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New investments on horizon in automobile sector

Lahore - New investments are on the horizon in automobiles, as most of the vendors are not only increasing capacities but are also upgrading technologies.
Some new entrants have also announced investment plans. The addition of a European and two Korean brands would add variety in the car section and create healthy competition.
Soon six of the top 10 global car brands would be operating in Pakistan. In addition a Chinese brand ranked 20th largest car producer globally is already active in the country.
These were the views of major stakeholders in the auto sector. Indus Motor CEO Ali Asghar Jamali and former PAAPAM chairman Amir Allahwala enlightened the journalists about the way forward and new investments through statistics and data at a workshop.
The sector has seen capacity enhancement by existing OEMs while they have increased shifts and work on gazetted holidays to meet the unprecedented demand, this demand is testimony that OEMs in Pakistan are producing global brands with international quality standards while most of our products are cheaper as compared to same variants in global markets.
Calling Pakistan a hidden treasure they pointed out that 50 percent of its 200 million populations is below the age of 30. They also revealed that two countries with about the same population are Indonesia and Brazil where the yearly car production is 1.3 million and 3.2 million respectively. The annual car demand in Pakistan they added is 283000 only (including domestic and imported cars)
They said Indonesia in 2000 was producing around the same number of cars as Pakistan is producing currently. That country has the same chequered political history, they added. They said in next 15 years car production in Indonesia crossed one million units. They said Pakistan is also attaining similar stability and better law and order coupled with better governance. They said AIDP envisages that car production in Pakistan would reach 500000 units by 2025. However they said that the way things are moving the half million vehicle production target would be achieved by 2020.
They pointed out that the young population helped shoot the motorcycle production from 100000 units in 2000 to 2.1 million units now. This aspiring young generation they added is now fully prepared to graduate to the use of small cars. This will increase the demand for small cars substantially. At the same time they added the employees that are moving up in the corporate cadre are looking for medium sized cars.
This they added is the reason that the demand for medium segment cars is also increasing. The waiting time for Suzuki Wagon R and little higher versions like Toyota Corolla and Honda City is on the rise.
The OEMs, they said are continuously investing in capacity enhancement amid unprecedented growth, now its upto the Govt to attract more auto makers by showing its resolve in making Pakistan’s auto industry the backbone of the economy by pursuing continuity in policies. The industry suffered heavily when Govt deviated from policy in 2008 when it allowed undue relaxation in import of used cars and resulting in closure of at least 4 OEM plants and their vendors while losing many job opportunities.
They said the industry is coping well with the AIDP including provision for import of 3 years old used cars. In fact they added the import of 1300 cc used cars is waning rapidly and after introduction of high end Fortuner the demand for luxury cars would also taper. They said as soon as a new version of small segment car is introduced the consumers would lose interest in import of small segment used cars as well.
The CEO Indus Motor Jamali said that the menace of car premium is a matter of grave concern for the car manufacturers as it brings them bad name. He said that his company takes utmost care to tackle this issue by keeping a close eye on its dealers. The Indus Motors believes that this menace of premium could be curbed only by the consume, however, he said this issue could also be resolved administratively by slapping a heavy tax of on the transfer of car within 6 months of purchase. He said this would discourage unethical investment in this sector.
Source: The Nation