Auto sales in Pakistan hit a two year high, jumping 61% in July, 2011 to 17,563 units from 10,942 units in the same month of last year. Pak Suzuki Motor Company led the auto sales up with 116 percent rise to 11,997 units from 4,503 seen in the same period last year. This is in sharp contrast to a Reuters report of 16% decline in auto sales in July across the border in India.
Pak Suzuki Motor Company saw a jump in all models while Honda and Indus Motors witnessed a slowdown. The latest addition to the Suzuki family Swift sprinted 285 per cent to 751 units while Mehran surged 179 per cent to 3,650 units. Liana posted its best month in more than a year by selling 100 units.
For Toyota Corolla, the best selling car in fiscal 2011, sales declined 16 per cent but still sold 3,681 units. Toyota Corolla remained the market leader but only by a small margin as they sold only 31 more units than second-highest selling car Suzuki Mehran.
Earlier, Economic Survey of Pakistan 2010-2011 reported that the first 9 months of fiscal 2010-2011 saw production of television sets jump 28.6% and automobile production increase by 14.6%. From July 2010 to March 2011, production of cars, light commercial vehicles and two and three wheelers grew by 16.4%, 20.5% and 12.6% respectively. These figures confirm the return of Pakistanis' appetite for consumer durables after a significant drop from 2007-2008 to 2008-2009.
In a separate news story carried by Bloomberg, Swiss food giant Nestle's Pakistan subsidiary said its sales of consumer packaged goods rose 25% year-over-year. Engro Foods, a local Pakistani competitor of Nestle, reported its sales climbed 46 percent to 7 billion rupees in the last quarter.
Rising sales of consumer durables like cars and fast moving consumer goods (FMCG) represent a clear sign of the return of the middle class consumers who had pulled back since 2008. This improvement has been been aided by rising incomes in the rural areas stimulated by higher food and commodity prices. Fast moving consumer goods (FMCG) – or Consumer Packaged Goods (CPG) – are products that are sold quickly and at relatively low cost. Examples include non-durable goods such as milk, juices, sodas, toiletries, and packaged grocery items.
Nestle Pakistan's chief Ian Donald summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company.
Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released in 2010.
The ADB report on Asia's rising middle class confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class.
Coming on the eve of Pakistan's Independence Day this Aug 14, the news of rising sales of cars and other consumer products could lead to more hiring and help revive Pakistan's economy which has been stagnant since 2008.
Related Links:
Haq's Musings
Resilient Pakistan
Pakistan's Rural Economy Showing Strength
Pakistan's Exports and Remittances Rise to New Highs
Incompetence Worse Than Corruption
Sugar Crisis in Pakistan
Agricultural Growth in India, Pakistan and Bangladesh
Pakistan's Rural Economic Survey
Pakistan's KSE Outperforms BRIC Exchanges in 2010
High Cost of Failure to Aid Flood Victims
Karachi Tops Mumbai in Stock Performance
India and Pakistan Contrasted in 2010
Pakistan's Decade 1999-2009
Musharraf's Economic Legacy
World Bank Report on Rural Poverty in Pakistan
Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan
China's Trade and Investment in South Asia
India's Twin Deficits
Pakistan's Economy 2008-2010
Auto Industry in India, Pakistan and China
Media Revolution in Pakistan
Threre are more reasons to migrate to Canada
1 year ago
48 comments:
The facts, as one has come to expect of your writings, are twisted beyond recognition.
One of the many reasons that the sales shot up in July is beacuse of the cut in sales tax. Hence the buying decisions were expectedly deffered untill the cuts.
Moreover, auto analysts such as Furqan Punjani have termed this spike in sales as an aberration and that the sales chart is expected to palateau out and register a a very humble growth rate of 5-10% in FY 12. Another point raised by Punjani was that the consistent rallies by the Yen against the Pak Ruppee - which is making the margins wafer thin.
" This is in sharp contrast to a Reuters report of 16% decline in auto sales in July across the border in India."
Auto analysts in India such as Abdul Majeed with PWC meanwhile have cited the hiking of key lending rates by the RBI as a chief factor hurting auto sales. The RBI has been hiked rates 11 times since 2010 - increasing the base rates of most banks by about 250 basis points.
This move has been designed to reign in inflation. And in India, the policy makes have managed to keep it in single digits as compared to inflation running riot in pakistan (refer to the inflation data in the same Pak Economic Survey that you have quoted).
Therefore - RBI's moves - and hence, dip in sales in India.
As much as it might not sit well with you, India is still head and shoulders above Pak. Despite macro eco headwinds - even pessimists peg indian growth at 7% for FY 12. With lower inflation and higher growth than pakistan - India is better positioned - one would say.
Ashmit: "Moreover, auto analysts such as Furqan Punjani have termed this spike in sales as an aberration and that the sales chart is expected to palateau out and register a a very humble growth rate of 5-10% in FY 12."
Before the July jump, Economic Survey of Pakistan reported that from July 2010 to March 2011, sales of cars, light commercial vehicles and two and three wheelers grew by 16.4%, 20.5% and 12.6% respectively, much higher than the pessimistic forecast from Punjani that you quote.
Nestle Pakistan's chief Ian Donald summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company.
That's because pakistan does not have domestic companies in this space unlike India which has Amul,Parle Agro,Britannia,Mother Dairy etc
U think this is a happy/acceptable state of affairs?
"Economic Survey of Pakistan reported that from July 2010 to March 2011, sales of cars, light commercial vehicles and two and three wheelers grew by 16.4%, 20.5% and 12.6% respectively"
The data that you quote is irrelavent. It represents sales in 3 quarters of the previous fiscal. Punjani is estimating the growth in FY12.
Moreover, you appear to be mighty confused. In your write up - you quote the Survey for claiming that PRODUCTION of cars, LCVs and two and three wheelers shot by "6.4%, 20.5% and 12.6% respectively".
Whereas, in response to my comment you claim that SALES shot up by "16.4%, 20.5% and 12.6% respectively".
There's a mighty big difference between the two.
Cheers.
Ashmit:"The data that you quote is irrelavent. It represents sales in 3 quarters of the previous fiscal. Punjani is estimating the growth in FY12."
Pakistan auto sector has been in recovery mode after 2008 crash, and sales just hit a two-year high. I see nothing on the horizon to change the trajectory in the foreseeable future.
Ashmit: "you appear to be mighty confused. In your write up - you quote the Survey for claiming that PRODUCTION of cars, LCVs and two and three wheelers shot by "6.4%, 20.5% and 12.6% respectively"."
