Like other auto makers around the world, Tata Motors is also contending with declining demand, both for its bread-and-butter commercial vehicles in India and its luxury brands, Jaguar and Land Rover. The company reported its first quarterly net loss in seven years in the October-December 2008 quarter, and saw its debt rating cut by ratings firms. More immediately, Tata Motors faces a June deadline to repay $2 billion in loans related to its Jaguar-Land Rover acquisition from Ford Motor Co. last year, according to the Wall Street Journal.
The automobile industry in India—the tenth largest in the world with an annual output of 2 million units last year—is expected to become one of the major global automotive industries in the future. A number of domestic companies produce automobiles in India and the growing presence of multinational investment, too, has led to an increase in overall growth. Following the economic reforms of 1991 the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and reduced restrictions. The monthly sales of passenger cars in India exceed 100,000 units, according to a related Wikipedia entry.
In comparison with the rest of the world, the Chinese market for automobiles appears to be relatively robust. Monthly auto sales in China surpassed those in the U.S. for the first time in January, but automakers and industry watchers say the news may tell us more about the troubles in the U.S. than about China's growing car market, says a report published in San Francisco Chronicle.
Data released in February by the China Association of Automobile Manufacturers shows 735,000 new cars were sold in China last month, down 14.4 percent from the record of 860,000 set in January 2008. U.S. sales, meanwhile, fell 37 percent to 656,976 vehicles — a 26-year low.
In Pakistan, Engineering Development Board (EDB) is attempting to increase the GDP contribution of the automotive sector to 5.6%, boost car production capacity to half a million units as well as attract an investment of US$ 3 billion and reach an auto export target of US$ 650 million.
In addition to the growing defense industry, auto industry can become a driving force for the much needed manufacturing industrial base in Pakistan to create significant employment opportunities for its large population. Last year, the auto sector contributed US$ 3.6 billion, only about 2% of the GDP, to the national economy, and employed about 192,000 people.
Pakistan's auto parts manufacturing is a billion US dollars a year industry. Sixty percent of its output goes to the motor cycle industry, 22% is for cars, and the rest is consumed by trucks, buses & tractors.
After a significant growth spurt in 2002-2006, the auto sector is feeling the pain of economic slow-down in Pakistan. The industry is continuing in a slump which began in the previous financial year and according to Business Monitor International's recently published Pakistan Automotives Report, the industry’s performance this year will get worse. In FY08, which ended in June 2008, total vehicle sales fell by 6.2%. The downturn carried over into FY09, with sales for the first half of the year (July to December 2008) down by 48% year-on-year to 52,927 units for cars and light commercial vehicles (LCVs), while compared with November, sales for December were down 55%. These results support BMI’s forecast for a drop in sales of cars and LCVs to around 112,000 units in FY09. BMI expects the total auto market in Pakistan to contract by over 32%, with the worst damage done in the car and bus segments, which is forecast to fall by 45% each. Pakistan’s Economic Co-ordination Committee (ECC) is to consider a tax cut of 10% for domestic car manufacturers, which has been proposed by the Ministry of Industries and Production. However, the plan is not without its opposition, as the Federal Board of Revenue is reportedly against supporting individual sectors as this would prompt other industries to seek help. Moreover, with just five carmakers producing locally, the automotive industry is relatively small. On the other hand, the industry is also largely self-sufficient as the majority of its output is sold within Pakistan; this reduces the country’s reliance on imports and raises issues such as the protection of local jobs and the industry’s contribution to the overall economy.
Pakistan Tractor Sales. Source: Trading Economics |
Among the automakers, Indus Motors and Pakistan Suzuki reported positive earnings: The two leading car assemblers PSMC and INDUS posted positive earnings for 2008. PSMC reported operating losses of Rs 399 million. However, increase in other income by 77 percent offset their losses helping PSMC post positive earnings of Rs 26 million, according to Daily Times. Honda posted a loss after tax of Rs 190 million for the period July-December 2008 after a decline in net sales by 5 percent and a massive surge in operating expenses over the corresponding period last year.
The poor state of the industry is reflected in BMI’s Business Environment Rating for the automotive industry in Asia Pacific, where Pakistan is in last place on a score of 42.4 out of a possible 100. The market is held back by low production growth potential and an average rating for sales growth. However, as a signatory to the Trade Related Intellectual Property Rights Agreement (TRIPS) under the auspices of the World Trade Organization (WTO), the country’s regulatory environment scores well. A number of free trade agreements also contribute to this criterion, although forming FTAs with non-Asian countries would improve this rating further. Despite low marks for bureaucracy and corruption, the market does score well for its long-term economic risk and policy continuity.
With just a handful of manufacturers, Pakistan’s competitive landscape remains narrow. Japanese car manufacturers control most of the country’s passenger car production and sales. Figures for FY08 show that Suzuki-brand models represented 62% of total Pakistani passenger car production and 51.7% of sales. Toyota is gaining, however, with Corolla becoming the country’s best-selling model in the first half of FY09.
According to Daily Times, as many as 60,000 workers and staffers in Pakistan's auto sector have lost their jobs from July, 2008 to January, 2009 due to falling demand for cars. More jobs cuts are feared with continuing weakness in demand.
Given strong underlying growth dynamics in South Asia, the negative feedback effects of the global financial crisis are expected to be temporary. A relatively rapid rebound is expected in 2010, with a projected revival of GDP growth to 7.2 per cent. The long term prospects for the auto industry in the continent of Asia appear to be quite favorable. As the current financial crisis ebbs, there will be significant pent-up demand for automobiles in Asia, including India, Pakistan and China, that will drive the growth in auto industry.
Related Links:
Pakistan Automobiles Report 2009
Auto Pakistan Expo 2009
Automobile Technology in Pakistan
A Review of Global Road Accident Fatalities
Pakistan Automotive Report
China Surpasses US in Auto Sales
Auto Industry in India
India's Global Shopping Spree
70 comments:
I would like to point out one potential impact of the Nano (if it is a success), that will do a great deal of damage if the government doesnt step in. That is its impact on the livelihoods of the autowallah's and taxi driver's across India. A typical Indian family will use the Nano not for day to day trips to the office but for the trips out to a relative or dinner. This service used to be provided by the taxis and autos, but if people have a cheap car then they will use the car instead.
The government should actually somehow subsidize the Nano for the auto/taxi drivers, so that they have a chance of remaining competitive.
Vikram,
It seems to me that the transportation needs in India will continue overwhelm the available means.
Besides, Nano factories should also create many better paying new jobs in the manufacturing sector.
My concern is mainly with the potential negative impact on the environment as both Chinese and Indians start buying a large number of cars. Already, I have seen the impact in Beijing and Shanghai where cars have replaced bicycles.
Nice Article Riaz
i wish Nano can reach out to masses of people from
developing world
Tata will be a great success for india
and it aims to sell atleast 1 million cars from 2010-2011
i wish ,pakistan allows joint ventures with tata ,and it can really help pakistan local automobile industry or vendors to grow
The way to look at the relative sizes of industrial sector in different nations is by its contribution to GDP. Here are some figures:
India 19.3%, Pakistan 26%, EU 27.3%, US 20.4%, Germany 29%, UK 25.6%, Brazil 38%,...
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composit ion
Political turmoil in Pakistan, in tandem with the global economic downturn, have delivered a double
whammy to car sales and production in the country, reports BMI research.
Sales of new vehicles in Pakistan underwent a decline of 34% y-o-y in fiscal year 2008/09 (July-end
June), with total sales registered at 163,479, compared to 247,160 in fiscal year 2007/08. This was largely
in line with the forecast that we made last quarter (just under 167,000 for the fiscal year).
Although data from the Pakistan Automotive Manufacturers Association (PAMA) for July 2009 shows a
rise in sales of passenger cars and light commercial vehicles of 33% y-o-y (to a total of 9,896 units), data
for the month was reportedly distorted by a production discrepancy related to the discontinuation of a
model. Nonetheless, it appears that auto sales in the country have bottomed out, looking at data on a
month-on-month view over the last few months. Indeed, the July figures show the fifth consecutive m-om
rise in sales. Compared to June, vehicle sales rose by 9%.
More from BMI auto report:
Two key factors appear to be supporting
sales: the removal of a 5% Federal Excise Duty on cars of 850cc and above, and a reduction in prices by
Pak Suzuki on cars falling into the sub-850cc bracket. However, the supportive effect of both these
factors is temporary, and is likely to dissipate as we move later into what is still, at the moment, a very
fresh fiscal year. Moreover, economic growth remains very sluggish – the latest forecast by our Country
Risk team is that Pakistan’s economy will grow by just 2.5% in real terms in FY2009/10. More to the
point, we forecast that private consumption growth is likely to decelerate this fiscal year, to 2.5%, from a
relatively buoyant 5.2% in FY2008/09. With that in mind, we remain cautious about the trajectory of new
vehicle sales in Pakistan in FY2009/10 and currently predict a rise of 2.4% y-o-y to 167,424 units.
Production of new vehicles in FY2008/09 was down 33% y-o-y, as output of CBUs registered 165,158,
compared to 247,036 in FY2007/08. This cliff-fall figure is reflective of the performance of domestic
sales, as Pakistan’s auto production is largely geared toward serving the home market, with exports
accounting for only a small proportion of output. We would expect production in FY2009/10 to lag
domestic sales, with a fall of 6.1%, to a total annual production volume of just above 155,000 CBUs. This
is due to CBU inventories being built up during FY2008/09. Although production and domestic sales
volumes were very close in numbers last fiscal year, unsold locally produced cars accumulated, as while
exports of Pakistan-produced cars are low, while the demand for new imported models – largely to cater
for the luxury end of the market – is moderately high.
Nice Post. I Like it.
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Here's a sad story about Tata Nano that reminds me of Ford Pinto of yester years:
Then there was smoke. And then there was fire.
Minutes after the software engineer's wife and five-year-old son clambered out of the back seat, smoke from the engine, located in the Nano's rear, erupted into flames that engulfed the tiny car.
His ordeal showed just the latest problem with the low-cost Nano - raising fresh questions about safety and quality as top Indian carmaker Tata Motors sets its sights on global expansion and aims to ramp up production of the Nano with a new factory next month.
"My wife now doesn't want to buy any car," Sawant said by phone from his home in northern Mumbai on Thursday. "She doesn't even want to go for a Mercedes."
Starting around US$2,500, the Nano has been heralded as the world's cheapest car, and was meant to usher in a safety revolution, which would get millions of families off dangerous motorbikes and into the cool comfort of an affordable car.
Tata Motors, which also owns Jaguar and Land Rover, plans to start selling versions of the Nano in Europe in 2011, and later, in America.
Tata Motors spokesman Debasis Ray said the company is investigating the incident but believes it to be a one-off problem rather than the result of faulty design or manufacture.
"We believe it was a one-off stray incident," he said. "It did catch fire. We're trying to figure out what may have caused it."
This is not the first time there have been customer complaints about the Nano, which has been feted with rave reviews and awards since its launch a year ago.
Last fall, three customers in India complained that their Nanos started smoking.
Tata Motors attributed that to a faulty electrical switch and said it had changed suppliers and done additional tests to rule out a recall or redesign.
Ray said Thursday that the incidents are not related.
The switch problem, he said, "has been comprehensively addressed."
"Safety has never been an issue with Tata cars," he added. "They are one of the safest cars on Indian roads."
But some say the Nano's smoke and fire problems are symptomatic of pervasive quality control issues at India's number three carmaker, which must be addressed before Tata can successfully take its brand global - especially in the wake of Toyota's massive recalls of more than six million vehicles around the world, which have left car buyers jittery about safety standards.
"As of today, is Tata good enough to take on the world? I would say no," said Deepesh Rathore, an auto analyst at IHS Global Insight in New Delhi. "On quality standards, Tata barely makes the cut."
There are fewer than 30,000 Nanos on the road today, which means on a percentage basis the problem rate is fairly high, he said.
"The Nano is a wonderful product, but these incidents really tarnish the image of the car as well as the company," Rathore said. "This is the time for Tata to have a deep look at quality."
He said the recent addition of Carl-Peter Forster, former head of General Motors in Europe, as group chief executive is a step in the right direction.
"They've got a guy running the show now who knows how the industry should work," he said. "How soon will the effects be seen across the Tata product range? Well, that will take time."
Meanwhile, Uruvashi Shah, manager of Ashapura Travel World, which runs a high-end taxi service, said she has gotten rid of all the Tata models in her fleet because they needed too much repair work.
She prefers Toyota.
"Corolla is quite good. There is a comfortable feel but the mechanical side is good too," she said.
Pakistan leads the world in the number cng vehicles and cng stations. Now, a report says that Landi Renzo Pakistan will export CNG Kits:
In Pakistan, Italian CNG kits manufacturer Landi Renzo, which commenced its assembling operations there in 2007, is planning expansion of production to enhance deliveries to growing export markets. Currently annual production exceeds 45,000 units. Corrado Storchi, External Relations Manager for Landi Renzo, confirmed the reports to NGV Global News, adding that “South-West Asia and South America are very important export countries for us”, with shipments also being made to China, Far Eastern and European countries.
Storchi confirmed that Landi Renzo has over 90 percent market share of CNG kits in Pakistan. It supplies to Indus Motors for Toyota and Daihatsu cars and Pak Suzuki Motor Company for its range of cars and vans, and other dealers and wholesalers.
Storchi also confirmed a report by The News that Landi Renzo intends to gradually increase the percentage of locally made components, currently at 20% but with the possibility of building to 100% as full quality and safety requirements are satisfied. A testing laboratory has been set up in Karachi, where all components are tested prior to assembly.
In the report, Landi Renzo Pakistan Chief Executive Officer Alberto Barbiery apparently warned that the safety and quality of the CNG kits, manufactured in Pakistan or imported, should be only installed by registered and certified dealers. Landi Renzo will soon launch an awareness campaign about safety and precautions regarding CNG kits.
Barbiery also encouraged the take-up of natural gas in the currently largely unexploited heavy duty vehicle market. “If heavy vehicles convert to CNG, the country would save precious foreign exchange being spent on diesel imports and environmental pollution would be reduced,” he said.
Excerpts from KPMG reports on Pakistan's auto sector:
Total auto sales in Pakistan in 1H-FY2010 increased by 16.37% to 61,021 units from ... The auto industry was operating at 37% of its installed capacity of 273 thousand units per annum in FY2009 and it is expected that 20% YoY growth ... units in FY2009. Market players Honda Atlas, Pak Suzuki, Indus Motors, Mitsubishi, Dewan ...
Here is an excerpt from a recent Wall Street Journal artcle on CNG:
Of the 11.4 million natural-gas vehicles currently in use world-wide, most can be found in the developing world, according the International Association for Natural Gas Vehicles, an industry body. Pakistan led with way with 2.3 million as of December 2009, while Iran, Argentina, Brazil and India together accounted for six million more. In China, the number has more than doubled since 2007 to around half a million.
There is a network of 1500 CNG stations in Pakistan to fuel the 2.3 million CNG vehicles.
Not only is Pakistan self-sufficient in building cng kits for domestic use, it is also exporting these kits.
