and hoped that the Japanese companies would tap that potential.
These remarks were made by Mr.Hiroshi Oe, Ambassador of Japan to Pakistan while addressing business community at Islamabad Chamber of Commerce & Industry (ICCI). He said that major reasons that keep Japanese companies away from investing in Pakistan are security and energy supply.
The Ambassador said that he has been trying to provide Japanese companies with opportunities to clear their perception gap and turn their eyes to the opportunities that Pakistan possesses. He said that Key areas of trade and investment between Pakistan and Japan could be textile, surgical equipments, furniture and automobile industry. He said that many big Japanese auto-industries investors are seriously planning to shift their units to Pakistan from Thailand due to heavy floods.
In his welcome address, Zafar Bakhtawari, President ICCI said that Japan is third biggest and one of the trillion dollar economies of the world and is an important trading partner of Pakistan as well as a major donor. ...
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/18-Dec-2012/japanese-auto-industry-investors-shifting-focus-to-pakistan-hiroshi-oe
Here's ET on cost difference in Indian and Pakistani cars:
In support of his claim, he said average cost of a Pakistani car (excluding taxes) is Rs750,000. An average Pakistani car uses 60% of local components and the value of such components is around Rs450,000. This is the amount that the parts makers lost on each imported car, he said.
Most people believe that locally assembled cars are much more expensive than vehicles manufactured in other countries, but this is a wrong perception, the industry representatives said while giving a comparison between prices of Pakistani cars and those manufactured in regional countries.
Pakistani cars are cheaper than most cars manufactured in India, Allawala claimed, adding 1,800cc Toyota Corolla is being sold in India for $16,334 (retail price excluding taxes) while the price of the same car in Pakistan is $13,253, lower by $3,081.
Including taxes, the retail price of Toyota Corolla in India is $26,744 while in Pakistan it is $19,781, a difference of $6,963.
Similarly, the retail price of 1,800cc Honda Civic in India he said was $19,216 (excluding all taxes) while the same car is being sold for $15,214 in Pakistan, a difference of $4,002, he said.
After including all taxes, the difference in prices of Honda Civic in Pakistan and India is $7,403. In India, Civic is being sold for $30,455 while it is available at $23,052 in Pakistan.
The automakers and vendors have underlined the need for revision in the import duty slabs, saying the old duty structures are favouring car importers.
In response to a question, PAMA Director General Abdul Waheed cautioned the consumers, who are opting for imported used cars, saying they were making a wrong decision.
“The buyers of used cars may spend less initially, but eventually they pay much more in terms of expensive maintenance and low resale value compared to a new car,” he said.
http://tribune.com.pk/story/478485/auto-assemblers-say-cannot-sustain-liberal-import-policy/
Pakistan Post Office to provide motorcycles to its staff, reports PakObserver:
Islamabad—Pakistan Post will provide motorcycles to its postmen to ensure timely delivery of mails and important parcels. In this regard a Memorandum of Understating (MoU) has signed between Pakistan Post and Bank of Khyber (BK).
Through the scheme, the employees of the Post have an option to choose each and any brand of motorcycle available in market as per their choice. Director General, Pakistan Post, Syed Ghulam Panjtan Rizvi said that the organization has earlier provided motorcycles to its staff officials to ensure provision of quality services and it will provide more motorcycles to its postmen”, he said.
http://pakobserver.net/detailnews.asp?id=192703
Here's a Nation report on GoP MOU with Twariqi and Posco:
In order to promote and closely collaborate on the development of steel and infrastructure industry in Pakistan, the joint venture of Al-Ittefaq Steel Products Company and POSCO, have signed a memorandum of understanding (MoU) with the government of Pakistan through the Ministry of Investment for the backward and forward integration of Tuwairqi Steel Mills Limited (TSML).
Forward integration would be a further value addition through a Melt Shop, producing world standard steel grades, while backward integration would be to the extent of exploring iron ore locally in Baluchistan, its beneficiation & pelletization as well. The estimated investment on these projects would be around US$900 million.
The MoU was signed by S. Anjum Bashir, Secretary, Ministry of Investment, Prime Minister Secretariat, Government of Pakistan and Zaigham Adil Rizvi, Director (Projects), TSML in the presence of Dr. Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding and Joon Yang Chung, Chairman & CEO, POSCO of South Korea.