My response is based on historical data from BMI that shows production and sales of cars in Pakistan closely match with very little unsold inventory.
why not just focus on good news in Pakistan -- why feel the need to feel better by pointing out that India is down? Economies are very different -
Bari: "why not just focus on good news in Pakistan -- why feel the need to feel better by pointing out that India is down? Economies are very different"
You can ignore Indian data if you wish. But I think comparisons are inevitable so close to Aug 14, especially when reports come in about the same industry at about the same time from the two sides of the border.
Anon: "That's because pakistan does not have domestic companies in this space unlike India which has Amul,Parle Agro,Britannia,Mother Dairy etc"
Nonsense!
Pakistani FMCG companies like Engro Foods, Haleeb Foods, Shezan, Tapal, Shan and others dominate the packaged food business in Pakistan, according to Euromonitor report. Here's an excerpt:
Although multinationals are paving the way for innovations and taking into account consumers’ demands by launching new products and advertising them heavily, it is usually the domestic companies which win the competitive battle in volume terms as they focus less on expensive and more conventional items which already have a consumer base. Nevertheless, multinationals carry strong brand names and target the higher class with premium products, thus taking their reasonable share in value terms.
Supermarkets/hypermarkets slowly gain share from traditional grocers
Supermarkets/hypermarkets is the most steadily growing distribution channel with a new player Hyperstar. As urbanisation is increasing, people tend to leave their families and live separately and therefore there is sometimes no housewife at home to be responsible for the purchase of fresh items close to home. Supermarkets/hypermarkets became more popular over the review period, being gradually considered more convenient as this channel can offer a wide selection of products in one place. Pakistanis are becoming more used to planning their meals for several days and supermarkets/hypermarkets work on offering as wide an assortment as possible. Nevertheless, traditional retail outlets such as independent and small grocery retailers continue to have a good name not just because of the lower unit prices offered but also because of their selection as most of them are specialised.
Positive growth both in retail value and volume
Further slow growth is predicted for packaged food, although the market is far unsaturated, consumers will have to wait until the economy is more stable and confident that prices are not going to peak further. This mainly concerns the middle class consumers who are new to packaged food. Because of this factor, manufacturers will focus on launching a wider selection of economy brands.
http://www.euromonitor.com/packaged-food-in-pakistan/report
I don't get it. While all Pakistan newspapers are busy pointing the dire state of economic affairs of Pakistan, this blogger is suggesting that Pakistan is doing better than India. Does this person knows that Pakistan had to remove the restrictions on import of 5 year old cars. Because production is very low.
Already all the sectors Of Pakistan economy are failing. Pakistan is losing in textiles, manufacturing(if it had any), and no electricity. Even the army chief has cast a deep worry over economic situation. The blogger works with his eyes closed. rather than working on issues which some other blogs do(people should read changinguppakistan), this blogger just tries to prove that Pakistan is better. Maybe its time you opened ur eyes. (and if you really don't want to publish my comment, i am proved right)
Rahul: "While all Pakistan newspapers are busy pointing the dire state of economic affairs of Pakistan, this blogger is suggesting that Pakistan is doing better than India."
Everything I have posted is based on data reported by the same newspapers and news agencies that you refer to. Such news does not get a lot of play.
Let me quote Pakistani entrepreneur Monis Rahman who summed it up well when he recently told the Forbes magazine the following: “You tend to hear the worst 5% of the Pakistan story 95% of the time"
http://www.forbes.com/sites/helencoster/2011/08/09/want-to-start-a-company-in-the-worlds-sixth-most-populous-country-time-to-move-to-pakistan/
Rahul: Are you not contradicting yourself by referring to the papers and stating “that Pakistan had to remove the restrictions on import of 5 year old cars. Because production is very low”.
Look at it a logically - the production is low and cannot meet the demand thus supporting Mr Haq that the sales went up hence the removal of restriction to meet the demand.
Remittances from by overseas Pakistanis rose to $1,096.31 million in July, 2011-12,a 38.57% jump over $791.18 million during the same period of last fiscal year, according to a report in Daily Times:
This was the fifth consecutive month when Pakistani workers remitted over $1 billion. They had remitted an amount of $1,052.90 million, $1,030.43 million, $1,049.80 million and $1,104.56 million in March, April, May and June 2011 respectively.
The inflow of remittances in July, 2011 from Saudi Arabia, UAE, USA, UK, other GCC countries (including Bahrain, Kuwait, Qatar and Oman), and EU countries amounted to $291.83 million, $257.65 million, $194.87 million, $118.55 million, $116.45 million and $32.59 million respectively as compared with the inflow of $194.94 million, $177.03 million, $143.86 million, $85.57 million, $101.25 million and $23.85 million respectively in July, 2010. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first month of current fiscal year (July FY12) amounted to $ 84.37 million as against $ 64.68 million received in the first month of last fiscal year (July FY11).
Earlier Pakistani workers had remitted a record amount of over $11.2 billion during the last fiscal year that ended on June 30, 2011.
It may be recalled that the State Bank of Pakistan, Ministry of Finance and Ministry of Overseas Pakistanis had undertaken a joint initiative called ‘Pakistan Remittance Initiative (PRI)’ with a view to facilitating the flow of remittances in the country through formal channels. This initiative has shown remarkable progress as the remittances through formal channels have beaten all previous records.
http://www.dailytimes.com.pk/default.asp?page=2011\08\11\story_11-8-2011_pg5_1
Isn't it the case that Car sales increase because govt. has overthrown the responsibility of providing public transport (including railway for national level traveling)?
Labor force data from the World Bank for 2007 indicates that 23% of Pakistan's labor force has had tertiary (college) education.
This compares with 61% in the United States, 32% in the UK, 20% in Malaysia, 33% in Singapore and 17% in Sri Lanka.
It has no data for India or China.
http://data.worldbank.org/indicator/SL.TLF.TERT.ZS
My name does not clarify my nationality - so let me be upfront. I am an Indian That does not however mean that I view my fellow brothers and sisters across the border as enemies.
I noted that is that in areas such as infant mortality, you quoted the total number of infants that die in India and said it is largest in the world (True) but did not state that the Infant Mortality Rate (IMR) which represents the number of childer who die before first year out of the total live births - is much lower than Pakistan.