Here's a Tribuneindia report from 2008 titled "India lags behind Pak" in gas infrastructure:
New Delhi, May 5
India is way behind Pakistan in terms of its gas pipeline network, with the neighbouring country’s network stretching around 56,400 km against its 10,500 km, connecting only 20 cities compared to Pakistan’s 1,050, industry body Assocham said.
Pakistan’s pipeline density, at present is 1044 km/mmscmd (million metric standard cubic meter per day) per day compared to 116 km/mmscmd of India, Assocham said in its paper on gas sector ‘A Comparison between India and Pakistan’.
The neighbouring country has created a 31,000 km distribution network to serve its domestic and commercial consumers in large locations, against the 11,000 km network that have so far been build in India to serve the needs of its consumers in limited pockets, the report said.
While Pakistan has nearly 1,600 CNG stations, India has 380. The gas throughput in Pakistan is 38 mmscmd per day as against 8.5 mmscmd gas in India.
The number of gas customers and vehicles running on CNG in Pakistan is about 19 lakh and 15.6 lakh respectively, while in India the number is 5.50 lakh and 4.60 lakh.
“The gas availability in Pakistan is undoubtedly quite large, compared to India but given the imports of gas and even its domestic availability in India, its pipeline network is extremely poor and the main reason attributed for the low and limited pipeline network in India is because this sector has been thoroughly regulated which has now been opened for competition,” Assocham president Venugopal Dhoot said.
The paper added that since the pipeline network in India does not reach out to most of the potential demand centres, a number of industrial projects, which would ideally run on gas, have to depend on much more costlier and more polluting alternative fuels.
As food prices and farm incomes rise, Pakistan is seeing record tractor sales in rural areas, according to The Nation newspaper:
LAHORE - Millat Tractors Limited set a new record of highest ever sales of 41,500 tractors in the calendar year 2010, improving upon its previous year sales of 37,537 tractors.
Out of these 41500 tractors, a record 5000 tractors have been produced and sold in the month of Dec, 2010.
This has been outcome of Company’s commitment to provide maximum number of tractors to increase farm productivity and accelerate the pace of farm mechanization in the country, according to a Press release.
Millat Tractors has further taken steps to increase productivity and quality of tractors in order to provide timely delivery to its customer in future.
Here's another report from Dawn on increasing rural sales of bikes:
Motorcycle and car sales enjoy over 50 per cent and 40-45 per cent market share in rural areas as country’s 60-65 per population lives in the rural areas.
After witnessing decline in August, many car and bike makers had registered recovery in sales in September.
Total car sales in July-September 2010 (including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009.
In the category of 1,300cc and above, Honda Civic and City sales in September 2010 rose to 548 and 832 units as compared to
492 and 688 units in August 2010. However, sale of these cars had plunged in August 2010 as compared to July 2010.
In July-September 2010, sales of Civic and City had risen to 1,558 and 2,274 units from 1,308 and 1,955 units in the same period of 2009.
Toyota Corolla sales slightly went up to 3,070 units in September 2010 as compared to 2,901 units in August 2010 while its July 2010 sales were 4,400 units.Overall Toyota sales in July-September 2010 increased to 10,371 units as compared to 8,951 units. Suzuki Swift sales rose to 252 units in September 2010 as compared to 226 units in August 2010.
In 1,000cc segment, a total of 1,106 units of Suzuki Cultus were sold in September 2010 as compared to 1,050 units in August 2010 while Alto sales slightly fell to 1,047 in September 2010 from 1,141 units in August 2010. The overall sales of Cultus and Alto in July-September swelled to 2,860 and 2,819 units from 2,852 and 2,365 units in the corresponding period of 2009...
Pak Suzuki Motors (PSMC) to gain from Punjab govt's yellow cab scheme, according to The News:
KARACHI: Pak Suzuki Motor Company (PSMC) stands to gain from the Yellow Cab Scheme announced by the government of Punjab in its budget for 2011/12, analysts said.
The provincial government has announced that a grant of Rs4.50 billion has been allocated for the scheme, which will partly finance 20,000 vehicles.
Contrary to the yellow cab scheme, the Nawaz Sharif government introduced in 1992/93, this scheme relies on locally-made vehicles.
‘Mehran’ and ‘Bolan’, the two most popular makes of Pak Suzuki, have been short-listed for the scheme.
The analysts said the ultimate beneficiary will be the PSMC, which has been suffering from appreciating yen, relaxation in import policy and production constraints since a tsunami-hit Japan.
Gross profit margin of the company has squeezed to mere two percent in 2010, which was around four percent a year back, they added.
Details of the scheme are yet to be unveiled, but it is expected that the vehicles would be 50 percent financed by the government of Punjab, while the buyer would have to pay the rest.
There are concerns of possible lack of transparency in financing.
Besides, there is a lack of clarity about the time period over which the scheme would be spread.
Furqan Punjani, an analyst at the Topline Research, said that there are possibilities that out of 20,000 only 12,000 to 15,000 units will go in the said scheme and the rest might fall victim to corruption.
An analyst at Arif Habib Research said that it is believed that PSMC’s car volumes would spike by nine percent and 16 percent in CY11E and CY12F.
Consequently, the earning pershare (EPS) of the company would improve by 75 percent and 116 percent in CY11E and CY12F, respectively, he said.
http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=53955&Cat=3&dt=6/23/2011
India's transport system is the most dangerous in the world costing hundreds of thousands of innocent lives each year, but it's hunger that takes the biggest toll with over 7000 dying of hunger every day.
Here's a story from the Guardian titled "Indian roads officially the most dangerous in the world":
It is an unenviable statistic but India's chaotic roads are now officially the most dangerous place to drive in the world.
Last year road accidents claimed more than 130,000 lives – overtaking China, which has seen fatalities drop to fewer than 90,000, and prompting a government review into traffic safety that until now has been best summed up by local drivers as "good horns, good brakes, good luck".
Ministers are considering a range of new measures, such as making airbags and anti-braking system mandatory in all cars. Trucks may also be fitted with speed breakers in a bid to bring down fatalities.
However, many experts say that new laws will have little effect in India, where seat belts are rarely worn and where no one can anticipate with any certainty the behaviour of the average road user.
Nor can most road users guess what type of vehicle they will face – Delhi alone has 48 different "modes of transport" including cows, elephants and camels as well as cycle-rickshaws and SUVs.
Rohit Baluja of Delhi's Institute of Road Traffic Education says "the real issue is not car design but road design. About 85% of all deaths on the roads are pedestrians and cyclists not drivers. We do not design traffic management systems to separate different streams of traffic. In America this began in 1932".
http://www.guardian.co.uk/world/2008/oct/10/india
Pakistani car sales rose 61% in July, according to The Nation:
LAHORE - The new fiscal year has kicked-off on a positive note for the car manufacturers. As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), country’s auto sales surged by a significant 61 per cent to 17,563 units in July 2011 against 10,942 units in the same period of last year. On monthly basis, the volumetric sales improved by 134 per cent compared to 7,517 units sold in June 2011.
This significant improvement is primarily attributable to deferred sales from June to July as buyers opted to take advantage of 2-3 percent cut in prices on account of reduction in sales tax by 1 percent and other measures announced in Federal Budget FY12
Company wise breakup shows that, PSMC led the increase with 116 percent rise to 11,997 units compared to mere 4,503 seen in same period last year, while sales for INDU declined by 9 percent to 4,551 units compared to 4,999 units in July 2010.
An auto expert Furqan Punjani observes that July sales are not an actual depiction of the sector’s fundamental and they are expected to ease down going forward. Furthermore, amid absence of aggressive consumer financing due to higher markup rates and nominal growth in agriculture economy the volumetric sales for FY12 will only show an improvement of 5-10 percent.
Despite improved volumetric sales, he maintained ‘Market-weight’ stance on the sector on account of strained margins amid continuous appreciation of Japanese yen and high regulatory risk.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/12-Aug-2011/Car-sales-jump-by-61pc-to-17563-units-in-July
Here's a news report on India's slowing car sales:
Passenger car sales in India grew at a scorching 30% in 2010-11 (April-March). But with rising interest rates on auto loans and a sharp rise in petrol prices, car sales this year have slowed down to a crawl.
In fact passenger car sales crashed 16% in July and 10% in August, according to data by Society of Indian Auto Manufacturers (SIAM). Strike at Maruti Suzuki’s plant in Manesar, which had hit output of one of its most selling cars, the Swift hatchback, has only added to the pressure on overall industry sales.
SIAM has already cut its growth forecast for car sales to 10-12% from earlier 16-18%. Last month it said it would further downgrade growth forecast for the full year.
Research firm Crisil painted a bleak picture earlier in the week, saying it expects "growth in passenger vehicles to decelerate sharply to 2-4% with domestic cars growing at a mere 0-3% as against earlier forecast of a growth of 8-10%."
Crisil said its latest downgrade was prompted by Rs 3 rise in petrol price and 25 basis points hike in interest rates by Reserve Bank of India in September.
Other analysts, like Nikhil Deshpande of Pinc Research and Sejal Jhunjhunwala of Way2Wealth Securities too agree that sentiments are not looking good this year, despite the ongoing festive season.
"Automakers had expected car sales to pickup in the festive season. But there were two conditions -- interest rate hike cycle would peak out and fuel prices wouldn’t rise. But there has been no respite on either front," Deshpande told moneycontrol.com
No wonder then the automakers are going all out to tempt customers now, with more offers this year than last year, in the hope that people will spend impulsively during Dassera-Diwali. Fiat India, for instance, is offering benefits up to Rs 1.30 lakh on its Linea sedan, and Rs 75,000 on the Punto hatchback. Fiat’s offer includes insurance at Rs 1, exchange benefits, gift cheque and free road side assistance for 50 months.
http://www.moneycontrol.com/news/business/discounts-galore-as-passenger-car-sales-hit-speed-bumps_592863.html
Here's a 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
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
German tuck maker MAN setting up manufacturing in Pakistan, according to Express Tribune:
To explore new business avenues in the agricultural sector, German farm minister will arrive in Pakistan in a couple of months while a German auto giant is making huge investment by establishing a manufacturing plant in Pakistan, says German Embassy’s Commercial Section Head Samy Saddi.
Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday, Saddi said German auto giant MAN is putting up a truck and bus manufacturing plant which would not only create a large number of job opportunities but would also send positive signal to investors in other developed countries.
The diplomat said other German companies were also planning to make investment in alternative energy to help Pakistan overcome the energy crisis.
Saddi spoke about measures being taken by the German government to strengthen bilateral economic relations and said the upcoming visit of agricultural minister was very much part of these efforts.
LCCI President Irfan Qaiser Sheikh said continuous fall in bilateral trade called for appropriate sector-specific, result-oriented measures by both sides as the existing trade volume of $1.9 billion did not correspond with the great potential the two countries had.
http://tribune.com.pk/story/340386/german-minister-to-visit-pakistan/
Here's a Japanese report on auto industry in Bangladesh:
TOKYO (Kyodo) -- Local companies in Bangladesh are aggressively diversifying into heavy machinery industries, offering a new window of opportunity for Japanese manufacturers in a promising Asian market with a population of some 160 million.
Topping the list of such firms is the Dhaka-based home electronics maker Walton High-Tech Industries Ltd., which is planning automobile production. The company, which started production in 2006 as the first domestic electronics manufacturer, said it hopes to begin making cars at its new plant next year.
Walton executives say they want to put three or four passenger car models on the market in the near future, possibly by tying up with some Japanese companies and gaining their technical support.
Walton is among the local companies rapidly expanding and growing into major exporters in Bangladesh, where the textile business has been the main industry and imported products have commanded large shares of the domestic market.
While grabbing a large market share in the domestic home appliance market with its low-priced products, Walton has expanded into motorcycle production.
Bangladesh has been seeing annual economic growth of around 6 percent in recent years and its government is seeking development of industrial clusters by setting up special economic zones.
Hoping to beat foreign rivals in establishing a presence in the promising market, a Japanese economic delegation led by the government-backed Japan External Trade Organization, known as JETRO, visited Bangladesh in February. Officials from about 40 Japanese companies including electronics and auto parts makers took part in the program, reflecting Japanese firms' growing interest in the country's cheap labor and economic growth.
Fast Retailing Co., which operates Uniqlo casual clothing stores in Japan and in some major cities abroad, is among the Japanese companies already operating in Bangladesh.
Some of the officials who visited the country cited concerns about lagging infrastructure development, but voiced hope for business potentials arising from gaining a foothold before more companies from around the world come into the market.
The head of JETRO's office in Bangladesh said the number of Japanese companies contacting the trade-promoting organization for information and advice about the Bangladesh market has doubled since around 2006.
Other rapidly growing industries in the country include shipbuilding. Propelled by technologies and business know-how brought by Bangladeshi-born engineers with overseas working experience, Western Marine Shipyard has been winning a series of orders from Europe and elsewhere for small vessels.
http://mdn.mainichi.jp/mdnnews/business/news/20120310p2g00m0bu043000c.html
PSMC to post PAT of Rs413mn (EPS 5.02), up 351% YoY, 237% QoQ, reports Investorguide360.com
The company is expected to announce PAT of Rs413mn (EPS Rs5.02) in 1QCY12, up by a massive 351% YoY. The gigantic rise in the profitability is mainly due to 31%YoY increase in unit sales coupled with 9%YoY increase product prices. Moreover, the other income of the company is also estimated to have helped in boosting up the bottomline of the company as it registers a healthy growth of 49%YoY to Rs196mn in 1QCY12. In the light of historical payout trend, we do not expect any cash dividend from the company with the results.
Company’s bottomline is also expected to jump 237% on QoQ basis due to 23%QoQ primarily due to increase in company’s sales volumes. As the customers prefer to book vehicles with the new year registration, therefore, during the last quarter company’s unit sales remained dull. As such, the other income of the company is also expected to decline (income comes from the customers’ advances).
At current levels, the company scrip is trading at a PE of 5.5x and 6.1x based on CY12 and CY13 earnings estimates, respectively. We recommend ‘Buy’ on the scrip with our revised Jun-12 target price of Rs92/share.
http://investorguide360.com/lucky-cement-3qe-gm-at-3-yr-high-pak-suzuki-motors-pat-up-237-qoq-investcap/
Here is a News story on Pakistan's textile-based exports:
Leading economists and entrepreneurs from other sectors at a discussion program titled ‘What is wrong with Pakistan’s economy?’, regretted the textile-specific approach of Pakistan’s economic planners that had led to the exclusion of other more lucrative sectors like engineering, information technology, mining and fuel, and agricultural products.
“Pakistan should look beyond textiles to ensure sustained exports and economic growth,” they claimed “as textiles, with only a 5.6 percent share in the total global trade, limit the opportunities for broad based growth. And textiles are also the first casualty in a recession.” Engineering entrepreneur Almas Hyder appealed to the government to have a wider vision and make a paradigm shift in its industrial policy. He said that attention should now be focused on sunrise industries like engineering, chemicals, bio-technology, IT, agriculture-livestock and pharmaceuticals.
Almas said that the government should realign its economy as well as its resource allocation to ensure uninterrupted growth. If these sectors had been given equal importance as that given to textiles, it would have shielded the economy from the ups and downs in a global economy. He said that in a recession, the first expense that people cut down on is of clothing, which is the reason that the textile trade has always come under stress in case of a global or regional recession, as the one being witnessed in Europe these days.
