Intense diplomatic lobbying on new auto policy

[The Sandman]

Nov 18th 2015,

As Pakistan prepares to unveil its new auto policy, a flurry of diplomatic activity is being witnessed with European and Japanese diplomats visiting various ministries lobbying to get incentives for their auto giants planning to invest in the country.

According to official sources the Japanese Vice-Minister for Economy, Trade and Industry Tuneo Kitamura, Belarus Minister for Industries Vitaly Vovk, and newly appointed French and German envoys met with various ministers including the finance minister, commerce minister and the minister for industries during the last week. They all discussed issues relating to the auto policy.

The Europeans want incentives for their companies to venture forth in Pakistan while the Japanese opposed lucrative new incentives to European giants. They have stressed for providing the same level of incentives to the Japanese manufacturers. Pakistan’s auto market is totally controlled by the three Japanese auto manufacturers, Toyota, Honda and Suzuki. Hyundai Korea and Fiat Italy tried to enter the market but failed.

The ruling PML-N government formed a ministerial committee to draft a new auto policy after coming to power two and half years ago. Auto manufacturing in Pakistan remains in infancy stage. The country produces less than 200,000 cars per annum. The number of buses and trucks remains abysmally low at 5,000 units per annum.

The domestic auto manufacturing peaked in General Musharraf’s era and after that, it declined sharply. Pakistan’s car and light commercial vehicles production peaked in fiscal year 2007 (FY07) to 195,688 units and after many years of decline it bounced back to 180,713 units in FY15. The trucks and buses assembly declined from 4,993 units and 1,146 units respectively in FY08 to 4,039 trucks and 575 buses in FY15. The production of tractors peaked to 71,607 units in FY10 and has declined to 48,883 units in FY15.

The reason for low indigenous production is cited to be the poor quality of locally assembled cars which are highly priced due to heavy taxation. As their quality is far inferior to the same brand of cars produced in other countries they cannot be exported in the region.

With the new auto policy, the government wants to introduce competition in the sector to bring the abnormally high prices to reasonable limit and improve their quality. The government is considering giving tax incentives to manufacturers as with the implementation of the China Pakistan Economic Corridor (CPEC), the country requires new trucks and buses to improve connectivity. All the leading manufacturers are European.

Japanese are lobbying hard for getting incentive for their already operating companies. However, Pakistani market not only requires cars but also tractors, trucks, buses, and dumpers, the incentives are focused on manufacturers of these vehicles, the source said.

French envoy Martine Dorance talking with the Minister for Industries and Production Ghulam Murtaza Khan Jatoi said that many French companies were interested in investing and setting up assembly plants in Pakistan. She revealed that major interest was shown by Renault–Nissan Alliance and suggested that concessions be given at the start to new French entrants.

The Belarusian minister informed Jatoi that investors from his country wanted to set up assembly plants for various products such as tractors, trucks, dumpers, complete range of agricultural technology and machinery and several types of engines. He said that several parties were interested in provision of these products and could also provide the complete range of Euro II, III and IV compliant engines.

Japanese vice-minister for economy hoped that the government would provide incentives under the new auto policy to existing investors as well. Jatoi assured that the government would try to extend as much support as it could for new and existing stakeholders in the automobile industry. Jatoi maintained that pioneering manufacturers would get concessions from the government.
Intense diplomatic lobbying on new auto policy | Pakistan Today

@Muhammad Omar @Viper0011. @Raja.Pakistani @Path-Finder @Indus Falcon @I S I

 

[Viper0011.]

Nov 18th 2015,

As Pakistan prepares to unveil its new auto policy, a flurry of diplomatic activity is being witnessed with European and Japanese diplomats visiting various ministries lobbying to get incentives for their auto giants planning to invest in the country.

@Muhammad Omar @Viper0011. @Raja.Pakistani @Path-Finder @Indus Falcon @I S I

Everyone wants a piece of a 160 million car market over the next 10 years. I've been writing about it for a year now. Sadly, many Pakistanis don't want to accept the fact that their country is FINALLY on the right path to become an economic power in the next decade.

There is going to be fierce competition as a couple of European brands want to have some "exclusiveness", but so do others. So good for the Pakistani consumers. PLEASE keep supporting the system as its about to do wonders for Pakistan, let the mid of 2017 come. This global Car tension to get into the Pakistani market is just one small example of what's about to come investment and business wide!!