Secondly, the quality of data that is collected from Pakistan - on which most of your article is based is not commented upon. WIth large swathes of the country not amenable to surveys due to the security situation and no census conducted since 1998, you have to question how representative are metrics on issues such as hunger, poverty and illiteracy. When its top cricketers age cannot be trusted (Shahid Afrid has confessed in a TV interview that his age was 2-3 years different from his official age and this was not uncommon in Pakistani cricketers), can the longevity number be trusted?
The section of William Darlymple's article that you quote focuses on India's weaknesses but you have conveniently omitted other areas that speak very warmly of its many strength and the progress. Half truths can sometimes be more misleading than lies.
You refer to the fact that Pakistanis give the most to charity but fail to mention that only 1% of Pakistani pays income tax and the tax to GDP ratio of Pakistan is one of the lowest in the world. If you combine the tax to GDP ratio plus charity as a total outlay that a Pakistani makes towards his society, would Pakistani numbers lead the world or lag them?
This is not to downplay many of Pakistan's real achievements. Neither do I seek to minimize your goal of highlighting Pakistani strengths - but does it always have to be done by comparing with India. Even there selecting only those metrics and articles where Pakistan fairs better?
I respect your intellect and patriotism but hope to see greater balance especially in your references to India.
Thank you.
Taxes were expected to be lowered in July for Pakistan and hence sales were deferred for the past couple of months making this growth rate unrepresentative. In India on the other hand, this was the month that Reserve Bank raised its prime interest rate depressing sales also making this month an anomaly.
If you consider the full year numbers, you would reach a different perspective.
Total cars sold in Pakistan in 2010 was 215,678 http://www.pakalumni.com/profiles/blogs/production-and-sales-of-cars-a
Total cars sold in India in 2010 was 2,5 million http://www.cartalk.in/f5/sales-report-of-cars-sold-in-india-during-2010-2011-a-159. Considering that India's population is 6.5 times that of Pakistan, these numbers indicate that the per capita sales of cars in India was almost double that of Pakistan.
When we take into account that the top 10 Indian cities have some form of mass public transport and this is absent in Pakistan, this shows that the need for personalized transport in Pakistan is grater than India yet actual sales are lower.
gp65:"but did not state that the Infant Mortality Rate (IMR) which represents the number of childer who die before first year out of the total live births - is much lower than Pakistan."
It was a Hindustan Times news story that I quoted verbatim.
gp65: "the quality of data that is collected from Pakistan - on which most of your article is based is not commented upon...."
The quality of data in Pakistan is in fact better than that in India and most other developing countries, given the fact that Pakistan has a fairly comprehensive biometric database of its citizens which India and most other countries don't have.
gp65: "WIth large swathes of the country not amenable to surveys due to the security situation and no census conducted since 1998, you have to question how representative are metrics on issues such as hunger, poverty and illiteracy."
Much larger swathes of India in North East, North West and Central Indian states are hit by major insurgencies and have become no-go areas for any state employees. You don't hear much about it because major Indian cities are not affected and therefore Indian media pay little or no attention to it.
gp65: "You refer to the fact that Pakistanis give the most to charity but fail to mention that only 1% of Pakistani pays income tax and the tax to GDP ratio of Pakistan is one of the lowest in the world."
It's clear that you are not a regular reader of my blog because you have missed on my posts on Pakistan's problem of widespread tax evasion.
rehmat: "Total cars sold in India in 2010 was 2,5 million"
Let's compare apples-to-apples. Total car sales volume in India in 2010 was 1.87 million units, according to the Wall Street Journal. Here's an excerpt from the WSJ story:
Sales climbed to 1.87 million cars from 1.43 million in 2009, the Society of Indian Automobile Manufacturers said Tuesday.
Total local vehicle sales in 2010 also rose 31% to 14.82 million from 11.32 million.
http://online.wsj.com/article/SB10001424052748703791904576075222569283448.html
rehmat: "Total cars sold in Pakistan in 2010 was 215,678 http://www.pakalumni.com/profiles/blogs/production-and-sales-of-cars-a"
This is not the best year for Pakistan auto sales. Pakistan car sales are recovering from a severe downturn in 2009.
Thank you for being kind enough to respond to my comments. I would like to differ with some of your interpretation and opinions, if I may.
1. I provided a source that supplied the exact number of cars sold for every single model in 2010-2011. That number comes to around 2.5 milion. You provide an alternative source Wall Street Journal which has a generic article. I do not doubt the integrity of the Wall Street writer but it is possible that he was working off some outdated numbers or annualized one particular months numbers. Why should a generic number be considered a better source than another one which has the level of granularity I supplied?
2. Even if we assume that indeed the WSJ number is more accurate (a debateble point in itself), it stil indicates that car purchase is 35% higher in India compared to Pakistan and that too when most of the top 10 Indian cities have a masst transport system and fairly well developed surface transport options available for inter-city travels. In absence of these options, the need for personalized transport is greater and yet the purchase is lower.
3. Finally you pointed out that the 215000 number for 2010-11 that I pointed out for Pak annual sales was in fact recovering off a low base due to the significant drop off in 2009. If that is the case, why did you fail to point out in your article that the 61% number you were comparing was off a low base and also due to some deferred buying option due to the expectation of duty reduction? Reading your original articlae, a person would come to the conclusion that Pakistanis buy more cars than India when in fact the fact on the grounds paint a different pictures.
I greatly appreciate that all your statements are fact based and you always provide the sources. I also understand that no-one is truly unbiased. I am biased towards India and you towards Pakistan - so that is understandable. But I think it would definitely add to your credibility if you did not cherry-pick data that actually results in misleading conclusions.
rehmat: "I provided a source that supplied the exact number of cars sold for every single model in 2010-2011. That number comes to around 2.5 milion."
Your source is user-generated content posted by someone named Dhillon, not as reliable as data from the Society of Indian Automobile Manufacturers quoted by the Wall Street Journal.
rehmat: "top 10 Indian cities have a masst transport system and fairly well developed surface transport options available for inter-city travels."
Pakistani roads and road transport networks and systems are more advanced than India's as reported by many independent observers like Alastair Scrutton of Reuters and William Dalrymple in The Guardian. Even an Indian journalist Hindol Sengupta agrees with that, as do I.
If you ever get a chance,try a bus ride with Daewoo bus service and their local competitors running on Pakistani motorways all over Pakistan.
Reduction in taxes announced by the government helped car sales sprint 35% in the first two months of financial year 2011-12, according to a report in The Express Tribune:
Sales stood at 29,537 units from July to August 2011 against 21,833 units sold in the preceding year, according to data released by Pakistan Automotive Manufacturers Association on Monday.