Senior Economist Naveed Anwar Khan pointed out that manufacturing and engineering goods account for 67.50 percent of the total global trade, while mining and fuel account for over 12 percent, agricultural products 10 percent and non-ferrous metals 1.8 percent. Instead of giving attention to around 94 percent of the global trade, Pakistan was only concentrating on the 5.6 percent textile’s trade.
He averred that this preference and attention bestowed on this sector, in the form of energy and power, has not paid any dividends as Pakistan’s share in the total global textile trade remained less than 2 percent. And that even Bangladesh, which had entered the textile sector in the early 1990s, had higher textile exports than Pakistan. He summed up that while the textile sector should be facilitated by the state, other sectors should also be given equal importance.
“Value addition in engineering goods is much higher than the value addition in textiles” stated Iftikhar Ali Malik, former president Federation of Pakistan Chambers of Commerce and Industry. He elaborated that auto parts made from plastic, steel or even cardboard fetched a much higher price than the cost of their raw materials. While 70 percent of the input cost was cotton in yarn manufacturing, in a car filter or a plastic or steel auto part, the cost of the card board, plastic or steel was10-20 percent and the value addition was high.
He regretted the fact that the engineering goods manufacturers were not facilitated by the state in the same way as textiles were by them. The added that the engineering industry has a long gestation period and is more entitled to concessional credit than textiles.
http://www.thenews.com.pk/Todays-News-3-114084-Preferential-treatment-of-textiles-decried
Here's a report on rising auto & tractor sales in Pakistan:
As per the latest available data of auto sales, recently released by the Pakistan Automotive Manufacturers Association (PAMA), car and LCV sales witnessed a 15.1% YoY growth in 11MFY12. Segment-wise break-up reveals that the economy segment (less than 1,000cc) led the growth with sales increasing by 24.9% YoY during the period under review. This was followed by the 1,000-1,300cc segment, which witnessed sales growth of 19.2% YoY to 26,734 units. The high-end segment (1300cc+) meanwhile remained the sector’s laggard and sales grew by a meager 2.1% YoY to 58,458 units. This lackluster performance can mainly be attributed to the suspension of production at Honda Atlas Car’s (HCAR) plant from Dec-11 to Mar-12, and single-digit sales growth of Corolla. Sales of LCV’s and 4×4’s registered a healthy 27.4% YoY growth in 11MFY12, mainly due to a jump in Bolan (PSMC), Ravi (PSMC) and Hilux (INDU) sales.
Pakistan Suzuki Motor Company Limited (PSMC) witnessed a 31% YoY improvement in sales in 11MFY12 to 100,805 units. PSMC has benefitted from the Punjab Government’s Yellow Cab Scheme, which has resulted in sales of Mehran and Bolan to increase by 39% YoY and 54% YoY respectively. Sales of Swift, Cultus and Alto meanwhile, increased by 67% YoY, 23% YoY and 15% YoY respectively in 11MFY12. Total units sold by the company in May-12, increased by 20% MoM to 10,608 units. On a YoY basis, this figure is 34% higher than May-11’s sales of 7,920 units.
Sales of Indus Motor Company Limited (INDU) decreased by 7% MoM in May-12 to 4,846 units. The primary reason behind this decline is the discontinuation of Coure, with only 63 units being sold during the month. During 11MFY12, the company sold a total of 48,907 units, which is 6% higher on a YoY basis. Hilux has remained at the forefront (with respect to sales growth), and its sales are higher by 56% YoY to 3,625 units in 11MFY12. Sales of Corolla during 11MFY12 increased by 9% YoY to 41,720 units.
Honda Atlas Cars Pakistan Limited (HCAR) reported a 53% MoM increase in total units sold to 1,150 units. The company’s endeavors to clear the backlog of orders of its City model resulted in sales of the model to jump by 533% MoM to 1,050 units. In 11MFY12 however, the company was only able to sell 9,901 units (33% lower YoY) owing suspension of production due to floods affecting its primary parts supplier in Thailand last year.
Al-Ghazi Tractors Limited (AGTL) registered a healthy 20% MoM sales growth to 2,743 units in May-12, helping the segment attain an overall performance improvement of 10% MoM to 6,913 units. On a YoY basis however, the sector recorded 33% lower sales owing to the imposition of GST last year, which resulted in demand for the product drying and production being suspended as a consequence. Millat Tractors Limited meanwhile, reported a 4% MoM improvement in sales to 4,170 units. On a YoY basis, sales of AGTL and MTL declined by 42% and 28% respectively during 11MFY12. This was mainly on account of the suspension of production mentioned above..
http://investorguide360.com/11mfy12-auto-sales-register-15-yoy-growth-lies-ahead-budget-ahl-research/
Here's a Daily Times report on motorcycle industry in Pakistan:
Pakistan motorcycle industry sector is vibrant, flourishing and exemplary, as it achieved 95 percent localisation through latest technology transfer, billions of rupees investment and hundreds of thousands of skilled workers.
The sector progressed tremendously so far due to consistent policy of the government, while it gave protection to local investors to expand its businesses locally as well as globally.
The sector is apparently standing on its feet as it is not only able to meet the local demand but also capable of exporting various models to various countries, resulting in becoming a strong foreign exchange earning arm of the country.
Motorcycle production in Pakistan has increased in past 12 years. It has increased from a mere 100,000 units at the start of the century to around 2.0 million this fiscal. No other industrial sector has shown high and sustained growth during the past one decade. In fact Pakistan has emerged as global leader in production of 70cc motorcycles. He said that now even new 125cc bikes are also being exported.
However the proposed abrupt change in policy has badly shaken the confidence of investors and local manufacturers, following Board of Investment (BoI) ill-conceived initiatives to incentivise a Japanese bike maker to re-enter the Pakistani market at zero rate.
The plan to allow a new investor to import all motorcycle parts at zero duty will be negation of the previous policies and will encourage all original equipment manufacturers (OEMs) to bypass vendors and parts made locally, a representative of OEM said. The U-turn of policies will be worrisome and against the interest of the country and future industrialisation, he added.
Pakistan needs foreign investment! However, the country should not be so desperate in attracting investment by catering to unit specific investment proposals so as to destroy its most vibrant sectors where existing domestic and foreign are already investing. Such a case is that of the motorcycle industry.
The projection of this bike maker as a new investor conveniently ignores the fact that the same brand was being produced and marketed for decades in Pakistan and was forced to wind up on failure to compete with either other brands especially the Chinese bikes. Industry experts are dismayed at the constant pursuance to grant special status to this OEM on its re-launch and even more so by insisting that a supposed, and highly misleading, $150 million investment figure will be made.
The local industry, based on the projection of increase in demand, has already embarked on capacity enhancement plans and by the end of current fiscal year will have invested around $100 million out of which a size able amount is already invested while plans for rest are already submitted.
The proposal given to the government reflects that the OEM’s investment is hardly a couple of million dollars in the initial years. The remainder is merely a commitment to reinvest the tax so saved in the form of exemptions granted, when all other motorcycle manufacturers have readily agreed to pay high duty on the import of parts that are not being produced in Pakistan.
Another surprising aspect in this regard is the government wants to allow the Japanese manufacturer to import parts from anywhere but most probably from China. The claim that the new investment would bring new technology is an eyewash as the existing players have all introduced latest Euro 2 engines into the market without any special incentive.
Current players are even willing to import hybrid and EFI based engine without special incentives.
http://www.dailytimes.com.pk/default.asp?page=2012\07\17\story_17-7-2012_pg5_12
Here's Nigerian Observer on tractor imports from Pakistan:
MAIDUGURI -The Borno State Government has planed to import 1,000 heavy duty tractors from Pakistan to harness the agricultural potential of the state.
Gov. Kashim Shettima who made this known while speaking with newsmen in Maiduguri.
Shettima explained that an agreement had already been signed by the Pakistani government and the Borno state government for the supply of the tractors.
“We are just coming back from a working visit to three countries - Pakistan, Turkey and India.
“The visit was aimed at exploring avenues for partnership with these countries on agricultural development.”
Shettima said the manufacturers of the tractors had agreed to supply them in a few months time.
“We are trying to see how we can tap from the experience of these countries to empower our people.
“Our farmers are still using hoes and cutlasses when other countries are busy using advanced technology in farming.”
Shettima said the tractors would be distributed to farmers across the state to boost agricultural production.
He said the objective was to enhance food production and fight poverty among the people.
“We have realised that the best way to tackle the current insurgency in the state is to develop agriculture and provide jobs for our employed youths.
“We believe that once we empower the youths the problem of the insurgency will be tackled.”
Shettima said the government would also collaborate with the Chad Basin Development Authority (CBDA)
toward cultivating the 70,000 hectare South Chad Irrigation Scheme (SCIS) in the state.
“We are going to partner with the CBDA toward cultivating the 70,000 hectares of land at the SCIS.
“We are going to supply fertiliser, and other implements to farmers to encourage them.”
http://nigerianobservernews.com/16102012/news/Other%20News/othernews14.html
Here's an ET report on the opening a new assembly plant for trucks and light commercial vehicles in Karachi:
Prime Minister Raja Pervez Ashraf said on Saturday that it is the government’s policy to promote the private sector so that it can play a leading role in the development and prosperity of the country.
Addressing a function after formally inaugurating Al-Haj FAW Motors’ automobile assembly plant on the National Highway in the vicinity of Bin Qasim Port, the premier said the private sector is the key to economic prosperity and development of a country, and this government fully realises this.
“It is a great pleasure for me to see that our industrial group has started this very important automobile facility in partnership with China,” he remarked, and hoped that this project would prove a milestone for the automobile industry in Pakistan.
Sindh Governor Dr Ishratul Ebad Khan, Federal Minister for Defence Syed Naveed Qamar, the Chinese consul general in Karachi and a group of other provincial ministers were also present.
With the launch of its assembly line, Al-Haj FAW Motors said that the company is all set to significantly increase its market share in Pakistan in both trucks and pick-ups.
“After making a respectable impression in the trucks market of Pakistan, our company is ready to gain a share in the pick-up market also,” Al-Haj FAW Motors Chief Executive Hilal Khan Afridi told The Express Tribune on the launch day of its only plant in Karachi.
The company said that it had completed construction of its assembly line near Karachi with an investment of Rs1 billion. The plant will be capable of producing trucks, prime movers, light commercial vehicles and passenger cars.
The company has already been assembling two 1,000cc vehicles at the plant since June 2012. Afridi said that his company has sold a few hundred pick-ups assembled at this plant over the last few months.
Al-Haj FAW Motors – a joint venture between the largest and oldest Chinese vehicle maker First Automobile Works (FAW) Motors and Al-Haj Motors, an established commercial importer of heavy vehicles in Pakistan – has been importing completely built units (CBU) from China for the last few years.
With its assembly plant in action, the company is now targeting to launch new vehicles and passenger cars of 1,000-1,500cc engine capacity within the next few years. It has been assembling trucks since October 2011 and plans to produce 6,000 trucks and 12,000 light vehicles every year.
However, the company’s ambitions may be tempered by the economics of demand and supply. The truck market has slowed over the last few years in Pakistan, a representative of Hinopak Motors – the largest truck maker in Pakistan – said.
Industry officials say that the decline in overall economic activity and continuous disruptions in Nato supplies to Afghanistan have resulted in significantly low sales of trucks in Pakistan.
The installed capacity of Hinopak Motors is 5,000 trucks, but it produced only 1,237 trucks in fiscal 2011-12. The historical high figure of truck production in the country’s history is 4,993, achieved in fiscal year 2007-08, according to the Pakistan Automotive Manufacturers Association (PAMA).
Al-Haj FAW Motors claim that they are now number two in the list of truck producers in Pakistan, assembling around 700 trucks annually in the country. However, their claim is difficult to prove as they are currently not members of PAMA –the representative body of vehicle manufacturers in Pakistan.
There are four truck assemblers currently operational in Pakistan. With the addition of Al-Haj FAW Motors to that group, five truck assemblers will now vie for the Pakistani market – all operating from their bases in the port city of Karachi.
http://tribune.com.pk/story/463957/al-haj-faw-motors-inaugurates-automobile-assembly-line/
"Al-Haj FAW Motors – a joint venture between the largest and oldest Chinese vehicle maker First Automobile Works (FAW) Motors and Al-Haj Motors, an established commercial importer of heavy vehicles in Pakistan – has been importing completely built units (CBU) from China for the last few years.
With its assembly plant in action, the company is now targeting to launch new vehicles and passenger cars of 1,000-1,500cc engine capacity within the next few years. It has been assembling trucks since October 2011 and plans to produce 6,000 trucks and 12,000 light vehicles every year."
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Dr. Haq,
We have been discussing the GOP 2011-12 report elsewhere.
http://www.finance.gov.pk/survey/chapter_12/03-Manufacturing.pdf
Take a look (again) at Table 3.11 on page 46.
On an annualized basis, the operating-level statistics in 2011-12 can be calculated as follows:
Cars: 60% of Installed capacity
LCVs: 45% of Installed capacity
Buses: 10% of Installed capacity
Trucks: 10% ofInstalled capacity
This is MASSIVE overcapacity, even by standards of developed countries.
So would you explain why we are opening even more capacity with this Chinese FAW assembly plant?
The only way this makes sense is if there is a political motive from GOP to "kick-out" the Japanese players (Hino etc) and replace them with Chinese ones (FAW etc).
Is that what this is about? Is it a BFF thing?
Please comment.
Thank you.
Dr. Haq,
This is a good graph you have published of production levels in 2007-2008 (just before the coronation of Malek Zardari):
http://1.bp.blogspot.com/_dj7hueuj-U0/ScVPb_DOr7I/AAAAAAAAA98/chBrKd5TI7Y/s1600-h/auto-volume-2007-08.jpg
2007-2008 Production Levels seen in Riaz Haq's published graph:
Trucks - 4,993
Buses - 1,146
LCV - 21,354
Cars - 164,710
FIVE YEARS LATER, here are the current production levels for 2011-12:
Trucks - 2,200
Buses - 500
LCV - 19,000
Cars - 140,000
Source:
http://oica.net/category/production-statistics/
http://oica.net/wp-content/uploads/hcv-2011-august-2012.pdf
http://oica.net/wp-content/uploads/bus-2011-august-2012.pdf
http://oica.net/wp-content/uploads/lcv-2011-august-2012.pdf
http://oica.net/wp-content/uploads/cars-2011-august-2012.pdf
This is not a normal market up & down (business cycle). This is a COLLAPSE.
What are your views?
Please comment on this phenomenon.
Thank you.
HWJ: "This is not a normal market up & down (business cycle). This is a COLLAPSE."
No, it's not.
There was a collapse but it happened from 2007-8 to 2009-9, and the auto mfg has since rebounded to 158,000 cars and 829,000 motorcycles, according to PAMA. These figures do not include production ad sales by companies like Al-Haj FAW which are not members of PAMA.
It seems you love the world COLLAPSE and readily apply it to anything to do with Pakistan.
http://www.pama.org.pk/statistical-information/historical-information/annual-sales-production
Here's an Automotive World story on Pakistan restricting used car imports:
With local policy aimed at making Pakistan a favourable trading country, rather than a manufacturing one, the significant inflow of used cars into Pakistan has, in the past, constricted the local automotive industry. This may be about to change, however, following a decision by the country’s Economic Coordination Committee (ECC).