 

[herono1]

Market size of 200,000 is too small. No one will set up a full production unit for such small market. May be manufacture discontinued models using discarded equipment.

 

[jupiter2007]

Our corrupt politians will not do anything good for the countries unless they are getting kickbacks.

 

[!eon]

Our corrupt politians will not do anything good for the countries unless they are getting kickbacks.

Agree, not to blame Toyota and Suzuki for their substandard vehicles but it's corrupt politics.

Market size of 200,000 is too small. No one will set up a full production unit for such small market. May be manufacture discontinued models using discarded equipment.

Pakistanis and their headache, don't your worry!

 

[Path-Finder]

"The Europeans want incentives for their companies to venture forth in Pakistan while the Japanese opposed lucrative new incentives to European giants. They have stressed for providing the same level of incentives to the Japanese manufacturers. Pakistan’s auto market is totally controlled by the three Japanese auto manufacturers, Toyota, Honda and Suzuki. Hyundai Korea and Fiat Italy tried to enter the market but failed."

that is a big lie the outdated Suzuki is still being sold. The Japanese need to take a back seat in the car monopoly, they should have thought of keeping Pakistan in the dark ages of car market limiting technology and vehicle safety for people. I hope with all this proper driver training is also introduced as well.

 

[Manidabest]

ohhh please we need some new cars in our country.... give japanese more incentives no problem but tell them to improve their models.... and upgrade their cars to the latest technology.... whereas new companies must be given incentives too ... and lucrative deals should be given for example gwadar free trade zone industrial zone should be created for those auto manufacturers to produce cars and export them to central asian and gulf countries and it should be tax free in return pakistanis will get employment it means gov will get more taxes and low prices for the cars being manufactured in Pakistan...anything else???

 

[war&peace]

Market size of 200,000 is too small. No one will set up a full production unit for such small market. May be manufacture discontinued models using discarded equipment.

A very typical rant of a butthurt indian

Everyone wants a piece of a 160 million car market over the next 10 years. I've been writing about it for a year now. Sadly, many Pakistanis don't want to accept the fact that their country is FINALLY on the right path to become an economic power in the next decade.

There is going to be fierce competition as a couple of European brands want to have some "exclusiveness", but so do others. So good for the Pakistani consumers. PLEASE keep supporting the system as its about to do wonders for Pakistan, let the mid of 2017 come. This global Car tension to get into the Pakistani market is just one small example of what's about to come investment and business wide!!

The stress should be on the completion of the deletion programs by auto manufacturers.

 

[General General]

The stress should be on the companies should complete their deletion program

The problem with industry monopoly is that no one can lay stress on them. Think of it this way, your only supply of drinking water is a delivery guy, but he's always late for his deliveries and when he does show up, the water is not quite clear. Now, you can't really tell him to shape up because you are the one at his mercy. If there are more water vendors, he will have to get his act together to maintain your custom.
It is the same with Pakistan's auto industry, when more manufacturers set foot in the country, the existing ones will have to improve their products and services to stay in business.

Market size of 200,000 is too small. No one will set up a full production unit for such small market. May be manufacture discontinued models using discarded equipment.

The 200k is the market at current levels. Pakistan's market is unique as an old car can sell for a higher price than a new one. This is because a used car is tried and tested, kind of like a quality control check, before it is sold on. However, when there are new modern cars at the same price level as the existing models, more people would like to buy new cars, and even people with used cars would like to swap theirs for a new one. So, we could realistically be expecting a market of around double that, at least.[/QUOTE]

 

[I S I]

Na baap bara na bhaiyya

Sub se bara rupaiyya.

 

[AtiF Malang]

Here in UAE for the Price of that stupid Mehran you can buy Hyundai Accent , Toyota Yaris , Renault Logan / Duster , Chevrolet Aveo / Optra etc
Google all these cars and match them to Mehran

 

[Mughal-Prince]

Nov 18th 2015,



The Europeans want incentives for their companies to venture forth in Pakistan while the Japanese opposed lucrative new incentives to European giants. They have stressed for providing the same level of incentives to the Japanese manufacturers. Pakistan’s auto market is totally controlled by the three Japanese auto manufacturers, Toyota, Honda and Suzuki. (Hyundai Korea and Fiat Italy tried to enter the market but failed).