The incentive given by the government in terms of removal of 2.5% special excise duty on imported and locally manufactured vehicles coupled with reduction in general sales tax to 16% from 17% were the core reasons for the growth, said Summit Capital analyst Sarfraz Abbasi.
Growth was primarily led by Pak Suzuki Motor Company as its sales rose by 67% to 18,301 units followed by Indus Motor by 6% to 8,829 units.
The biggest leap forward was seen in Suzuki Swift sales that tripled to 1,274 units against 421 units in the same period last year. Liana, under the domain of 1,300cc engine capacity and above, recorded 149% jump in its sales to 127 units in comparison with just 51 units sold in the same period last year.
Meanwhile, tractor sales dropped by a hefty 78% to 1,993 units on the back of higher input taxes and plant shutdowns during the period. Al-Ghazi Tractors’ production operation remained completely shut during August.
Moreover, car sales declined by 31% in August alone amid less working days due to Eid holidays and lower production on account of Ramazan.
Company-wise breakup shows that this time Indus Motor took the front seat to lead sales with an increase of 27% to 4,728 units compared with 3,360 units sold in the same period last year.
New variants launched by the company in 1,600cc segment and CNG vehicles introduced in the already established market acted as a catalyst in this growth.
http://tribune.com.pk/story/250984/car-sales-rise-35-per-cent/
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
India leads the world in road accidents, according to WHO:
NEW DELHI: In a dubious distinction for the country, the World Health Organization has revealed in its first ever Global Status Report on Road Safety that more people die in road accidents in India than anywhere else in the world, including the more populous China.
The statistics for India are chilling. At least 13 people die every hour in road accidents in the country, the latest report of the National Crime Records Bureau reveals. In 2007, 1.14 lakh people in India lost their lives in road mishaps — that's significantly higher than the 2006 road death figures in China, 89,455.
Road deaths in India registered a sharp 6.1% rise between 2006 and 2007. However, road safety experts say the real numbers could be higher since many of these accident cases are not even reported. "There is no estimate of how many injured in road accidents die a few hours or days after the accident," points out Rohit Baluja, member of the UN Road Safety Collaboration and Commission of Global Road Safety representing Asia.
The report, based on 2006 and 2007 statistics collected from 178 participating countries, said globally over 1.2 million people die in road accidents every year and 20-25 million people suffer non-fatal injuries.
Baluja said both central and state governments, while pushing for construction of more highways and roads, were doing precious little to make them safe. "We don't have scientific traffic engineering which forms the basis of road safety improvement practised in US and UK since 1930s. This still remains a matter of consultancy in India as we are yet to have our own traffic engineering wings," Baluja adds.
In fact, the report shows while only 3,298 people died in road accidents in UK in 2006, the figure, at 42,642, was much higher in the US.
The report pointed to speeding, drinking-driving and low use of helmets, seat belts and child restraints in vehicles as the main contributing factors. In 2004, road accidents was the top ninth cause of death in 2004.
Calling road fatalities an "epidemic" that will become the world's fifth biggest killer by 2030, the report said while rich nations had been able to lower their death rates, these were sharply on the rise in the third world. It said 90% of deaths on the world's roads occur in low and middle-income countries (21.5 and 19.5 per lakh of population, respectively) though they have just 48% of all registered vehicles.
http://articles.timesofindia.indiatimes.com/2009-08-17/india/28181973_1_road-accidents-road-fatalities-global-road-safety
Here's a Bloomberg report on rising consumer spending and growing FMCG sector in Pakistan:
...“The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”
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Nestle Pakistan Ltd., which is spending 300 million Swiss francs ($330 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($377 million) in the six months through June.
“We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”
The parent, based in Vevey, Switzerland, aims to get 45 percent of revenue from emerging markets by 2020.
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Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before.
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Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg.
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Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said.
While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.
Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.
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Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.
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Pakistan, Asia’s third-largest wheat grower, in 2008 increased wheat prices by more than 50 percent as Prime Minister Yousuf Raza Gilani sought to boost production of the staple.
“The injection of purchasing power in the rural sector has been unprecedented,” said Sherani, who added that local prices for rice and sugarcane have also risen.
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Increasing consumption in rural areas is forecast to drive economic growth in the South Asian country of 177 million people, according to government estimates.
Higher crop prices boosted farmers’ incomes in Pakistan by 342 billion rupees in the 12 months through June, according to a government economic survey. That was higher than the gain of 329 billion rupees in the preceding eight years.
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Telenor Pakistan (Pvt) Ltd. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.
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.
-------------
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 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/
Here are some of the findings of a recent paper by Durre-e-Nayab of Pakistan Institute of Development Economics (PIDE) titled "Estimating the Middle Class in Pakistan":
Depending on the definition applied, it is found that the size of the middle class ranges drastically in the country, as can be seen from Table 2. Applying the definitions having solely an economic rationale, we find the middle class to range from 60 per cent of the population (Table 2, Definition One) to being totally non-existent (Table 2, Definition Five). Translating it in number of people, using the population base of 187 million as it stands on mid-year 2011 (USCB, 2011 and UN, 2009), the size of the middle class ranges from a huge 112 million to no one. This variability, as stressed earlier, reflects the complexities and
arbitrariness associated with defining and measuring the middle class.
Among all the definitions given above, Definition Eight and Definition Thirteen, based on gradation of income and expenditure per person per day, respectively, are currently the most
extensively used measure employed to estimate the middle class (as also used by Chun (2010) and Bhandari (2010) among others)3. This definition too, however, suffers from the same drawback of relying solely on one criterion. As also pointed out by Eisenhauer (2008), Atkinson and Bourguignon (1982), Kolm (1977), Bourguignon and Chakravarty (2003) and Gilbert (2003), being a part of the middle class should be ascertained by a person’s socio-economic attributes holistically. Income is an important aspect but other qualities like level of health, wealth,
education and specialised knowledge are also significant factors for constituting a class. Technically speaking too, most of the definitions suffer from serious drawbacks. For instance, the ‘quintile approach’ can be useful in measuring or comparing income or expenditure growth but cannot be used as a method to estimate the middle class as the size cannot shrink or expand and by definition would permenantly remain at 60 percent. Any denomination of the median income should also be used with caution in low income countries like Pakistan. Taking 75 per cent of the median income might lead to the inclusion of people below the poverty line in countries with very low income levels. In the above-stated definitions and resulting estimates there are issues with the lower bounds
set for inclusion in the middle class. While some of the definitions (like Definition Three and Five) set the limit too high4, resulting in a very small middle class or in the absence of a middle class altogether, there are other definitions that set the limit too low, like those that set the lower
bound at $2 per person per day. Does the middle class begin where poverty ends? Ravallion (2010: 446) supports, “the premise that middle class living standards begin when poverty ends”.