The ECC has decided to reduce the age limit of used car imports into Pakistan to three years, from the previous limit of five years, according to The News International. This directive will come into effect on 15 December 2012.
The Economic Coordination Committee is a cabinet-level body responsible for final decisions pertaining to Pakistan’s economy. Set up under the Chairmanship of the country’s Central Finance Minister, the committee comprises ministers in charge of the country’s economic ministries.
This decision has drawn mixed reactions from the various automotive industry bodies in Pakistan. The Pakistan Automotive Manufacturers Association (PAMA) has welcomed this decision, as it favours local vehicle manufacturers. The association’s Chairman, Parvez Ghias, feels that this move is in the greater national interest.
The All Pakistan Motor Dealers Association (APMDA), on the other hand, has called this move unfair and unjust, as it is a setback to the import of used cars. Chairman HM Shahzad says this cut in age limit, along with the depreciation policy in force at present, will push the prices of cars significantly.
Earlier, Daily Times, citing industry experts, said the government lost nearly Pakistani Rs16.5bn (US$171.79m) due to the import of 55,000 vehicles. Around US$371m were reportedly spent on the import of used cars last year. According to Shahzad, though, this move to restrict import of used cars into Pakistan will result in a Pakistani Rs32bn loss to national exchequers
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The report stated that there were more than 100 vehicle assemblers in the country. These companies assemble cars, buses, trucks, two- and three-wheelers and tractors. The number of automotive parts manufacturers, however, totals approximately 1,700.
Japanese companies lead the list of vehicle assemblers in Pakistan, while local companies form the bulk of the country’s parts manufacturers. This is compounded by a weakness in terms of manufacturing systems and technology in the supply industry, which the report attributes to a lack of competition brought on by localisation requirements.
....
http://www.automotiveworld.com/articles/manufacturing-logistics/ecc-move-to-restrict-import-of-used-cars-brings-cheer-to-assemblers-in-pakistan/
Here's a News story on Linde expansion:
KARACHI: Linde Pakistan on Tuesday officially inaugurated its new flagship air separation plant installed at the Sunder Industrial Estate in Lahore, according to a statement.
This new state-of-the-art plant is now the largest air separation plant in Pakistan, capable of producing 150 tons per day of gaseous oxygen, nitrogen and argon for the merchant gases market, it said, adding that the investment value of the plant, along with the related supply chain equipment is more than Rs2 billion.
Yousuf Mirza, chief executive of Linde Pakistan, said: “Our new air separation plant in Lahore represents a milestone for our business as this is Linde’s fourth and largest air separation plant in Pakistan.”
“The additional supply from this plant significantly enhances our ability to respond quickly and effectively to meet the gases requirements of our customers in the North and further reinforces our position as the leading industrial gases player in Pakistan.”
http://www.thenews.com.pk/Todays-News-3-145263-Linde-starts-Pakistans-largest-air-separation-plant
^^RH: "Pakistan's auto parts manufacturing is a billion US dollars a year industry. Sixty percent of its output goes to the motor cycle industry, 22% is for cars, and the rest is consumed by trucks, buses & tractors."
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Dr. Haq,
I just found the figures from SBP for export of Auto Parts:
http://www.sbp.org.pk/ecodata/Export_Receipts_by_Commodity_arch.xls
FY 12 Exports: 24.5 Million%
This is not bad, but we need to do MUCH better to match our neighbor: 43.4 billion$ in FY12:
http://alturl.com/qjkfc
Something to blog about.
Thank you.
Here's a Forbes piece on Millat tractors in Pakistan:
Almost a year after floods devastated Pakistan, swamping 5.8 million acres of farmland and displacing millions of people, Ashaq Malik, who grows cotton, sugarcane and wheat on 865 acres in Punjab province, has reason to feel optimistic. After nearly a third of his land was inundated, today he is seeing a strong harvest. "As soon as the water level fell down, we started reconstructing the houses and working on the fields," says Malik. "Today there is no problem with the crops."
Companies that service the agriculture sector are also thriving in the rebound, none more than Millat Tractors of Lahore, which also manufactures other farm gear. Last year Millat earned 2.3 billion rupees ($29 million) on sales of $263 million, a 40% increase from the previous year. In the first quarter of 2011 profits grew 52% from the same period a year earlier..
To buy his 150,000 shares, Ansari--then a 39-year-old general manager--sold a plot of land, liquidated his retirement funds and borrowed money from his father. "It was a lot of money to me back then," he says. "Today it's like a lottery coming your way. The value has increased many, many fold since then."
Today the public, including Millat's 1,600 employees, owns 42% of the company; management and kin 28%; and banks and other institutions the rest. Employees are prosperous because of stock dividends and their salaries. Most of Millat's employees pay income tax--a sign of affluence in Pakistan--and have their own cars.
..
http://www.forbes.com/global/2011/0912/best-under-a-billion-11-millat-tractors-pakistan-after-flood.html
Here's a Nation report on Japanese investor interest in Pak auto sector:
Huge potential exists between Pakistan and Japan to further strengthen economic ties as Pakistan offers a big market for investment in different sectors and hoped that the Japanese companies would tap that potential.
These remarks were made by Mr.Hiroshi Oe, Ambassador of Japan to Pakistan while addressing business community at Islamabad Chamber of Commerce & Industry (ICCI). He said that major reasons that keep Japanese companies away from investing in Pakistan are security and energy supply.
The Ambassador said that he has been trying to provide Japanese companies with opportunities to clear their perception gap and turn their eyes to the opportunities that Pakistan possesses. He said that Key areas of trade and investment between Pakistan and Japan could be textile, surgical equipments, furniture and automobile industry. He said that many big Japanese auto-industries investors are seriously planning to shift their units to Pakistan from Thailand due to heavy floods.
In his welcome address, Zafar Bakhtawari, President ICCI said that Japan is third biggest and one of the trillion dollar economies of the world and is an important trading partner of Pakistan as well as a major donor. ...
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/islamabad/18-Dec-2012/japanese-auto-industry-investors-shifting-focus-to-pakistan-hiroshi-oe
Here's ET on cost difference in Indian and Pakistani cars:
In support of his claim, he said average cost of a Pakistani car (excluding taxes) is Rs750,000. An average Pakistani car uses 60% of local components and the value of such components is around Rs450,000. This is the amount that the parts makers lost on each imported car, he said.
Most people believe that locally assembled cars are much more expensive than vehicles manufactured in other countries, but this is a wrong perception, the industry representatives said while giving a comparison between prices of Pakistani cars and those manufactured in regional countries.
Pakistani cars are cheaper than most cars manufactured in India, Allawala claimed, adding 1,800cc Toyota Corolla is being sold in India for $16,334 (retail price excluding taxes) while the price of the same car in Pakistan is $13,253, lower by $3,081.
Including taxes, the retail price of Toyota Corolla in India is $26,744 while in Pakistan it is $19,781, a difference of $6,963.
Similarly, the retail price of 1,800cc Honda Civic in India he said was $19,216 (excluding all taxes) while the same car is being sold for $15,214 in Pakistan, a difference of $4,002, he said.
After including all taxes, the difference in prices of Honda Civic in Pakistan and India is $7,403. In India, Civic is being sold for $30,455 while it is available at $23,052 in Pakistan.
The automakers and vendors have underlined the need for revision in the import duty slabs, saying the old duty structures are favouring car importers.
In response to a question, PAMA Director General Abdul Waheed cautioned the consumers, who are opting for imported used cars, saying they were making a wrong decision.
“The buyers of used cars may spend less initially, but eventually they pay much more in terms of expensive maintenance and low resale value compared to a new car,” he said.
http://tribune.com.pk/story/478485/auto-assemblers-say-cannot-sustain-liberal-import-policy/
Pakistan Post Office to provide motorcycles to its staff, reports PakObserver:
Islamabad—Pakistan Post will provide motorcycles to its postmen to ensure timely delivery of mails and important parcels. In this regard a Memorandum of Understating (MoU) has signed between Pakistan Post and Bank of Khyber (BK).
Through the scheme, the employees of the Post have an option to choose each and any brand of motorcycle available in market as per their choice. Director General, Pakistan Post, Syed Ghulam Panjtan Rizvi said that the organization has earlier provided motorcycles to its staff officials to ensure provision of quality services and it will provide more motorcycles to its postmen”, he said.
http://pakobserver.net/detailnews.asp?id=192703
Here's a Nation report on GoP MOU with Twariqi and Posco:
In order to promote and closely collaborate on the development of steel and infrastructure industry in Pakistan, the joint venture of Al-Ittefaq Steel Products Company and POSCO, have signed a memorandum of understanding (MoU) with the government of Pakistan through the Ministry of Investment for the backward and forward integration of Tuwairqi Steel Mills Limited (TSML).
Forward integration would be a further value addition through a Melt Shop, producing world standard steel grades, while backward integration would be to the extent of exploring iron ore locally in Baluchistan, its beneficiation & pelletization as well. The estimated investment on these projects would be around US$900 million.
The MoU was signed by S. Anjum Bashir, Secretary, Ministry of Investment, Prime Minister Secretariat, Government of Pakistan and Zaigham Adil Rizvi, Director (Projects), TSML in the presence of Dr. Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding and Joon Yang Chung, Chairman & CEO, POSCO of South Korea.
As per the MoU, GoP will facilitate TSML in using Pachinkoh Deposit (Nokkundi) and Dilband Deposit (Mastung) for the development of iron ore mine and utilization of such developed iron ore products as raw material for TSML’s DRI Plant and Pellet Plant in its 1st and 3rd phase respectively. GoP has also committed to facilitate TSML with 180 MW of electricity, 3,000 m3 of water per day and natural gas as per the additional quantity required for TSML’s upcoming projects.
Through the MoU, POSCO has also expressed its interest for exploring business opportunities with GoP in engineering, procurement and construction services in the fields of infrastructure and industrial, environmental, electric power and oil & gas facilities.
On this occasion, Dr. Hilal Hussain Al-Tuwairqi, Chairman Al-Tuwairqi Holding said that Al-Tuwairqi’s vision is to participate in the development of national economy, in order to have a long sustaining growth of Pakistan. “We are looking forward to create, for our younger generations, ample job opportunities to build a strong and prosperous nation, on the face of this plant. Al-Tuwairqi sees Pakistan as a land of opportunities and we are very clear in our perception that Pakistan as a country has to grow and we are determined to play an instrumental role in its development,” he remarked.
Mr. Joon Yang Chung, Chairman & CEO, POSCO said that POSCO is serving some of the most quality conscious markets in the world, and with its vision and expertise in the global steel industry spanning over 4 decades, POSCO is committed to transform TSML into a globally renowned company for quality steel making.
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/23-Jan-2013/tuwairqi-posco-to-expand-operations-in-pakistan
Here's a BR story on 217% increase in annual car sales from 2001 to 2011:
The Competition Commission of Pakistan (CCP) has revealed in its research study on automobile sector that car sales in the country increased by 217 percent during 2001-2011.
In the study, the competition assessment of the passenger cars in the automobile sector in Pakistan has been analyzed, which shows that there are currently three major car manufacturers and assemblers in the car industry in Pakistan namely Pak Suzuki Motor Company Limited, Indus Motor Company Limited (Toyota) and Honda Atlas Cars Limited.
Between 2001 and 2011, car sales in Pakistan increased by 217% and the sales of the above mentioned three players mainly contributed towards this growth.
The CCP as part of its on-going programme of sectoral research has released the updated draft study on automobiles sector titled Competition Impact Assessment Studies, to assess the competition vulnerabilities in various sectors.
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Indus Motors, Pak Suzuki Motors and Honda Atlas have increased their sales by almost 322%, 241% and 217% respectively in this time period.
Currently, in the 800 cc and 1000 cc market segment, Pak Suzuki is the sole local manufacturer, assembler while in the 1,300-1,800 cc cars, the state of competition is slightly better with Honda, Suzuki and Toyota competing amongst each other for market share.
Parallel increase and decrease in prices by manufacturers in the last three years from 2010-12 may be a cause of concern from a competition perspective.
In all the three market-segments, the manufacturers and assemblers have excess installed capacities and by not utilizing their excess capacities, the incumbent firms signal their inward looking approach towards the domestic industry.
The study also states that Pakistan automobile industry is inward looking and it tries to protect itself through the use of regulatory instruments.
Pakistan needs to develop the automobile industry instead of protecting it and in this regard, imports have a disciplinary impact on domestic firms.
Currently, the import of cars is allowed only under the Gift, Personal and Baggage Schemes with restriction on allowable age limits.
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Furthermore, on August 31, 2012, the depreciation rules were also changed. If the cumulative effect of both these policy changes is taken into account, a further protection was landed to protect the domestic automobile industry at the expense of consumers.
For enforcing safety and quality standards, the government established Pakistan Standards and Quality Control Authority (PSQCA) in 2000 which has so far developed standards for only 2 wheelers.
Due to the absence of regulation, the domestic automobile manufacturers do not offer safety features, such as anti-lock breaking system (ABS), airbags and lower CO emissions along with quality specifications such as alloy rims, power steering and windows in all their vehicles.
In addition, Pakistan has an aging automobile population which is an increasing burden to the economy due to increased emission levels and a growing safety hazard.
The current dealership and supply chain structure in the industry does not allow for meaningful competition as dealerships are behaving merely as agents of the manufacturing companies and have no real incentive to compete in the market. Due to delay in deliveries, premiums are charged in the secondary markets.
The study recommended that the domestic market should be opened to the import of new cars at reasonable tariffs and reducing protection of local industry to allow foreign competition for the benefit of consumers will bring in new technology and offer more choice to the consumers.....
http://www.brecorder.com/pakistan/business-a-economy/106820-car-sales-increased-by-217-percent-during-2001-2011-ccp-.html
Here's a report of Japanese investment in Pakistan:
TOKYO (Kyodo) -- Yamaha Motor Co. will build a motorcycle plant in Pakistan with the aim of starting production in 2015, in an attempt to expand its business in an untapped emerging market, company President Hiroyuki Yanagi said Friday in an interview with Kyodo News.
Yamaha will first invest 1.3 billion yen in the Pakistani plant before increasing the amount to a total of 10 billion yen by 2020 to raise its production capacity to 400,000 units a year.
"Motorcycles sold now in Pakistan are mainly Chinese-made, but they are very old," Yanagi said. "We'd like to stimulate the market by introducing new models."
Yamaha has set its initial production target at 40,000 units per year.
The motorcycle market in Pakistan is expected to double to 3 million units in 2020 from the 2013 level of 1.5 million, according to the Japanese manufacturer.
http://www.manufacturing.net/news/2013/02/yamaha-building-motorcycle-plant-in-pakistan
Here's a Dawn report on Yamaha investment in Pakistan:
Yamaha Motors will invest US$150 million in auto sector of Pakistan to produce two-wheelers in the country.
This was stated by Sumioks, Senior Executive Officer of Yamaha Motors Pakistan (YMPK) while addressing a press conference in Islamabad on Thursday.
He said that the company would start production of motorcycles with engine capacity of 100cc and above from 2015.
“We have already submitted the application for registration to Securities and Exchange Commission of Pakistan (SECP) and 18 months after getting approved from the SECP, the company would start its production,” Sumioks added.