As per the MoU, GoP will facilitate TSML in using Pachinkoh Deposit (Nokkundi) and Dilband Deposit (Mastung) for the development of iron ore mine and utilization of such developed iron ore products as raw material for TSML’s DRI Plant and Pellet Plant in its 1st and 3rd phase respectively. GoP has also committed to facilitate TSML with 180 MW of electricity, 3,000 m3 of water per day and natural gas as per the additional quantity required for TSML’s upcoming projects.
Through the MoU, POSCO has also expressed its interest for exploring business opportunities with GoP in engineering, procurement and construction services in the fields of infrastructure and industrial, environmental, electric power and oil & gas facilities.
On this occasion, Dr. Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding said that Al-Tuwairqi’s vision is to participate in the development of national economy, in order to have a long sustaining growth of Pakistan. “We are looking forward to create, for our younger generations, ample job opportunities to build a strong and prosperous nation, on the face of this plant. Al-Tuwairqi sees Pakistan as a land of opportunities and we are very clear in our perception that Pakistan as a country has to grow and we are determined to play an instrumental role in its development,” he remarked.
Mr. Joon Yang Chung, Chairman & CEO, POSCO said that POSCO is serving some of the most quality conscious markets in the world, and with its vision and expertise in the global steel industry spanning over 4 decades, POSCO is committed to transform TSML into a globally renowned company for quality steel making.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/23-Jan-2013/tuwairqi-posco-to-expand-operations-in-pakistan
Here's a BR story on 217% increase in annual car sales from 2001 to 2011:
The Competition Commission of Pakistan (CCP) has revealed in its research study on automobile sector that car sales in the country increased by 217 percent during 2001-2011.
In the study, the competition assessment of the passenger cars in the automobile sector in Pakistan has been analyzed, which shows that there are currently three major car manufacturers and assemblers in the car industry in Pakistan namely Pak Suzuki Motor Company Limited, Indus Motor Company Limited (Toyota) and Honda Atlas Cars Limited.
Between 2001 and 2011, car sales in Pakistan increased by 217% and the sales of the above mentioned three players mainly contributed towards this growth.
The CCP as part of its on-going programme of sectoral research has released the updated draft study on automobiles sector titled Competition Impact Assessment Studies, to assess the competition vulnerabilities in various sectors.
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Indus Motors, Pak Suzuki Motors and Honda Atlas have increased their sales by almost 322%, 241% and 217% respectively in this time period.
Currently, in the 800 cc and 1000 cc market segment, Pak Suzuki is the sole local manufacturer, assembler while in the 1,300-1,800 cc cars, the state of competition is slightly better with Honda, Suzuki and Toyota competing amongst each other for market share.
Parallel increase and decrease in prices by manufacturers in the last three years from 2010-12 may be a cause of concern from a competition perspective.
In all the three market-segments, the manufacturers and assemblers have excess installed capacities and by not utilizing their excess capacities, the incumbent firms signal their inward looking approach towards the domestic industry.
The study also states that Pakistan automobile industry is inward looking and it tries to protect itself through the use of regulatory instruments.
Pakistan needs to develop the automobile industry instead of protecting it and in this regard, imports have a disciplinary impact on domestic firms.
Currently, the import of cars is allowed only under the Gift, Personal and Baggage Schemes with restriction on allowable age limits.
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Furthermore, on August 31, 2012, the depreciation rules were also changed. If the cumulative effect of both these policy changes is taken into account, a further protection was landed to protect the domestic automobile industry at the expense of consumers.
For enforcing safety and quality standards, the government established Pakistan Standards and Quality Control Authority (PSQCA) in 2000 which has so far developed standards for only 2 wheelers.
Due to the absence of regulation, the domestic automobile manufacturers do not offer safety features, such as anti-lock breaking system (ABS), airbags and lower CO emissions along with quality specifications such as alloy rims, power steering and windows in all their vehicles.
In addition, Pakistan has an aging automobile population which is an increasing burden to the economy due to increased emission levels and a growing safety hazard.
The current dealership and supply chain structure in the industry does not allow for meaningful competition as dealerships are behaving merely as agents of the manufacturing companies and have no real incentive to compete in the market. Due to delay in deliveries, premiums are charged in the secondary markets.