This paper, however, supports the argument forwarded by Horrigan and Haugen (1988:5) when they posit, “to ensure that the lower endpoint of the middle class represents an income
significantly above the poverty line”. The middle class should, hence, include only those households that do not face the risk of experiencing poverty at all, and are not just those who
are outside the the realm of poverty at a particular time.
http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-71.pdf
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
Here's an excerpt from Dr. Ishrat Husain's comp of India-Pak economy:
Pakistan is one of the few developing countries that has achieved an average annual
growth rate of over 5 percent over the six decades. Consequently, the incidence of poverty has
declined from 40 percent to 24 percent. The salient features of Pakistan’s economic history are
summarized below:
• A country with 30 million people in 1947 that couldn’t feed itself and had to import all its
food requirements is not only able to fulfill the domestic needs of 170 million people at a
much higher per capita consumption level, but also exports wheat and rice .
• An average Pakistani earned about $ 1050 in 2009 compared to less than $ 100 in 1947.
In US current dollar terms the per capita income has expanded almost ten fold.
• Agriculture production has risen five times with cotton attaining a level of more than 12
million bales compared to 1 million bales in 1947. Pakistan has emerged as one of the
leading world exporter of textiles.
• Manufacturing production index is well over 13,000 with the base of 100 in 1947. Steel,
cement, automobiles, sugar, fertilizer, cloth and vegetable ghee, industrial chemicals,
refined petroleum and a variety of other products are manufactured for the domestic
market and in many cases for the world market too.
• Per capita electricity generation has reached 10,160 kwh compared to 100 in 1947.
Pakistan’s vast irrigation network of large storage reservoirs and dams, barrages, link
canals constructed during the last five decades has enabled the country to double the area
under cultivation to 22 million hectares. Tubewell irrigation provides almost one third of
additional water to supplement canal irrigation.
• The road and highway network in Pakistan spans 250,000 km-more than five times the
length inherited in 1947. Modern motorways and super highways and four lane national
highways link the entire country along with secondary and tertiary roads.
• Natural gas was discovered in the country in the 1950s and 32 billion cubic feet of
natural gas is generated, transmitted and distributed for industrial, commercial and
domestic consumption accounting for 50 percent of the country’s energy needs.
• Private consumption standards have kept pace with the rise in income. There are 52 road
vehicles for 1000 persons relative to only one vehicle for the same number of population
in 1947. Phone connections have reached 100 million from almost scratch. TV sets which
were non-existent adorn 62 out of every 1,000 houses.
http://www.iba.edu.pk/News/speechesarticles_drishrat/Indo_Pak_economies_compared.pdf
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
Online News: Half of Pakistan’s population may live in cities by 2030
ISLAMABAD: More than half of Pakistan’s population is estimated to be living in cities by the year 2030. Both natural increase and net migration are major contributory factors to urban growth.
These views were expressed by participants of a seminar on “Business and the Middle Class in Pakistan organized by the Planning Commission of Pakistan which was held here on Wednesday.
The seminar included speakers and discussants from some of the largest companies and businesses in Pakistan, coming together to discuss the importance of the evolving middle class in Pakistan.
The participants said that current urban growth rate was approximately 3.5 per cent as compare to 2 per cent nationally. More rural people are migrating to urban centers for higher-paying jobs. Upward social mobility creating and expanding the middle class.
Given the low median age, Pakistan’s middle class is unusually young as compared to developed economies, meaning that younger population will have the most disposable incomes.The expanding middle class consumers will aim for first world aspirations and greater focus will be on branded retail products. The middle class has been growing in number as well as in importance all over the world, which is why businesses strategize targeting this specific class.
The participants said that the middle class is conceptually defined as the class between the rich and the poor; however its boundaries are usually made arbitrarily. It is also important to note the multi-dimensionality of an adequate definition; a person belonging to the middle class needs to be evaluated not only on a monetary basis, other aspects of quality of life and available opportunities need to be encapsulated to arrive at a well rounded definition.
They said that studies show a positive relationship between the higher share of income for the middle class and economic growth as well as political aspects like democracy. Other studies indicate the emergence of entrepreneurs from the middle class. It is the middle class that was the driver of success in India and China.
They said that the biggest opportunity of the rising middle class, at present and future will be for companies selling mass-consumer goods and services. As incomes rise spending patterns will incorporate discretionary and small luxury items while proportionate expenditure on food, clothing and other necessities tend to shrink.
While the basics may decline as a share of consumption, in absolute terms they will continue to grow. Housing, healthcare and educational expenses are expected to register a greater share of the wallet – this spending will be driven by the strong link between education and higher salaries, as well as growing number of options for both higher and vocational education.
http://www.onlinenews.com.pk/details.php?id=186520
Rising per capita income and a growing, young population spending more time online and at Western movies are helping build a mass market in Pakistan, according to Businessweek:
One way to take a city’s economic pulse is to check out where locals shop. In Karachi, Pakistan, shoppers are flocking to Port Grand, which opened in May. Built as a promenade by the historic harbor for almost $23 million, the center caters to Pakistanis eager to indulge themselves. This city of 20 million has seen more than 1,500 deaths from political and sectarian violence from January to August. At Port Grand the only hint of the turmoil is the presence of security details and surveillance cameras. “The whole world is going through a new security environment,” says Shahid Firoz, 61, Port Grand’s developer. “We have to be very conscious of security just as any other significant facility anywhere in the world needs to be.”
Young people stroll the promenade eating burgers and fries and browsing through 60 stores and stalls that sell everything from high fashion to silver bracelets to ice cream. Ornate benches dot a landscaped area around a 150-year-old banyan tree. “Port Grand is something fresh for the city, very aesthetically pleasing and unique,” says Yasmine Ibrahim, a 25-year-old Lebanese American who is helping set up a student affairs office at a new university in Karachi.
One-third of Pakistan’s 170 million people are under the age of 15, which means the leisure business will continue to grow, says Naveed Vakil, head of research at AKD Securities. Per capita income has grown to $1,254 a year in June from $1,073 three years ago.