He said that initially YMPK will produce 40,000 units, which will be gradually increased and after five years the production would reach 400,000 units per year.
He said that the company would have its own factory and office of 50 acres at Bin Qasim Industrial Park Karachi.
“We will have high ration of localisation in manufacturing starting from 25 per cent since the first day of commercial production up to 85 per cent in five years,” he added.
He said the investment will help in boosting economic activity, increasing foreign direct investment, creating job opportunities, developing human resources and broadening the base of parts supplier industry.
He said the investment will create nearly 2000 job opportunities directly and 25,000 indirectly.
He said the motorcycles will be fuel efficient and would have new technology with Euro-II & Euro-III compliance, which were are not yet manufactured in Pakistan.
On the occasion, Feroz Shah, honorary councilor of Board of Investment (BoI) in Japan said that after producing motorcycles, Pakistan would be able to export them.
“The annual production of motorcycle is around 1.8m in Pakistan but almost all domestic models, so export is negligible.
“This plant will bring opportunity not only for the export motorcycles but vendors will also be able to export their parts as well,” he added.
http://dawn.com/2013/02/28/yamaha-to-invest-150m-in-pakistan-auto-sector/
Here's a PakistanToday report on railway carriage restoration in Islamabad coach factory:
Islamabad Carriage Factory has rehabilitated 690 old coaches during the last three years, making them durable for another 20 years, an official said on Tuesday.
The factory which was established with the cooperation of the German government is capable of manufacturing 150 German-designed coaches each year.
"The Carriage Factory rehabilitated 20 coaches of meter gauge for Senegal Railway and manufactured new six slipper coaches for the Pakistan Army," an official told APP.
He said out of 400 dysfunctional coaches, 275 had been rehabilitated whereas work on the rest was already in progress. He added that the restoration of these coaches would help Pakistan Railways achieve progress.
The official said that Pakistan Railways would receive also 202 new coaches against a cost of around Rs 16 billion to improve its operations and to facilitate its passengers.
Out of the 202 coaches of various types, Pakistan Railways received 65 coaches in Completely Built Unit condition which are being utilised with different trains plying across the country.
He said the new coaches had the capacity to run at the speed of 160 km per hour but due to the dilapidated rail track it would run at 120 km.
http://www.pakistantoday.com.pk/2013/03/19/city/islamabad/carriage-factory-rehabilitates-690-coaches/
Here's a Daily Times story on export potential for bullet-proof cars:
Pakistan is likely to enter into lucrative export market of bulletproof cars as the company manufacturing bullet-proof cars has received export inquiries from Indonesia.Managing Director Toyota Central Motors (TCM) Salim Godil on the eve of 8th Toyota Dream Car Contest at TCM said his manufacturing plant in Karachi was already in full production and converting around 25 cars a month. He said, “If Pakistan enters into export arena of bullet-proofing it may prove to be the most lucrative export sector as bullet proofing cost is ranging from Rs 4 million to Rs 12.8 million depending upon the models and shapes of the vehicles”. He said majority of the customers were interested in bullet-proofing of their 4X4 vehicles which usually costs Rs 4 million while cars like Mercedes cost up to Rs 12.8 million. Pakistan has fully capable in converting vehicles into bulletproof as the best and number one bullet-proofing company in the world has given franchise to him.
TCM has also exhibited a locally bulletproof 4X4 vehicle on the occasion, which was also shown to the media. He said at present his manufacturing unit has limited production capacity and if the government formulates a policy to encourage this industry, export of bulletproof cars might fetch huge foreign exchange to the national exchequer.
He said production of locally assembled cars has dropped at a significant level as government has allowed import of secondhand cars. He demanded of the government to impose restrictions on import of secondhand vehicles in order to rescue local automobile industry. He said hybrid cars’ future in Pakistan was yet to be clear as only a limited number of such vehicles have been imported since the government announced to encourage these cars. He said unless and until hybrid cars get economical, they might not become popular in Pakistan.
Taimur Soori of Indus Valley School of Art and chief of the jury announced the names of the winners of the nationwide contest. A number of schools from Karachi and upcountry participated in the contest. The winners of the contest would be sent to Japan for global contest to be held there.
http://www.dailytimes.com.pk/business/13-Mar-2014/pakistan-likely-to-enter-into-export-of-bulletproof-cars
The rampant and unchecked auto industry growth in large population countries like China and India, could end up in a disastrous auto boom, where every one wants to have wheels, no matter what the condition of the roads, or the environmental hazard, it results in. For China and India, even if every third person owns a car there, it would imply at least 40 crore cars in India, and an even higher number in China. It is high time both these nations revisited the wisdom, as well as feasibility of mass transport, rather than the American way, of every family having more than one car. It would certainly be catastrophic for these nations' road infrastructure, lack of proper parking space and overcrowding, in the existing chaotic road conditions.
KARACHI: The electric bike was officially launched in Karachi on Sunday, during a public ceremony that took place at Sea View. The E-bikes were taken for a test drive by people in attendance, as reported by PakWheels.
According to PakWheels, the electric bike commonly known as E-bike, comes with a electric engine and runs on chargeable batteries. Athar Ahmed Khan, the owner of TAZ Trading which imports E-bikes in Pakistan, hopes to replace the 70cc bikes with this eco-friendly alternative.
TAZ Trading has already sold 25 bikes in Faisalabad and is hopeful about the future of these bikes in Pakistan after the launch in Karachi.
The E-bike runs on rechargeable batteries which is an eco-friendly option that can help reduce the high amounts of air and noise pollution in Pakistan. The report also stated that when it comes to speed, the E-bike can do 60 kilometres per hour and close to 70 kilometres per unit of electricity. The Energy Conservation Department of K-electric did an analysis which shows that for every nine kilometres the cost is one rupee. In the duration of one charge, the bike can cover a distance of up to 100 kilometres, which means that the running cost can be reduced by up to 90 per cent.
According to the report, the running cost of regular motorcycles is three thousand rupees per month, whereas the analysis shows that the E-bike can provide the same use for only 300 rupees. The starting price of the E-bike is 89 thousand rupees and since they are under 50cc there is no requirement of registration with the excise and taxation department.
According to The World Health Organisation (WHO), there are 170,000 deaths in Pakistan every year due to pollution, as mentioned by the report. The major cause of pollution in Pakistan are vehicles that have internal combustion engines. Since 48 per cent of the population uses two-wheelers in Pakistan, these vehicles alone contribute significantly to pollution. The E-bike might finally be a solution for this issue and help in permanently reducing pollution in Pakistan.
http://www.dawn.com/news/1143984/environment-friendly-e-bike-comes-to-pakistan
KARACHI: Auto sales outlook remains bright as import of completely knocked down (CKD) kits of locally-produced heavy vehicles, cars and bikes rose by 37, 51 and 23 per cent, respectively, in the first seven months of this fiscal year from the same period last year.
According to the figures of Pakistan Bureau of Statistics (PBS), import of CKD kits for buses, trucks and heavy vehicles increased to $91.4 million in July-Jan 2014-15 from $66.5m in the same period last year.
Import of CKDs of locally-produced cars and bikes swelled to $280m and $51.5m from $185m and $42m, respectively.
However, higher imports of used cars seemed to have not caused any serious blow to the locally-produced cars whose sales went up to 74,497 units in July-Jan 2014-15 as compared to 64,835 units in corresponding period of last year.
Total import of cars, in which the share of used cars is over 90pc, rose by 32.5pc to $148.5m in the period under review compared to $112m in the same period last year.
Declining trend in imports of completely built up (CBU) buses, trucks and other heavy vehicles in the recent months has been giving much support to the sales of locally produced vehicles.
The import of buses, trucks and other heavy vehicles fell by 43pc to $59m in July-Jan period of 2014-15 as compared to $103m in the same period last year.
Sales of locally-produced trucks and bus jumped to 2,027 and 2,326 units from 1,249 and 1,579 units, showed Pakistan Automotive Manufacturers Association (Pama) data.
The rising trend of purchasing costlier heavy bikes (new and used ones) has now slowed down which is evident from 52pc fall in CBU imports of bikes to $987,000 from $2m.
Sales of locally-produced Honda and Suzuki bikes plunged to 355,174 and 12,647 units in July-Jan 2014-15 as compared to 376,003 and 13,852 units in same period last year.
Around 3,563 units of DYL Motorcycles were sold in the first seven months of this fiscal year as compared to 9,592 units in the corresponding period last year. Hero bike sales fell to 6,937 units from 8,823 units.
Published in Dawn February 26th , 2015
http://www.dawn.com/news/1165917
Pew Survey: Car, bike or motorcycle? Depends on where you live
Only 3% of Pakistani households (vs 6% in India) own a car but 43% (vs 47% of Indians) respondents own motorcycles.
If you’ve ever witnessed traffic in Ho Chi Minh City, it’s clear that motorcycles and scooters dominate transportation there. While less common than cars and bicycles, these relatively inexpensive two-wheelers are especially popular in South and Southeast Asia. More than eight-in-ten in Thailand, Vietnam, Indonesia and Malaysia own a scooter. And the next tier of motorcycle owners are all in Asia: China at 60%, India at 47% and Pakistan at 43%.
http://www.pewresearch.org/fact-tank/2015/04/16/car-bike-or-motorcycle-depends-on-where-you-live/
“#Pakistan is all set to become one of the top global markets of #motorcycles" #Yamaha President Hiroyuki Yanagi http://tribune.com.pk/story/876873/investment-yamaha-resumes-assembly-in-pakistan/ … Yamaha Motor Pakistan (Pvt) Ltd, a newly formed company with 100% equity from Yamaha Motor Company, Japan, is expected to produce 30,000 units in year 2015.
The factory has been established with an initial investment of Rs5.3 billion and its current production capacity is 40,000 units per year. It has hired 200 employees in the first phase.
In its initial phase, the company has introduced the “YBR125” model, a 125cc engine motorcycle, with a network of 140 dealerships in different parts of the country. Equipped with new technology, industry analysts say the initial price of YBR125 (Rs129,400) is competitive enough for its rival models in the market. Pak Suzuki’s GS150 is available in Rs128,500 while Atlas Honda’s CG125 and CG125 Deluxe is available in Rs102,900 and Rs124,000, respectively.
Japanese Ambassador to Pakistan Hiroshi Inomata said that the presence of the top leadership of Pakistan in the inauguration ceremony signifies the importance of the investment Yamaha has brought into Pakistan.
“We appreciate the efforts of the government of Pakistan in bringing FDI in the country. We believe this is a win-win situation for both Japan and Pakistan,” Inomata added.
Board of Investment Chairman Dr Miftah Ismail said the middle class of Pakistan was growing at a rapid pace. From the current level of 70 million, it will touch 100 million by 2025, making Pakistan one of the top six countries with the largest middle class in the world, he added.
KARACHI: Car sales are expected to reach their highest level in three years by the end of June 2015, analysts have predicted, stressing that the growth is depended on the sustained success of new models.
With a 24% improvement during the first nine months (Jul-Mar) of fiscal year 2015 (FY15), sales of new and used vehicles picked up in March and are now expected to reach their highest in three years by the end of the current fiscal year.
“Auto sales are expected to grow in double-digits but they are highly dependent on automaker’s new models,” Global Research analyst Asad Raza Nayani told The Express Tribune.
“The sales depend on the new make of Toyota Corolla and Punjab government’s Apna Rozgar Scheme,” Nayani added.
The growth of automobiles in FY15 is expected to touch 165,000 units, 23% compared to last year, he said. But, that will still be low compared to 175,000 units sold in FY12.
Looking at March 2015 sales alone, one can be a little more bullish in the remaining three months (April-June) of FY15.
According to latest figures posted by the Pakistan Automotive Manufacturers Association, local auto sales, including light commercial vehicles, shot up by an impressive 72% to 21,147 units compared to 12,269 units during the same month last year.
According to Sherman Securities, car sales in March are possibly the highest-ever sales posted by the Pakistan auto industry in a single month.
If monthly car sales grow at the same rate as they did in March 2015, which it possibly can, cumulative car sales may touch a six-year high.
However, analysts are not yet entirely optimistic as the auto industry is still facing considerable challenges despite many positives including growing margins of auto companies, declining interest rates and double-digit growth in sales.
“The interests rates have come down considerably in the last four months, but banks are still cautious when it comes to auto financing which is not helping car sales considering its potential,” Nayani added.
Industry officials and analysts estimate that car financing still stands at a mere 30-35% of the total car sales in the country, which is considerably low, compared to other countries.
Banks are reluctant when it comes to car financing due to its bad experiences during the last few years when Non-Performing Loans (NPL) ballooned and considerably hurt the financial health of banks.
The cumulative sales during the first nine months (Jul-Mar) of FY15 stood at 124,000 units, up 24% compared to 100,000 units in the same period of previous year. However, sales growth drops to 19% if car sales under the Punjab taxi scheme that was launched in February 2015 is excluded.
http://tribune.com.pk/story/868357/ongoing-fiscal-year-auto-sales-expected-to-post-3-year-high-analysts-predict/
Car sales in Pakistan to achieve highest growth in three years
* Report reveals that auto e-commerce has grown at a staggering rate and 80% of new car and almost 100% of used car customers begin their car shopping online
The car sales in Pakistan that has witnessed 24% improvement during first three quarters of current fiscal year, are expected to reach the highest rate in next three years.
Auto sales in 2015 are expected to hit 165,000 units, nearly reaching the amount sold in 2012.
A report on ‘Booming Automotive Industry in Emerging Markets’ released by Carmudi has provided a detailed look into state of global automotive sales and how car purchasing behaviours have changed due to drastic increase in internet and mobile penetration, rising GDP and the emergence middle class.
The findings in this report are results of quantitative surveys conducted online with both car buyers and car dealers, and in-depth interviews with industry influencers throughout Pakistan.
The study found that over 58% of car dealers in Pakistan reported an increase in car sales over past twelve months while 41.7% reported a decrease.
According to the Pakistan Automotive Manufacturer’s Association, local auto sales including light commercial vehicles, grew by 72% as compared to same month last year. One reason for the boom is the reduction in interest rates over the course of the year. Car financing still stands at less than 35% of the total car sales in Pakistan.
With regard to shift to online, the report said car dealers are beginning transition to digital space to reach potential buyers as 25% of dealers reported using websites to reach buyers and 16.7% are actively using facebook.
Car dealers have not started using Twitter or Instagram to reach potential consumers.
Although the shift towards online is apparent, car dealers in Pakistan still have relatively high level of offline advertising, with 41.7% of car dealers are still comfortable, focusing their listings on newspapers.
In his comments, All Pakistan Motor Dealers Association (APMDA) Chairman H M Shahzad on Wednesday said if provided a level playing field for all stakeholders, the auto industry could contribute substantially in achieving GDP growth targets. The used car import alone can generate Rs 60 to Rs 70 billion in revenue while providing healthy competition and choice of multiple makes and models at affordable prices to the consumers.
The report further revealed that globally, auto E-commerce has grown at such a staggering rate that now as many as 80% of new car customers and almost 100% of used car customers begin their car shopping experience online.
With Internet and mobile penetration significantly growing in emerging markets, the rate of moving the car shopping experience online is beginning to mirror that of the western markets.