The study recommended that the domestic market should be opened to the import of new cars at reasonable tariffs and reducing protection of local industry to allow foreign competition for the benefit of consumers will bring in new technology and offer more choice to the consumers.....
http://www.brecorder.com/pakistan/business-a-economy/106820-car-sales-increased-by-217-percent-during-2001-2011-ccp-.html
Here's a report of Japanese investment in Pakistan:
TOKYO (Kyodo) -- Yamaha Motor Co. will build a motorcycle plant in Pakistan with the aim of starting production in 2015, in an attempt to expand its business in an untapped emerging market, company President Hiroyuki Yanagi said Friday in an interview with Kyodo News.
Yamaha will first invest 1.3 billion yen in the Pakistani plant before increasing the amount to a total of 10 billion yen by 2020 to raise its production capacity to 400,000 units a year.
"Motorcycles sold now in Pakistan are mainly Chinese-made, but they are very old," Yanagi said. "We'd like to stimulate the market by introducing new models."
Yamaha has set its initial production target at 40,000 units per year.
The motorcycle market in Pakistan is expected to double to 3 million units in 2020 from the 2013 level of 1.5 million, according to the Japanese manufacturer.
http://www.manufacturing.net/news/2013/02/yamaha-building-motorcycle-plant-in-pakistan
Here's a Dawn report on Yamaha investment in Pakistan:
Yamaha Motors will invest US$150 million in auto sector of Pakistan to produce two-wheelers in the country.
This was stated by Sumioks, Senior Executive Officer of Yamaha Motors Pakistan (YMPK) while addressing a press conference in Islamabad on Thursday.
He said that the company would start production of motorcycles with engine capacity of 100cc and above from 2015.
“We have already submitted the application for registration to Securities and Exchange Commission of Pakistan (SECP) and 18 months after getting approved from the SECP, the company would start its production,” Sumioks added.
He said that initially YMPK will produce 40,000 units, which will be gradually increased and after five years the production would reach 400,000 units per year.
He said that the company would have its own factory and office of 50 acres at Bin Qasim Industrial Park Karachi.
“We will have high ration of localisation in manufacturing starting from 25 per cent since the first day of commercial production up to 85 per cent in five years,” he added.
He said the investment will help in boosting economic activity, increasing foreign direct investment, creating job opportunities, developing human resources and broadening the base of parts supplier industry.
He said the investment will create nearly 2000 job opportunities directly and 25,000 indirectly.
He said the motorcycles will be fuel efficient and would have new technology with Euro-II & Euro-III compliance, which were are not yet manufactured in Pakistan.
On the occasion, Feroz Shah, honorary councilor of Board of Investment (BoI) in Japan said that after producing motorcycles, Pakistan would be able to export them.
“The annual production of motorcycle is around 1.8m in Pakistan but almost all domestic models, so export is negligible.
“This plant will bring opportunity not only for the export motorcycles but vendors will also be able to export their parts as well,” he added.
http://dawn.com/2013/02/28/yamaha-to-invest-150m-in-pakistan-auto-sector/
Here's a PakistanToday report on railway carriage restoration in Islamabad coach factory:
Islamabad Carriage Factory has rehabilitated 690 old coaches during the last three years, making them durable for another 20 years, an official said on Tuesday.
The factory which was established with the cooperation of the German government is capable of manufacturing 150 German-designed coaches each year.
"The Carriage Factory rehabilitated 20 coaches of meter gauge for Senegal Railway and manufactured new six slipper coaches for the Pakistan Army," an official told APP.
He said out of 400 dysfunctional coaches, 275 had been rehabilitated whereas work on the rest was already in progress. He added that the restoration of these coaches would help Pakistan Railways achieve progress.
The official said that Pakistan Railways would receive also 202 new coaches against a cost of around Rs 16 billion to improve its operations and to facilitate its passengers.
Out of the 202 coaches of various types, Pakistan Railways received 65 coaches in Completely Built Unit condition which are being utilised with different trains plying across the country.
He said the new coaches had the capacity to run at the speed of 160 km per hour but due to the dilapidated rail track it would run at 120 km.
http://www.pakistantoday.com.pk/2013/03/19/city/islamabad/carriage-factory-rehabilitates-690-coaches/
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