The appetite for things American is strong despite the rise in tensions between the two allies. Hardee’s opened its first Karachi outlet in September: In the first few days customers waited for hours. It plans to open 10 more restaurants in Pakistan in the next two and a half years, says franchisee Imran Ahmed Khan. U.S. movies are attracting crowds to the recently opened Atrium Cinemas, which would not be out of place in suburban Chicago. Current features include The Adventures of Tintin and the latest Twilight Saga installment. Mission: Impossible—Ghost Protocol is coming soon. Operator Nadeem Mandviwalla says the cinema industry in Pakistan is growing 30 percent a year.
Exposure to Western lifestyles through cable television and the Internet is raising demand for these goods and services. Pakistan has 20 million Internet users, compared with 133,900 a decade ago, while 25 foreign channels, such as CNN (TWX) and BBC World News, are now available. And for many Pakistanis, reruns of the U.S. sitcom Everybody Loves Raymond are a regular treat.
The bottom line: With per capita income rising quickly, Pakistan is developing a mass market eager for Western goods.
http://www.businessweek.com/magazine/pakistans-consumers-flex-their-newfound-muscle-12012011.html
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/
Here's an Express Tribune report tiled "Nokia Sees Pakistan Becoming a High-Growth Market":
KARACHI: Foreign delegates and local entrepreneurs discussed challenges facing businesses, sought greater industry-academia collaboration and highlighted business models to succeed in an emerging market at the 12th Management Association of Pakistan (MAP) Convention on Leadership Challenges for Business Success here on Wednesday.
Emerging markets will account for 80% of the world’s growth the next decade and Pakistan will be an important emerging market in future, Senior Vice President of Nokia India, Middle East and Africa Shivakumar said in a speech titled “Winning in emerging markets”.
Speaking to a conference packed with businessmen, Shivakumar – who is also the senior vice president of All India Management Association (AIMA) – said growth in developed economies has slowed down dramatically and the world is now looking at emerging markets, which account for 42% of population and 13% of income.
Pakistan is listed in four categories of emerging markets including Dow Jones 35 and emerging and growth level economies (EAGLES), he said. “Pakistan will be an important high-growth emerging market.”
In order to succeed in an emerging economy, he said, it is important to understand its segments and consumers. The emerging market consumers – most of whom live under $2 a day – are value-sensitive and not price-sensitive, he said and added entrepreneurs have to work on their business models to accommodate that segment of consumers who believe in the doctrine of “pay more, get more” and “pay less, get less”.
Sharing his experiences, he said, there are three things that he applied and succeeded. “Always put the country’s interest first, keep fixed costs very low and turn as many cost variables as possible,” he said.
“Never cut the features and offer your product at half the price. Consumers don’t want an incomplete product.”
Speaking to the participants earlier on, event’s chief guest and State Bank of Pakistan Governor Yaseen Anwar said it is time for all business leaders and managers to take the lead. Leaders must be more aware of the challenges facing the country – inflation, unemployment and power crisis.
There are no shortcuts to sustained economic development, Anwar said. “We need to develop the right strategies and then translate these strategies into action.”
AIMA President Rajiv Vastupal also addressed the event, saying IMF has lowered growth projection for both 2011 and 2012. “Today’s corporate leaders must focus on innovation to counter the global economic challenges,” he said. He elaborated the successful example of Apple’s iPad, which was launched during recession and earned a great success.
http://tribune.com.pk/story/306766/nokia-sees-pakistan-becoming-a-high-growth-market/
Here's an interesting story in Express Tribune on the rise of the middle class via banking sector:
Hasan Rizvi used public transport to get around the city, and didn’t have a house of his own 10 years ago, while he studied for a Bachelor of Commerce degree at a college affiliated with University of Karachi. Today, he owns two motorcycles, one car and a modest apartment in a middle-class neighbourhood that he rents out to supplement his monthly income.
Rizvi’s upward movement on the social ladder corresponds with the growth in Pakistan’s banking sector that he has been part of since 2004.
In 2000, the combined profit-before-tax of all Pakistani banks was Rs4.5 billion. It reached Rs80.7 billion in 2009 – almost 17-fold increase over nine years!
With more than 8,000 branches of 41 scheduled banks all over the country, the banking sector has witnessed phenomenal growth in the past 10 years: assets of the banking system have been growing at an average of 14.8 per cent since 2001.
The exceptional growth in the banking sector has created thousands of private-sector jobs. The public sector controlled almost 80 per cent of the banking industry in 1997. However, after privatisation of several banks, the figure reduced to 20 per cent in 2004.
Rizvi said that to buy his apartment he took out a loan from his bank in 2008 at a reduced interest rate. Generally, the mark-up on home loans for ordinary customers is around 20 per cent. But the interest rate Rizvi is paying on his home loan as a bank employee is just five per cent.
He said he now lets out the apartment for Rs14,000 a month. The monthly instalment he pays to his bank is Rs.13,000, which means that without paying a single rupee out of his pocket, Rizvi not only bought his own apartment, but also makes an additional Rs1,000 every month – thanks to the fringe benefits of his bank job.
Similarly, car financing is also cheap for bank employees. While ordinary customers pay a 16-18 per cent mark-up on car loans, a bank employee gets it at a nominal rate of about five per cent.
“Every banker out there drives his own car and lives in, or rents out, his own flat. Banks pay well. And they give you facilities no other employer can afford to give its employees,” Rizvi said.
High profits for commercial banks over the past decade have resulted in the expansion of the banking sector, creating more jobs and promising better compensation packages for middle-class young men and women with tertiary education.
There are many reasons for the expansion in the banking sector in Pakistan. Most importantly, privatisation of nationalised banks spurred growth and increased overall banking standards in the 2000s. The share of private-sector banks in aggregate assets of the banking industry surged from 44 per cent in 2000 to over 77 per cent in 2005....
http://tribune.com.pk/story/311896/the-resurgence-of-pakistans-middle-class-moving-up-the-social-ladder/
Here's an Express Tribune story speculating about Wallmart entry in Pakistan retail market:
...“We have not made any announcements concerning Pakistan,” said Megan Murphy, Walmart’s international corporate affairs manager in an e-mail. Walmart does not comment on market entry speculation, she added.
Murphy, however, said their priorities are to “concentrate on the markets where we already have operations and look for growth opportunities in markets where customers want to see us and where it makes sense for our long-term growth.”
While Pakistan clearly does not fall into the first category, its regulatory environment has been far more welcoming than neighbouring India, where the government was recently forced by populist protests to roll back reforms that would have allowed Walmart and other foreign retailers in. The Pakistani retail market, currently estimated at $42 billion and rapidly growing, is viewed as an attractive opportunity for foreign investors.