In Pakistan, where economic growth is at a seven-year high, close to 30% of car buyers report using the Internet to conduct research on a car before making a purchase.
Speaking about growth of Pakistan’s automotive industry, Carmudi Pakistan Managing Director Raja Murad Khan said the growth in Pakistan’s automotive industry, the increase in purchase intent and shift of buyers from traditional to online marketplace are all positive indicators and success in Pakistan. Carmudi is one of the leading online vehicle platforms in Pakistan offering private customers, car dealers and other partners a car-trading platform that helps them sell and find cars, motorcycles or commercial vehicles in an easy and effective manner.
http://www.dailytimes.com.pk/national/11-Jun-2015/car-sales-in-pakistan-to-achieve-highest-growth-in-three-years
#Pakistan's #Japan-dominated car market poised 4 new entrants from #Europe, #Korea. #Automobiles -The Economic Times http://economictimes.indiatimes.com/news/international/world-news/pakistans-japanese-dominated-car-market-poised-for-new-entrants/articleshow/48314521.cms …
Pakistan's car market has been dominated by Japanese automakers for decades, but a mini-economic revival looks set to attract new players from Europe and Korea into the mix.
Despite heavy taxation on imported vehicles, enthusiasm for owning a car in Pakistan has remained undented -- thanks in part to underdeveloped public transport in the country's sprawling cities, but also the social status it brings.
Toyota, Suzuki and Honda car assembly plants already work around the clock in Karachi to satisfy demand but still customers have to wait for about 4 months to get delivery
Read more at:
http://economictimes.indiatimes.com/articleshow/48314521.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
#Pakistan's monthly auto sales up 129pc to 15,909 in units in July 2015 https://shar.es/1tTkru via @sharethis
Pakistan local car assemblers have started the new fiscal year with a positive growth of around 129 percent year on year (YoY), according to the data released by Pakistan Automotive Manufacturers Association (PAMA).
During July 2015, the local vehicle sales including LCVs, Vans and Jeeps stood at 15,909 units. It is important to note that in July 2014, sales dropped abnormally due to increase in advance motor vehicle tax and imposition of advance income tax on transfer of motor vehicles in Federal Budget FY15, said Muhammad Tahir Saeed, an analyst at Topline Research.
“Furthermore, anticipated new ‘Corolla’ model and less working hours due to Ramadan were other factors contributing to the historical low sales in last July,” he added.
Overall healthy growth in auto sector is indicative of increase in per capita income, improved farmer economics and overall recovery of the economy. Car financing is also picking up gradually, currently estimated at 30 percent versus 5.0 percent few years ago. To recall, car sales in Pakistan grew at a 5-year (FY11-15) CAGR of 5.3 percent to 179,953 units while volumes surged by 31 percent in FY15 on the back of a new model of Toyota Corolla, Taxi Scheme of Punjab government and an increase in car financing due to 42-year low interest rates in the country.
“We forecast car sales to grow at 13 percent in FY16 to reach at 203,653 units,” the analyst added.
Among individual companies, Pak Suzuki Motors (PSMC) sales increased by 119 percent YoY to 9,464 units in Jul 2015 primarily due to Punjab government’s Taxi Scheme. Volumes declined by three percent on Month-on-Month (MoM) basis due to extended Eid holidays.
Indus Motors Company (IMC) sold around 4,259 units in Jul 2015 compared to 1,106 units in the same month last year. It is pertinent to note that customers were waiting for the new model of Toyota Corolla in the same month last year which was the main reason for such an abnormally low base. On MoM basis, INDU sales decreased by 22 percent from 5,458 units it sold in Jun 2015.
Saeed attributed this decline to less working hours during Ramadan and extended Eid holidays. Just to highlight, Toyota’s new Corolla model is sold out for next 3-4 months, according to the sources in the industry.
HCAR sold 2,181 units in Jul 2015 compared to 1,505 units in the same month last year. On MoM basis, HCAR sales decreased by 12 percent in Jul 2015 from 2,488 units in Jun 2015.
It is important to note that HCAR is consistently posting sales growth despite the new model of Toyota Corolla launched by its competitor Indus Motors. This indicates that overall market size of Pakistan automobile sector is growing.
Millat Tractors (MTL) and Al Ghazi (AGTL) sales have been affected due to the floods.
MTL sold 743 units in July 2015 compared to 1,703 units in the same month last year. On Month-on-Month basis, MTL sales decreased by 71 percent in July 2015 from 2,556 units in June 2015.
AGTL sold 820 units in Jul 2015 compared to 1,056 units in the same month last year. On Month-on-Month basis, AGTL sales decreased by 40 percent in Jul 2015 from 1,375 units in Jun 2015.
#Pakistan Auto industry shows robust growth despite chronic energy, tax, labor woes - Nikkei Asian Review http://s.nikkei.com/1LgFPH0
KARACHI, Pakistan -- This country's auto industry has seen sharp increases in production and sales lately, following a long period of doldrums since their previous peak in 2007. This shows that the sector is well ahead of other industries in taking advantage of the country's burgeoning economic recovery. But Japanese automakers operating here continue to face tough challenges, including chronically unstable power and gas supplies, a shortage of skilled workers, and the negative impact of the tax system on their sales.
In April, Japanese motorcycle manufacturer Yamaha Motor resumed assembling motorcycles in Pakistan for the first time in seven years at its new factory in the Bin Qasim industrial park in the outskirts of Karachi, Pakistan's commercial hub. The new assembly line is turning out Yamaha's new YBR125 sport bike, equipped with higher-end features, such as an electric starter and cast wheels. The YBR125, a top-of-the-line model from Yamaha, costs approximately 129,000 rupees ($1,238), roughly double the average price for the 70cc models that are the most popular in Pakistan. The company expects the model's first year shipments to reach 30,000 units. Yasushi Ito, managing director of Yamaha Motor Pakistan, said the company aims to produce up to 400,000 units annually by 2020.
Hirofumi Nagao, managing director of Pak Suzuki Motor, a Pakistani subsidiary of Japanese automaker Suzuki Motor -- which holds a 54% share of the domestic automobile market -- said: "The Pakistani rupee is holding steady, inflation has calmed down and auto loan rates have dropped to 11% per annum after climbing to around 20%. If loan rates fall below 10%, it will help boost sales significantly."
Output at Pak Suzuki is likely to surpass 130,000 units and reach an all-time high this year, thanks in part to "special demand" from the Punjab state government, which has ordered from Pak Suzuki 50,000 cabs under its taxi scheme to boost employment in the province.
Indus Motor, a joint venture between the Habib group, one of the leading business groups in Pakistan, and Toyota Motor, registered sales of over 57,000 units in fiscal 2014, up 70% from the previous year, thanks to brisk sales of a new Corolla model.
Local car sales jump 72% in Pakistan
KARACHI: Local car sales (including light commercial vehicles, jeeps and vans) jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% compared to 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).
It is important to note that in September 2015, despite fewer working days due to Eidul Azha, local car sales rose 45% year-on-year (YoY) to 18,424 units. They, however, declined by 10% month-on-month (MoM).
The overall healthy growth in the auto sector is indicative of an increase in per capita income, lower interest rates and overall recovery of the economy. Car financing is also picking up gradually (currently estimated at 30% versus 5% a few years ago).
To recall, car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped.
“We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.
Amongst individual companies, Pak Suzuki sales increased by 98% YoY to 33,770 units in 1QFY16 primarily due to the taxi scheme. Volumes declined by 12% MoM.
Indus Motor sold 14,767 units in 1QFY16 compared to 9,862 units in the same quarter last year. In the month of September, Indus Motor’s sales stood at 4,984 units which rose by 6% year on year. On a MoM basis, however, following the trend in Pak Suzuki, Indus sales also decreased by 10%.
Honda Cars sold 6,184 units in 1QFY16 compared to 4,887 units in the same period last year. In September, Honda Cars sold 2,001 units, up by 14% YoY, while remained flat on a MoM basis.
http://tribune.com.pk/story/971872/local-car-sales-jump-72/
Volkswagen's #China Partner Plans to Build VW V2 Hatchback Cars in #Pakistan in 2016 http://bloom.bg/1kYVe3Z via @business
China FAW Group Corp., a Chinese partner of Volkswagen AG, plans to start assembling cars in Pakistan to tap growing demand as measures to curb terrorism boost growth in the South Asian economy.
The company seeks to sell 10,000 vehicles, including vans, cars and pickups, in 2018 after it begins local assembly of the V2 hatchback at the end of this year, Hilal Khan Afridi, chief executive officer of Al-Haj FAW Motors Pvt., said in an interview in Karachi. Al-Haj FAW is the Chinese group’s local venture and began selling imported V2’s in January last year.
FAW will be the first carmaker in a decade to start assembling in Pakistan, where the economy is set to grow at the fastest pace since 2008 as Prime Minister Nawaz Sharif’s government tackles power shortages and terrorism. China’s President Xi Jinping has also pledged to invest $45 billion in the country, boosting the outlook for expansion.
“Initially we had a lot of difficulty to convince them to help us with technical expertise,” said Afridi. “Now that the Chinese market has slowed down they have increased their interest in international markets. It’s a good sign for us.”
Chinese spending on infrastructure may help Karachi-based Ghandhara Nissan Ltd. double sales of Chinese Dongfeng trucks. Al-Haj FAW sold about 3,400 vans and pickups along with 535 locally assembled trucks last year. The company plans to invest 1 billion rupees ($9.5 million) to assemble cars in Pakistan.
“Things are looking up for the auto industry,” says Ahmed Hanif Lakhani, analyst at Karachi-based Arif Habib Ltd. “The economy is growing and consumer demand is rising with low interest rates making leasing more feasible.”
Pakistan’s economy is estimated to expand 5.5 percent in the year to June, according to the Ministry of Finance. Car sales in the nation increased 52 percent to 15,724 units in November from a year earlier, according to the Pakistan Automotive Manufacturers Association.
Although such disruption has yet to come to Pakistan’s auto industry, plenty of auto related services such as classifieds, car brokerage, dealerships and sales are quickly moving online to websites such as Apni Gari, Carmudi, OLX, PakWheels, Sasti Gari and countless others.
Smartphones with internet connectivity are deployed to solve some of the inherent problems related to the conventional auto trade. For example, buying a used car from a dealer meant several visits to find the right car or sifting through hundreds of newspaper classifieds, with limited information and no pictures. With online portals, people can sift through tens of thousands of cars listed for sale across Pakistan, look at pictures and then decide which ones they want to investigate further.
Similarly, sellers faced challenges with the traditional system because they either had to leave their car at the dealer’s for a long period of time or sell it to the dealer instantly at a price lower than the market value. With online services, they can now list their cars and wait until they find a buyer willing to offer the right price.
Plenty of auto related services such as classifieds, car brokerage, dealerships and sales are quickly moving online to websites such as Apni Gari, Carmudi, OLX, PakWheels, Sasti Gari and countless others.
According to World Bank data, there are three million cars on the road in Pakistan today. This number is increasing rapidly as more than 170,000 new cars are sold every year and about 35,000 to 40,000 cars are imported every year as well. Yet these numbers pale in comparison to other developing countries, given that the car ownership per capita in Pakistan is very low.
There is already a trade of about 750,000 used cars taking place every year in Pakistan and more than 50% of this used car inventory has already come online through auto buying/selling portals. Given that trade is moving online, used car dealerships have realised the power of the internet and according to the All Pakistan Motor Dealers Association (APDMA), 4,500 dealerships in Pakistan are putting all of their inventory online on auto sites and other mediums like their own websites, social media, etc.
Not only has the car trade moved online, so has the research part, whereby people decide what to buy. Rather than relying on an auto expert, a relative or a friend, anyone can go online, find out the pros and cons of the different makes and decide what to buy. In a study conducted by Nielsen, Pakistanis spend about three weeks deciding on what their next car will be and the majority of this time is spent online thanks to the abundance of information.
Services such as car financing and maintenance have also moved online. With over 10 banks offering car financing, the internet is an excellent means for people to compare rates and terms and conditions. In terms of maintenance, services such as AutoGenie allow people to book an appointment with an experienced mechanic who will come to their home and make the necessary repairs. Similarly, Insta Lube, a service launched by Total this April, enables people to call a helpline to have their automobile’s oil changed at their home.
While all the above feels like disruption in the traditional way of doing things, in my view we are only just getting started in Pakistan and all the businesses that are disrupting today will be disrupted in turn unless they innovate. In more mature markets like the US, used car sales are even more disrupted and are almost like buying diapers on Amazon.
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So imagine being driven around in driverless cars owned by Uber! Disrupt or be disrupted!
http://aurora.dawn.com/news/1141310
#Pakistan automobile industry booming with sales up 31% year over year - http://www.khaleejtimes.com/business/auto/pakistan-auto-industry-rides-a-high …
Pakistan's auto industry is enjoying a boom. All leading brands such as Suzuki, Toyota and Honda have reported high profits.
The biggest car producer - Suzuki - shot down the industry's production record growth of 31 per cent by upping its own output by 54 per cent in 2015. Suzuki maintained its leadership among the country's Big 3.
The sale of cars manufactured and assembled in Pakistan climbed to 179,953 units in 2015 from 136,888 units in 2014, the Ministry of Industries said.
What is pushing this car buying and production spree? The yen stays weak against the greenback, helping car assemblers to buy imported spare parts for cheap prices. Imported spares account for around 75 per cent of the equipment which goes into assembling cars. Commercial banks' interest rates are now the lowest in 42 years, making car financing cheapest in decade.
New car models are attracting buyers as Pakistanis enjoy a higher purchasing power. "The latest growth in the automobile sector confirms a rising per capita income in Pakistan, improved economics of the auto sector and overall recovery of the economy," said Tahir Saeed, a financial market researcher.
There is big scope of more investment inflows to expand production capacity as competition among car manufacturers increases.
Auto is perhaps the only industry which is doing well at a time when others - ranging from textiles to farm products - are hit hard by stagnating exports. Reduced foreign demand, difficulties related to the international oil price crash and energy shortages are key factors hitting other industries.
"The auto industry must now focus on enlarging output of its cars and export more units to countries in its neighbourhood. It should also tap new markets in Central Asia," Minister for Commerce Khurrm Dastgir said.
Suzuki has unveiled its operational and financial results for 2015. The company is jointly owned by Pakistan Automobile Corporation (Paco) and Suzuki Motor Corporation of Japan (SMC). SMC owns 73 per cent of the joint venture.
Paco said: "In January to September 2015, Suzuki tripled its pre-tax profit to Rs6.33 billion as compared to Rs2.18 billion in the like period of the previous year."
Toyota cars assembled by Indus Motors is moving up the ladder fast. Its report said: "Toyota sold 57,000 car in 2015 - a record in the company's history. We have exceeded production capacity which is usually 54,800 units a year."
#Pakistan steel industry booming with production of 4 million tons to meet rising demand last year
http://tribune.com.pk/story/1053741/local-economy-cpec-to-help-steel-industry/ …
The start of mega development schemes and power projects under the China-Pakistan Economic Corridor (CPEC) will boost the annual demand for steel products by more than 30% to 6 million tons from 4 million tons, said an industry representative.