@Muhammad Omar @Viper0011. @Raja.Pakistani @Path-Finder @Indus Falcon @I S I

Now that's a bulsh!t. The half hearted way they have tried to grab the market or you can say that they were actually not trying as it meant to be. Raja motors bring in Bloody 10 year old model of Fiat Uno which cost them nothing but pennies and what they do is just make money with CKDs and nothing no services provided to the buyers and meanwhile in India there were punto and other models were launched. Similarly what dewan salman has done with Hyundai. It's about the company if they truly want to take their chunk or just try half hearted.

 

[Thəorətic Muslim]

Market size of 200,000 is too small. No one will set up a full production unit for such small market. May be manufacture discontinued models using discarded equipment.

A very typical rant of a butthurt indian

No he's right. 200,000 is too small of a market to set up a manufacturing plant in. Even now all the Toyotas, Hondas, Suzukis are assembled in Pakistan. Manufacturing plant and assembly plant are different things. But 200

The entire reason the Japanese auto companies were given a monopoly was

Volkswagen, German autos in general, aren't like the Japanese models at all. Japanese cars are for the common man, easy to buy, easy to maintain, easy to have 'serviced' in Pakistan. German engineering is a precise measurement, there's no room for error, and each nut and bolt you take off a German auto has to be put back on. There's not going to be room for a repair man to take apart and reassemble the alternator or starter, or a/c compressor on a German auto.

American autos have made a great leap since the recession. Their cars are dependable, better mileage, and a greater range of options to choose from.

It would have been beneficial to look into the Adam Motors company. Sure they also assembled the parts to make a car but as with anything domestic you have to start from somewhere. Just look at Malaysia's Proton, they were assembling Mitsubishis in the 1980s, in the 1990s they rolled out their own car design.

This isn't a problem of high import duties but a lack of will. Original startup for a domestic auto industry was in the 50s. But the project died out. Then the focus came to supplying the military with a jeep, but that died off too. So the Government (Bhutto) took over in the 70s.

The costs to enter the industry are high, high deletion, and there's more supply than demand. The original entrees were given preferable loans and high tariffs were introduced to entice them. They were to hold their end of the bargain, which was to bring the designing, manufacturing plants to Pakistan, but they didn't.

The Japanese autos conceived to concentrate their influence on the government. There's some economic graphs and marginal revenue/ costs to talk about but I think I've made my point.

A few side notes; Chevy was marketed by Daewoo (Korean Company) on license from GM. Volkswagen if they do set up shop will import parts for their assembly plant from their Indian manufacturing plants.

@LeveragedBuyout

 

[Valkyrie]

Upcoming auto-policy, albeit disastrously late, can potentially turn matters around if these suggestions are considered, in my humble opinion,

1) An environment conductive to the establishment and development of domestic auto-industry is created. This can be achieved by providing incentives in the form of reduced taxes and govt. patron-ship to local auto-manufacturers. There's a colossal potential to be taped here. (Adam Revo, in this context, can become a model. Had we not mired it down into political complications, we'd most probably be seeing it running on our roads today)

2) Foreign automobile companies that are eyeing Pakistan's lucrative market must be compelled to "indigenize" or produce a large percentage of automotive parts within Pakistan as opposed to just erecting a few assembly plants.

3) Joint-manufacturing with local industries for the production of automotive components must be emphasized. This will help local manufacturers absorb technical "nitty-gritties" and mature in the process.

4) Car manufacturers must be forced to comply with the contemporary global standards of safety, ergonomics, fuel economy and carbon emissions. Any vehicle falling to fulfill these merits, must not be allowed to enter production. Non-compliant models that are currently in use, must be gradually phased out.

We should be prudent enough to understand the long terms benefits a carefully designed auto policy can bring to our country. It's is absolutely crucial that we aim and work towards providing our people access to a variety of dynamic, safe, reliable and affordable vehicles that'll not only bolster national economy and create employment opportunities but also catapult local industry to an advanced technological stage.

 

[Bouncer]

Man I would love to see this Fred Flintstone era Mehran finally put to rest. Seriously 30 years old design and still sells for $6500! Only in Pakistan smh