“To say Pakistan is not on Walmart’s opportunity radar screen, I don’t agree,” said Afnan Ahsan, CEO of Engro Foods, one of the largest consumer goods companies and a subsidiary of the Engro Corporation.
Pakistan is a very large and concentrated consumer opportunity. Karachi alone accounts for 40% of any consumer business, Ahsan said. “It is on every big player’s radar screen,” he added.
Despite recent troubles, Pakistan’s $210 billion economy has been mentioned by several global analysts as a potent force to be reckoned with in the future, including Goldman Sachs’ Jim O’Neill, the man famous for creating the term BRICs. Goldman includes Pakistan in its list called the Next Eleven, economies that are expected to become some of the most important sources of global growth.
The growing middle class – one-third of the country’s population of 180 million, of which 55% age below 30 – has already prompted international players like Germany’s Metro Cash and Carry and France’s Carrefour to enter the market.
MCC has recently acquired Makro and now has a network of 10 stores in Karachi, Lahore, Faisalabad and Islamabad. Hyperstar – Carrefour’s joint venture with the UAE’s Majid Al Futtaim Group – has one store each in Karachi and Lahore. It also announced opening of four more stores in Karachi and extend its chain to every metropolitan city in Pakistan.
Besides international wholesalers and retailers, local supermarkets – Imtiaz Supermarket in particular – have also been expanding their businesses.
Government officials also have a more welcoming attitude. “Personally speaking, Walmart will be very viable in Pakistan,” said Liaquat Ali Gohar, head of marketing at the Small and Medium Enterprise Development Authority. He said that the retail sector so far has not been able to meet the overall demand.
While the retail sector has grown significantly over the last few years, most of the development took place in the big cities. Misbah Iqbal, a consumer goods analyst at AKD Securities, pointed out that the rural people – about 55% to 60% of the total – are still underserved.
Pakistan is rapidly urbanising, Iqbal said. Despite many new entrants in the supermarket business, all of them are attracting huge traffic and growing significantly, she said, though largely in the major metropolitan areas.
Poor infrastructure in rural areas prevents investment. Nevertheless, many consumer goods companies are actively marketing to rural consumers, creating awareness about branded products, Iqbal said. Retailers will automatically benefit from that, she added....
http://tribune.com.pk/story/311892/retail-expansion-worlds-largest-chain-silent-on-entering-pakistani-market/
The State Bank said on Wednesday that the value of e-banking transactions aggregated to Rs12 trillion during the second half of 2010-11, showing an increase of 19 per cent as compared to the first half of the year, according to a Dawn report:
The Payment Systems Half Yearly Review released by the State Bank here noted speedy rise in e-banking transactions in the country.
The volume of such transactions during the period under review reached 125.9 million depicting an increase of 15.5 per cent as compared to the first half of FY11, the review said, adding that the payment system infrastructure has maintained an overall growth trend for the second half of FY11.
However, the review also said that the volume and value of paper-based retail payments during the second half of FY11 were recorded as 177.3 million and Rs84.6 trillion respectively, indicating an increase of 3.5 per cent in the volume of transactions.
“The value of transactions has increased by 13.3 per cent as compared to the first half of FY11. The contribution of paper-based payments in total retail payment transactions was 58.5 per cent in terms of volume and 87.5 per cent in terms of value,” it added.
The review said the Automated Teller Machines (ATMs), which are the largest channel of e-banking transactions, showed 16.5 per cent increase in number of transactions and 19 per cent increase in value raising the share of ATM transactions in total e-banking transactions to 58.8 per cent and 5.4 per cent respectively, the review said.
It said the number of Real-Time Online Branches (RTOB) transactions grew by 14.7 per cent and the value of transactions increased by 18.8 per cent as compared to first half of FY11. “These transactions contributed 31.6 per cent in total volume of e-banking and 93.2 per cent in the value of such transactions respectively,” the review observed.
According to the review, as many as 466 more Automated Teller Machines were added bringing the total number of ATMs to 5,200 while 380 more bank branches were converted into Real Time Online Branches (RTOBs).
“A total of 7,416 bank branches (78 per cent) are now offering real time online banking out of a total of 9,541 branches in the country. The number of plastic cards at 14 million also registered an increase of 6.2 per cent during the period under review as compared to the numbers during the preceding half year,” the Review added.
The overall increasing trend in payment system infrastructure was also witnessed in the large value payments settled through Pakistan Real-time Inter-bank Settlement Mechanism (PRISM), which increased by 14.8 per cent in volume and 21.9 per cent in terms of value as compared to the first half of FY11.
http://www.dawn.com/2011/12/29/electronic-payments-reach-rs12tr.html
Here's an Express Tribune story on social mobility and a middle class suburb in Karachi:
The decision by Abdul Manan Shaikh’s family to move to Gulshan-e-Hadeed 10 years ago marked the beginning of his upward social mobility. Hailing from Larkana, where he learned the English alphabet at a government-run ‘taat’ school in sixth grade at an annual fee of less than Rs50, Shaikh has since attended three elite business schools of Karachi in the past decade.
Although he now drives a company car to a textile mill located in SITE every day, and attends evening classes at a business school in Clifton on weekends, he does not want to move out of Gulshan-e-Hadeed. In fact, his family bought a modest house there just three years ago.
So what makes Shaikh stay in a place as far removed from Karachi’s city centre as Gulshan-e-Hadeed?
Affordability
Real estate in Gulshan-e-Hadeed is affordable. A 120-squareyard independent housing unit with a lounge, drawing room and two bedrooms with attached bathrooms costs somewhere around Rs2.5 million. Similarly, 240- and 500-squareyard housing units are available for around Rs5 million and Rs6.5 million, respectively.
The average monthly rent for a 120-squareyard, single-unit house in Gulshan-e-Hadeed is between Rs4,000 and Rs6,000. Compared with other middle-class areas of Karachi, that rate is cheap.
Moreover, an improvement in the city’s inner highways means that it takes almost the same time from these areas to go to the centre of the city. Gulshan-e-Hadeed may be a remote place in terms of kilometres, but an easy drive through National Highway and Sharae-Faisal makes it a choice neighbourhood for mid-level corporate managers, like Shaikh, who have company cars and receive subsidised fuel.
Peaceful and suburban
Although Gulshan-e-Hadeed is 48 kilometres from SITE, and 42 kilometres from Clifton, it offers what many localities closer to the centre of the city do not: better security.