Pakistan Steel Re-Rolling Mills Association (PSRMA) Vice Chairman Akhtar Saeed said that 475 steel making units (large and small size) were operating in the country and their annual production was around 4 million tons. The large units’ production share was around 1.2 million tons.
Saeed said that more incentives were needed to attract new investment to the steel industry in the country. “The government should come up with a new comprehensive and targeted policy for the important sector of steel and they should have a detailed consultation with PSRMA.
“As a result of the increasing demand, new steel units would be set up. Thus, more job opportunities would be created and the government would get more taxes.
#Motorcycle production in #Pakistan reaches nearly 2m per annum. #Manufacturing http://www.dailytimes.com.pk/business/12-Mar-2016/motorcycle-production-in-pakistan-reaches-nearly-2m-per-annum …
Lack of adequate transportation infrastructure, higher inflation and poor economy made the low-powered vehicles apex priority of Pakistanis as two-wheeler production increased by 10% to 19, 12,944 units in 2015.
"Lower oil prices and improved business environment has provided a much needed boost to motorcycle industry in the outgoing year as production went up significantly due to rising demand," said Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh.
He said that the government has to end the cartelisation of Japanese car and motorcycle assemblers in order to flourish the local industry otherwise the industry would remain on sluggish trajectory in coming decades as well.
He urged the government to abolish imports regime and duty structure for various motorcycles parts, as the duty on imported parts should be the same at 25 % custom duty instead of existing five different structures.
Shaikh said the industry has enough capability to cater to the rising demand of two-wheelers by producing more than 4 million motorcycles per year. However, he added that the government's apathetic attitude towards this dynamic sector has put the industry on a slow track, which has restricted production to only 2 million per annum.
"About half of the parts of motorcycles are being made in Pakistan and half of them are imported from different countries while the local industry is capable to make full production if the government patronises the sector," Sheikh said, adding that the domestic motorcycle industry now completely dominates the local market and not even a single motorcycle has been imported since 2007-08.
Detailed assessment of Pakistan Bureau of Statistics (PBS) latest data reveals that the motorcycle production including locally made Japanese brand and Chinese made imported motorcycles' brand stood at 1,912,944 units in the 2015, registering 10% growth over the same period of last year to 1,743,039 units. In December 2015, total 156,415 motorcycles were produced in the country, registering 17% growth over the production of 134,230 motorcycles in December 2014.
Recently, Atlas Honda Limited has announced an investment of $100 million in the expansion of its motorcycle operations in Pakistan. The first motorcycle produced from the new line will arrive in the market by the beginning of October 2016. The expansion will lead to the generation of 1,800 direct jobs and 5,000 jobs at associated companies and parts manufacturers.
Shaikh told Daily Times that around 4 million of motorcycles are sold illegally in Pakistan due to which the national kitty is being deprived of huge revenue in terms of taxation. "Due to this lack of concern by law enforcement agencies, the national kitty is continuously missing huge revenue in terms of taxes and duties as many local motorcycles assemblers do not show sale of unregistered motorcycles in tax documents," he added.
The motorcycle production in the country is being run by about 100 motorcycle assemblers, including one dozen cottage manufactures, which produce less than 1,000 units.
#Honda to double production capacity at #motorcycle plant in #Pakistan to 1.35 million units | ET Auto http://auto.economictimes.indiatimes.com/news/two-wheelers/motorcycles/honda-to-double-production-capacity-at-motorcycle-plant-in-pakistan/49641931 …
Two wheeler manufacturer Honda has announced plans to double the production capacity of its existing motorcycle plant at Sheikhupura in Pakistan, the company informed in a statement.
From current 6,00,000 units, the company will increase the capacity to 1.2 million units during the next three years to accommodate the expected expansion of the motorcycle market in Pakistan.
Honda is also planning to invest approximately $ 50 million in this three-year capacity expansion, which also will add approximately 1,800 new associates.
After this expansion, Honda's overall annual production capacity will be increased to 1.35 million units.
For this capacity expansion, Honda will first add another production line to the Sheikhupura Plant with the plan to begin production on this new line in October 2016. It then will further expand the overall capacity in stages.
Honda is currently producing motorcycles at two plants - the Karachi plant in the southern part of the country and the Sheikhupura plant in the northeastern part of the country, with annual production capacity of 1,50,000 units and 6,00,000 units, respectively.
The Sheikhupura plant manufactures Honda CD70, CD Dream, Pridor, CG125, CG Dream and Deluxe.
#Pakistan woos Renault-Nissan in push for #automobile #investments http://reut.rs/1XbdcQR via @Reuters
With the economy growing at its fastest pace in eight years, the local currency stable against the dollar and interest rates at their lowest in 42 years, Pakistani officials believe the country is once again on the radar of investors seeking to tap into a market of nearly 200 million people.
Officials are touting a new auto policy, skewed in favor of new entrants, that includes offering foreign car manufacturers lower duties as an incentive to set up plants in Pakistan or revive shuttered ones.
"We expect that there will be one or two foreign investors coming into Pakistan," said Miftah Ismail, chairman of Pakistan's Board of Investment, who has been talking to car makers about setting up assembly plants for the local market.
Ismail told Reuters he had held talks with Japan's Nissan (7201.T) and alliance partner Renault (RENA.PA) for "some time", and last month met Fiat (FCHA.MI) executives in Italy for the first time.
Previous discussions also involved Germany's Volkswagen.
"I hope some people will bite," he said.
A source close to Renault said Pakistan was under consideration for new production investment, along with other potential locations, but added that discussions were at a very early stage. In an e-mailed statement, the company said it had "no news to announce at this time".
Nissan chief spokesman Jonathan Adashek said: "Pakistan is certainly a market of interest for us at present", but added no final decision had been made.
A significant rise in infrastructure projects in the wake of China-Pakistan Economic Corridor (CPEC) is also expected to accelerate demand for iron, steel and cement.
“Imports of both steel scrap and steel products increased by 27.3 per cent and 30.1 per cent, respectively, during July-March FY16,” said the SBP report.
“The imports posted extraordinary growth despite imposition of anti-dumping duties for four months on import of cold-rolled coils and sheets from China and Ukraine,” said the report.
http://www.hellenicshippingnews.com/chinese-imports-capture-steel-market/
The country produces six million metric tons of steel per year, as per a report published by the State Bank of Pakistan (SBP).
This includes raw products, iron ore and scrap flat products, sheets and plates used in the automotive sector, and long products (steel bars, wire rods, rails, and structures used in infrastructure development, and tubes and pipes).
However, per capita steel consumption in Pakistan is very low at 23.5 kilograms against 58.6 kilograms in India, as well as the Asian average of 261.3 kilograms and the global average of 216.9 kilograms, the report added.
https://www.thenews.com.pk/print/112676-Pakistan-produces-6MT-of-steel-annually
#Pakistan #Suzuki to invest $460 million to set up 2nd #automobile manufacturing plant http://www.pakistantoday.com.pk/blog/2016/12/15/pak-suzuki-motors-plans-to-invest-460m-on-second-plant/ …
After the announcement by the Korean and French auto giants to invest in Pakistan’s auto sector, the major incumbent Japanese player Pak Suzuki Motors has unveiled a plan to invest $460 million to set up a second assembly plant in the country.
Pak Suzuki Motors Managing Director Hirofumi Nagao called on the Finance Minister Ishaq Dar on Thursday and discussed his company’s plan of future investment in Pakistan.
The MD said that his company was ready to invest $460 million in Pakistan to set up a second plant. After completion of formalities, the new project would be completed within a period of two years and may start production by the end of 2018, he informed.
The minister asked the Pak Suzuki Motors MD to submit a complete plan with all the details to process the request in accordance with prescribed codal formalities and procedures. He said the government was committed to providing a level playing field to all the prospective investors.
The government has implemented a new auto policy from this fiscal year that provided tax incentives up to three years for the new players in the sector. The incentives were not offered to the existing three Japanese players. However they were provided incentives for modernization and expansion.
Japanese auto giants are demanding the similar policy incentives for making new investment in the country. The government may provide similar incentives to Japanese auto makers if they make investment in setting up new plants, an informed source said.
A week back a big Pakistani conglomerate announced that they planned to assemble autos in the country with the help of Korean auto giant Kia Motors. While a delegation of French company Renault formally informed the Finance minister in Paris that they planned to set up an auto manufacturing plant in Pakistan.
The minister said Pakistan has been projected by JETRO as the second best place for investment in the world. He said that the turnaround of Pakistan’s economy, macroeconomic stability, improvement of energy and security situation in the country has provided a conducive atmosphere to foreign direct investment.
He said that a number of new entrants have shown keen interest to invest in automobile manufacturing sector as well. The meeting was attended by senior officials of the Ministry of Finance and the members of the delegation of Pak-Suzuki.
#Automobile companies eye production in #Pakistan as local market accelerates. #manufacturing #economy https://www.ft.com/content/328ca8ae-f34a-11e6-8758-6876151821a6
When Naeem Khan went into his local automobile dealer in Karachi to replace his five-year-old taxi with a rickshaw, he was not expecting to leave with a brand new air-conditioned car instead.
But after getting a financing package that was cheaper than he expected, Mr Khan became one of an increasing number of Pakistanis who have recently bought vehicles they previously only dreamt of owning.
The national surge in sales has prompted three global carmakers to commit in the past few months to starting production in Pakistan, potentially doubling the number of foreign carmakers in the country.
“The dealer told me it was the right time to get a loan to buy a car,” says Mr Khan. “Five years ago he said he would have told me to buy a second-hand car or a rickshaw, but today I could afford to buy a new car.”
Pakistan’s car market is still small, and dominated by the three Japanese brands that have local manufacturing plants: Toyota, Honda and Suzuki. The trio made all but seven of the country’s domestically manufactured cars in 2015-16, according to the Pakistan Automotive Manufacturers’ Association, though the figures are just a fraction of their total global car sales.
In the past, analysts say, manufacturers have been put off by the country’s relative poverty, as well as political instability and concerns about security.
But in the past few months, France’s Renault and both Hyundai of South Korea and its affiliate Kia have announced they will soon start assemblies in Pakistan, in partnership with local companies. It marks a return for Kia and Hyundai, which left in the previous decade when their local partner suffered financial problems.
The new and returning entrants are being drawn in by several factors.
The first is both the scale of the potential market in a country of 200m people, as well as the rate at which it is already growing. In 2012-13, carmakers sold 118,830 cars in Pakistan. By 2015-16, that had risen 52 per cent to 181,145.
Analysts say the surge has left Toyota, Honda and Suzuki struggling to meet demand with their customers sometimes forced to wait as long as five months before their cars are delivered.
Yong Sohn, general manager at the Hyundai group, says: “Population and growth-wise, Pakistan is very promising.”
Renault declined to talk about its plans while it is in negotiation with local partners.
Part of the reason for the rise in car sales is that Pakistanis are getting richer. Between 2010 and 2015, the amount each person earned per year rose from $4,370 to $5,320 as measured in gross national income per capita at purchasing power parity.
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That trend is expected to continue, partly helped by China’s plans to invest more than $52bn in Pakistan’s infrastructure under the “One Belt, One Road” project. Hyundai forecasts that, consequently, car sales in Pakistan will hit 300,000 a year by 2020.
Just as importantly, say analysts, has been the corresponding fall in interest rates. Since September 2000, the rate at which banks can borrow from the Pakistan central bank has fallen from 13 per cent to 6.25 per cent.
Saleem Memon, who sells finance packages for carsin central Karachi, says: “A few years ago, customers sometimes paid 16 or 17 per cent in annual interest rates. Now, if they are lucky, they can get a good deal for around 11 per cent.”
Another factor drawing carmakers to Pakistan is that security has begun to improve thanks to a two-year campaign by the army. Mr Khan remembers days when he and other taxi driverswere routinely stopped at gunpoint by armed extortionists. “The streets are now safe and people feel comfortable driving till late at night,” he says.
Third, the government has drawn up policies aimed at attracting carmakers, such as cutting the duties applicable to parts shipped from abroad and making it easier to find a site to build a plant.
#Pakistan #Auto Show 2017: Auto part manufacturers gear up for biggest ever exhibition in #Karachi
https://tribune.com.pk/story/1343197/pakistan-auto-show-2017-auto-part-manufacturers-gear-exhibition/
Pakistan’s auto part manufacturers are bullish on future growth of the industry due to growing sales of locally-assembled vehicles and planned investments of new companies.
“A record number of foreign exhibitors are going to participate in the Pakistan Auto Show (PAPS) 2017,” Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Mashood Ali Khan told reporters at a local hotel on Wednesday.
Pakistan, Thailand: PAAPAM expresses concern over inclusion of auto sector in FTA
Paapam officials expect over 65 international exhibitors in PAPS 2017, being held from March 3-5 at the Expo Centre, Karachi. Relative improvement in security, macroeconomic stability and the announcement of the new auto policy in 2016 has created an ideal condition for global car manufacturers to invest in Pakistan.
Current conditions are particularly beneficial for the local auto part making industry, which is expected to provide auto parts to new automobile entrants that need their partnership to produce economical cars in Pakistan.
“New auto players like Kia and Hyundai are setting up their plants in Pakistan and this is a huge opportunity for us,” former Paapam Chairman Aamir Allawala commented.
“Last year, only six international exhibitors participated in the event, but this time the response is overwhelming. We are pleased to entertain a large complement of dignitaries from across the globe,” added Khan.
This time a total of 85 local exhibitors, 17 sponsors, six universities and 17 support organisations are going to take part in the show. This comes to a total of 192 exhibitors this year, as against 104 last year. In PAPS 2013, a total 15,000 visitors and 100 exhibitors were part of the show while in 2014 the number of visitors was 25,000 and there were 150 exhibitors. In 2015, the visitors increased to 30,000 and exhibitors were 200.
Government officials, local and international buyers and manufacturers, machinery manufacturers, raw material providers and service providers are expected to visit the show.
International visitors from Afghanistan, Bangladesh, China, Japan, the Netherlands, Sri Lanka, the UAE, the UK and African countries have attended the past events, but this year visitors from other countries as well are expected in this show, Paapam Senior Vice Chairman Saeed Iqbal Ahmed Khan said.
“We would like to strengthen our international relationships, which have been developed after years of hard work. Export orientation will be the key to introducing new and upgraded technology,” he said.
Paapam Vice Chairman Syed Mansoor Abbas commented that an additional important objective is to strengthen relationships with OEMs and strive to increase localisation content.
#Pakistan Indus Motor Company unveils Rs4bln (US$400m) investment plan to expand production. #Automobiles #Toyota
https://www.thenews.com.pk/print/195925-Indus-Motor-Company-unveils-Rs4bln-investment-plan-to-expand-production
Indus Motor Company Limited (IMC), a country’s leading automaker, on Saturday unveiled four billion rupees investment plan to expand its annual production capacity by 200,000 units in a bid to capitalise on the growing consumer demand.
Currently, IMC holds an annual production capacity of 54,800 units, which are sold under the brand name of Toyota. The planned capacity enhancement would bring the production to 75,000 vehicles a year.
“Pakistan’s auto industry future looks very promising,” IMC Chief Executive Officer Ali Asghar Jamali told media at its third auto workshop.
“I am hopeful that Pakistan will be producing 500,000 cars per year by 2022,” Jamali said.