Gulshan-e-Hadeed connects to the main city through National Highway and Shahrah-e-Faisal. Even during the worst law and order situations, one can expect these two roads to stay clear of trouble. Moreover, the ethnic and religious harmony within Gulshan-e-Hadeed, thanks to a heterogeneous population mix, has kept the crime rate under control for years.
Infrastructure
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All streets in Gulshan-e-Hadeed are paved and have ample space to park vehicles. There are no slums. Public transport is easily available, as buses leave for Karachi’s financial district every two to three minutes for the most part of the day.
Other than several degree colleges offering a decent standard of education, Gulshan-e-Hadeed is dotted with both government and private schools, including a cadet college and a branch of Beaconhouse School System in the adjoining Steel Town.
“A school, mosque and market are always at a walking distance from your home no matter which street of Gulshan-e-Hadeed you live on,” a local real estate dealer told The Express Tribune. “How many localities in Karachi offer that kind of closeness to these places?”
The real estate agent’s question is rhetorical. The fact that is that many of Pakistan’s largest cities now have similar suburban areas, which are in many ways similar to the Levittowns that sprouted around the United States after the World War II. Pakistan’s middle class has grown rapidly, and this is where many of them increasingly live.
Indeed, many of the villages that used to surround cities in Punjab’s GT Road belt have since turned into suburbs, no longer truly rural and offering an affordable option of the good life to many of the Pakistan’s up-and-comers. Indeed, these areas are acquiring a character of their own...
http://tribune.com.pk/story/318504/the-rise-of-the-pakistani-middle-class-how-new-suburbs-made-the-good-life-affordable/
Here are some excerpts from an interesting Friday Times Op Ed on Pakistan's undocumented (informal & illegal) economy:
The economy is in the doldrums, but that is not news any more. What is more interesting, and more difficult to investigate, is what is happening in the world beyond the survey operator and tax collector's ambit. Papers published by the Social Policy Development Center (SPDC) in Karachi and the State Bank place the informal economy in a range of 20 to 30 percent of GDP. But most of this undocumented economy does not include strictly illegal, or shall we say criminal, practice.
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that militant groups are running their own businesses (during the TNSM's movement in Swat, emerald mines were reputed to be in the hands of Maulana Fazlullah's men); that militants and terrorists are even coming up with new ways to generate funds (kidnapping for ransom being a case in point).
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According to data from the UN, Afghanistan produced about 90% of the global output of opium in 2007. This fell to just over 62% by 2010 (with Myanmar accounting for most of the rest). Three quarters of the poppy production was in the provinces of Helmand and Kandahar, which border Pakistan. Domestic consumption of opium in Afghanistan is next to nil. Also, the country does not legally import the chemicals needed to process opium into heroin, although these are imported in Pakistan for legitimate uses. Almost 7,000 metric tons of opium, both raw and processed, in the form of morphine and heroin, leaves Afghanistan and finds its way to the lucrative markets of Western Europe.
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Given that the global trade in opiates is estimated to have a value of some $70 billion, even a small proportion of the proceeds can make life comfortable for a lot of people in Pakistan.
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With close to 80 suicide attacks in 2010, about 400 rocket attacks, and about 350 bomb blasts in addition to target killings, use of improvised explosive devices etc, its not hard to deduce that there is a significant trade in arms and ammunition in Pakistan. The ISAF container scam case led to some interesting findings. There were the obvious conclusions - including that the abuse of the Afghan Transit Trade facility is massive. More tellingly, the Supreme Court's suo moto case found that 7,922 ISAF containers simply went missing. In addition to the packed meals, the alcohol and the camp supplies stamped with ISAF logos that appear in border markets, the possibility of pilferage of more dangerous items cannot be ruled out.
The smuggling masked by the Afghan Transit Trade is another story altogether, and according to some stakeholders extends to the illegal trade in timber, antiquities and gemstones stemming from that unfortunate nation. Being a neighbor to a land-locked, war-ravaged country with no semblance of law and order was never going to be easy. But Pakistan's governance failures have made a bad situation worse.
There's much more to Pakistan's economy than meets the eye, and many of the more interesting activities are practically impossible to investigate unless someone is prepared to take considerable personal risks. The few pieces of the jigsaw puzzle that are available from public data and information paint a tantalizing picture. If the downslide of the formal economy continues, things could get even more interesting.
http://www.thefridaytimes.com/beta2/tft/article.php?issue=20120113&page=7
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
Here's an Express Tribune story on housing trends in Lahore, Pakistan:
...as the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.
“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.
“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”
Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.
“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”
Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.
Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.
Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.
Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.
http://tribune.com.pk/story/328177/the-rise-of-pakistans-middle-class-as-crime-rises-property-developers-beef-up-security/
Here's a 2011 Dawn Op Ed on cement industry by Pakistan Cement Industry Association leader Tariq Saigol:
While the private sector performed magnificently whenever provided with an enabling environment, the response of the present government remains mired in confusion and inertia. Installed capacity was a paltry nine million tons in 1990, much of it being grossly inefficient as it was based on the outmoded wet process technology. As demand rose, the industry responded by launching a massive expansion programme. Over time, the installed capacity rose to nearly 44 million tons, a magnificent feat by any standards and a credit to the entrepreneurial spirit of the private sector.
However a number of adverse developments from 2007 onwards have brought the GDP growth to some two per cent. It is being reported by the media that the revised allocation after the latest cut, is a measly Rs180 billion. High inflation combined with slump in real estate and increase in the cost of production due to weakness of the dollar, resulting in a spike in coal prices, electricity and freight rates and accounting for 70 per cent of the cost, has adversely affected consumption while production cost soars, retarding construction activity in the private sector.
The current economic environment including low public spending has had disastrous consequences for the cement sector.
Local sales during the first half of the current fiscal year have witnessed an eight per cent year on year drop to around 10.1 million tons. Simultaneously, exports fell from 5.6 million tons to 4.6 million tons. The bad news does not end here. On top of low volumes, the average cement FOB prices fell to $48 per ton during the corresponding period— a level low enough to hardly break even.
Consequently cement sales through the sea route alone declined by about one third. Cement sales to India were also hard hit on account of non renewal of BIS certification (a quality control licence). Burdened with high energy and freight costs as well, the manufactures are desperate for some government support.
But no support is forthcoming. One would expect the government’s economic planners to appreciate the tremendous odds against which the industry is battling. If care of the cement industry is in short supply, then some thought may be given to the enormous exposure of the banks which have provided financing to the tune of $1.5 billion to the sector during 2003-2008.
http://www.dawn.com/2011/03/14/opportunities-missed.html
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