The demand for local as well as used cars has exponentially been growing for the last three years due to overall improvement in the macroeconomic activities.
Despite being a world’s biggest densely-populated country, Pakistan has, however, not seen rapid motorisation. The country has only 16 cars per 1,000 people. By 2020 the ratio is likely to reach 20 cars per 1,000.
Industry experts are expecting a fast growth in car sales due to growing and young middle-class in the country.
The experts said the country is the third largest growing economy in emerging market and it could benefit from the ongoing $57 billion worth of China-Pak Economic Corridor (CPEC) projects.
IMC recorded five percent drop in sales during the July-February period of 2016/17, but in light commercial vehicle -- vans and jeeps – sales of Toyota Fortuner increased to 568 during the period from 368 units in the corresponding period.
Analyst Sohaib Subzwari at Taurus Securities Limited attributed the fall in sales to “strong demand for Honda Civic and operational issues restricting production.”
Subzwari, however, said the growing construction and road network development activities on account of CPEC would contribute to growth in volumes of heavy and light commercial vehicles.
In July-February, IMC emerged as the second leading player by number of sold vehicles. Pak Suzuki was the first, while Honda was the third.
The government recently announced auto policy 2016-21 containing a number of incentives for Greenfield and Brownfield projects in the country’s Japanese-dominated auto market.
IMC started its operation as a joint venture of House of Habib of Pakistan, Toyota Motor Corporation and Toyota Tsusho Corporation of Japan in 1989.
Analysts said auto industry generally feels comfortable about the new auto policy, which they say has provided a solid road map to the investors to plan investment for a long period.
On premium (own money) and black marketing, Jamali said the government should impose Rs100,000 as a levy per car if the first owner sells it within six months of the purchase. “This will eliminate the middleman and investors who create artificial shortage of cars in the market,” he added.
Car manufacturers said import of used cars poses the biggest threat to the local industry’s survival.
“We purchase local parts of Rs150 million on every working day, which becomes Rs40 billion per year,” said IMC executive.
Pakistan imports more than 46,500 used cars in a year, around 15 percent of the total car sales of 283,000 units in 2016.
Aamir Allawalla, ex-chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) said import of five-year old used vehicles dented the industry as it led to shutdown of several plants.
“New variants to be introduced by local players in the next years would, however, give a tough competition to the imported cars,” Allawalla said.
He said local industry wants long-term auto policies to get return on their investment and in order to avert ‘sudden shocks’. A huge investment in the sector has been planned, he added.
After #GM's #India exit, #Volkswagen, #Ford and #Skoda to abandon #Indian #automobile market. http://ecoti.in/XP54SZ via @economictimes
Last month, after over two decades in India, Detroit giant General Motors (GM) called it quits. The company will stop selling cars in India and focus only on exports from its factory in Talegaon in Pune. GM will shut down its plant in Halol in Gujarat. It has been struggling in India, selling 25,823 cars in 2016-17, giving it a market share of under 1%. Its dealers and customers are still reeling under the shock.
In a market that at last count had over 17 carmakers, and in which the top four control over 75%, a legitimate question to ask is: who next after GM? It’s also pertinent considering that all is not well at many of the bit players — in India as well as at the global headquarters.
Look under the hood at Volkswagen India. It has been hit by a flight of senior honchos at the sales division. The head of sales, national head of corporate sales and south sales manager have reportedly quit.
More exits are said to be in the offing. The world’s largest carmaker that sold over 10 million cars as a group in 2016 is struggling in India. Under the mother VW brand, the Indian outpost sold 50,042 cars in 2016-17, yielding 1.6% in market share. “India is indeed one of the toughest markets,” says Andreas Lauermann, managing director, Volkswagen India. But he has reason not to give up. “If you can crack it, you can practically access many more such markets around the world. We know that the I ..
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http://economictimes.indiatimes.com/articleshow/58978980.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Pakistan Government asks auto investors to conclude committed investments
https://www.thenews.com.pk/print/216089-Government-asks-auto-investors-to-conclude-committed-investments
The government on Wednesday asked four investors, which was given approval to invest around $3 billion in setting up auto assembling plants in the country, to furnish all the necessary documents in order to finalise the agreements by next week.
In June, ministry of industries and production allowed United Motors Private Limited, Kia-Lucky Motors Pakistan Limited, Regal Automobiles Industries Ltd, and Nishat Group to set up units for assembly and manufacturing of vehicles under the Greenfield investment category.
A senior official at BoI told The News that the four companies would likely to bring in investment of around three billion dollars, “which will help in breaking the existing cartel of three Japanese car assemblers and bringing down prices and create job opportunities.”
A statement said Khizar Hayat Gondal, secretary ministry of industries and production and Azhar Ali Chaudhry, secretary Board of Investment held a meeting on Wednesday with the four awardees of Greenfield status under the Auto Development Policy (ADP) 2016-21 as a follow-up of the meeting held on June 6.
The investors were urged to meet the necessary codal requirements under the policy as early as possible. They were asked to prepare their agreements to be effected pursuant to the award of ‘Greenfield status’ without any loss of time.
All concerned assured that these agreements would be finalised over the next week. Most of them expressed the resolve to present all necessary documentation by the 20th of this month, according to the statement.
Secretary ministry said companies awarded with Greenfield investment would be required to separately enter into agreements with the ministry of industries and production to ensure compliance with ADP 2016-21, relevant statutory regulatory orders and various timelines for completion of the projects for availing incentives under this policy.
The meeting asked the Engineering Development Board (EDB) to examine and put up these cases for approval as and when complete documentation is received.
Next monthly meeting with investors will be convened in the ministry of industries and production in the 2nd week of August 2017.
EDB will issue manufacturing certificate and list of importable components to new investors after verifying that their manufacturing facilities are adequate to produce roadworthy vehicles. The investors appreciated efforts of the ministry and the board for being pro-active in finalising investment proposals in record time.
Applicants for award of Greenfield status also participated during the meeting and showed their level of preparedness. The applicants are Habib Rafiq (Pvt.) Ltd., Khalid Mushtaq Motors (Pvt) Ltd., Pak-China Motors (Pvt) Limited, Foton JW Auto Park (Pvt) Ltd, Cavalier Automotive Corporation (Pvt) Ltd.
#India’s stalling #car market sparks wider concerns. Last month, passenger vehicle sales were 17.7% lower, two-wheelers (#motorcycles) down 16% and commercial vehicles declined 6% than a year before #manufacturing #auto #industry #Modi https://www.ft.com/content/b3b92502-7650-11e9-be7d-6d846537acab via @financialtimes
As India overtook China to become the world’s fastest-growing major economy, its buoyant car market was a conspicuous sign of its momentum.
Driven by growing urban disposable income, the car sector enjoyed robust growth as sales surged, with global giants such as Hyundai vying for market share with dominant incumbent Maruti Suzuki.
Its rapid expansion between 2015 and the first half of last year prompted predictions that India would soon overtake Japan and Germany to become the world’s third-biggest motor market.
But figures released this week showed a sudden reversal of that upbeat narrative. Last month, passenger vehicle sales were 17.7 per cent lower than a year before, according to the Society of Indian Automobile Manufacturers.
The pain was severe across all vehicle categories, which are closely watched as economic indicators. “Two-wheeler” sales, an important sign of rural economic health, fell by 16 per cent, while commercial vehicle sales declined 6 per cent.
For some foreign carmakers, the Indian market has been a tough nut to crack despite the success of Hyundai, Honda and Toyota, which have built up a significant presence in the country. Some big western groups have struggled to compete in the market, where Maruti Suzuki last year held a share of 51 per cent.
General Motors stopped sales in India in 2017 as part of a retreat from its less successful national ventures, and media speculation has been swirling about Ford ceding control of its Indian operation to local peer Mahindra & Mahindra.
The latest data add to concerns about flagging economic momentum in India, reflecting weak job growth and the impact of a squeeze in the credit market.
Unfortunately for Narendra Modi, prime minister, these worries have arisen in the middle of a general election where he has presented the government as an architect of growth.
“It reflects a broader lack of confidence in the economy — the entire consumption sector is slowing down,” said Prabodh Agrawal, chief financial officer at IIFL, a financial institution. “Liquidity is tight and confidence is low.”
Industry observers now fear that the car sector has become one of the most prominent victims of a debt market crunch that began last September, when defaults by infrastructure and finance group IL&FS triggered sharp outflows from mutual funds.
That drained money from the commercial paper market, a major source of funding for the nonbank financial companies that had driven the growth of loans as they took market share from the ailing state-controlled banks. The so-called NBFCs were particularly active in areas such as vehicle loans and lending to small businesses.
“In smaller towns and cities, NBFCs really control the [vehicle financing] game,” said Puneet Gupta, a car analyst at IHS Markit.
The motor industry had already been flagging after a strong first half of 2018, but sentiment darkened more seriously as the credit squeeze fed through.
“For everyone I speak to in the market, November was a turning point — there was a ripple effect from the NBFC crisis,” said Anant Goenka, managing director of Ceat, the country’s biggest tyre producer.
The tighter credit market has been reflected in India’s economic growth figures: gross domestic product grew at 6.6 per cent in the last quarter of 2018, the slowest pace for five quarters.\
#China's Great Wall Motor to shift some #India investment to #Brazil after approval delays. It is reallocating to Brazil a portion of its $1-billion investment in India. Great Wall is acquiring Daimler's plant in Brazil to build #SUVs. #automobile
https://www.reuters.com/business/autos-transportation/exclusive-great-wall-motor-shift-some-india-investment-brazil-after-approval-2021-08-11/
In 2020, Great Wall unveiled plans to invest $1 bln in India
Part of the $1 bln being re-allocated to Brazil -sources
Firm close to buying plant in Brazil amid global push -sources
Great Wall committed to India but cautious over delays -sources
NEW DELHI/BEIJING, Aug 11 (Reuters) - Great Wall Motor (601633.SS) has decided to re-allocate to Brazil a portion of its $1-billion investment in India, as the Chinese automaker has been unnerved by a year-long delay in winning government approvals, three sources told Reuters.
The re-allocation, which could range up to $300 million, comes as the sources said the maker of popular sport-utility vehicles (SUVs) and pick-ups was close to acquiring a former Daimler (DAIGn.DE) plant in Brazil to build cars.
Great Wall has also tasked James Yang, its India president since last year, with the responsibility of assisting with operations in the Latin American nation, said the sources, who have direct knowledge of the matter.
"Brazil is almost a done deal and it did not make sense to keep the funds blocked for India," said one of the sources, explaining the rationale for the change of focus.
Great Wall's move is a fallout of India's decision in April 2020 to more closely scrutinise investments from China, the sources said, as part of a crackdown that followed a border clash between the two Asian giants.
Just two months before, amid the fanfare of India's biennial car show, Great Wall had said it would invest $1 billion to build cars there, by buying a former General Motors (GM) (GM.N) factory, as well as making batteries and car parts.
Two of the sources said the re-allocated funds, budgeted by Great Wall for India since 2020, would mainly have been used to buy GM's factory, a cost that sources had earlier put at about $300 million.
Great Wall declined to comment. The Indian government did not immediately reply to an email seeking comment.
The step highlights growing nervousness and impatience among Chinese investors, who have seen roughly 150 investment proposals worth more than $2 billion held up by India's slow approvals process, according to industry estimates.
The delays are forcing Great Wall, which was expected to begin selling its India-made Haval brand of SUVs in the country this year, to look at taking a more measured approach.
It may even consider entering the market with a fully-built imported vehicle before starting domestic production, one of the sources said.
"When approvals in India come through, Great Wall will be ready with the money, but it may not be a straight decision anymore," said the source.
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"The company will judge the situation before moving forward. What if future approvals get stuck?"
Earlier this year, India had been set to clear about 45 of the investment proposals from China, mainly in manufacturing, but it was not immediately clear how many had been approved. read more
Indian officials say the situation cannot return to business as usual until de-escalation at the border is complete, however. read more
The Chinese automaker will also wait for ties between the two nations to improve and for the COVID-19 pandemic to ease in India before speeding up its plans for the market, said a second source.
Great Wall still wants to make cars in India and is now building its supply chain, the source added.
The firm saw India as a key market when it kicked off its global expansion, envisioning its plant in the subcontinent to be its biggest outside China.
Great Wall now makes cars in Russia and Thailand, where it acquired a plant at the time it announced its India plans.
Fingers ‘turned to powder’: maimed workers of #India’s #automobile hub in #Haryana. Poor training, shoddy equipment leave thousands of auto workers injured. 52% of accidents happen on power press machine, 47% of workers had low-quality safety gear. #MakeInIndia #safety https://www.aljazeera.com/economy/2023/8/4/crushed-fingers-hands-mar-indias-auto-manufacturing-hub
At the break of dawn, thousands of workers walk out from dusty and congested maze-like alleys to work at nearby factories in Manesar, one of India’s leading automobile hubs, about 50km (31 miles) south of the capital.
In India, the automobile industry employs around 3.7 million people and contributes 7.1 percent to the gross domestic product (GDP). Just in Manesar and the next-door city of Gurugram, both in Haryana state, approximately 80,000 workers are employed in different automobile units of Hero MotoCorp, Maruti Suzuki, Yamaha, and other global companies.
Waiting restlessly outside a government dispensary for his turn, Manish Kumar, 20, a worker at one such factory in Manesar, quickly covers his bandaged hand with a piece of cloth as a group of workers walk past him. In February, Manish lost two fingers when a power press machine, used in the manufacturing of car windows, came crashing down on his hand.
“I came to Manesar like thousands of other workers to support my family and for a better future. But little did I know, instead, this place would make me dependent on someone for the rest of my life,” Manish told Al Jazeera.
“The incident is fresh in my mind and I get traumatised when someone asks me what happened to your hand, and that’s why I try to hide it most of the time,” he said.
Before the outbreak of the COVID-19 pandemic, Manish worked as a casual labour in his central Indian state, Madhya Pradesh. To meet his daily ends and support his ailing parents, he boarded a bus to Manesar, like hundreds of others from his village, in search of a better job opportunity. Soon at the recommendation of a friend, he landed a job that would earn him 13,500 rupees ($163) per month in a small factory manufacturing parts for auto major Maruti Suzuki.
“The factory owners don’t care about our safety; their main agenda is production should not stop at any cost … The machine I was working on malfunctioned for a week, and still I was made to work on it instead of getting it repaired. The machine crushed my two fingers due to their negligence, turning them into powder.”
“It has been over a month, and still, I don’t know whether I will ever be able to work again,” said Manish while struggling to clear drops of sweat dripping from his face. He said he is yet to receive any compensation for his injury.
Like Manish, thousands of others have been injured while working in this sector in India. “Crushed”, a report published by Safe in India Foundation (SII) revealed that, on average, 20 workers lose their hands and/or fingers daily while working in automobile factories spread in the Manesar and Gurgaon areas. Around 65 percent of injured workers are under the age of 30.
The automobile manufacturing sector in India recorded 3,882 incidents of injuries including 1,050 deaths in 2020, according to data from the Directorate General Factory Advice Service and Labour Institutes (DGFASLI). That year, the state of Haryana reported 50-60 nonfatal accidents, it said. However, SII says that figure is far from reality as each year it helps at least 4,000 workers suffering from a range of injuries in the state’s auto sector.
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