Pakistan’s flourishing car market attracts global attention
In the backdrop of the surge in passenger car sales that recently crossed 200,000 units for the very first time in Pakistan, all of the country’s automakers are planning production increases to please brisk domestic request.
According to Nikkei Asia Review Web, fresh players are also flocking to this market of two hundred million, lured by government incentives and the chance to tap a growing middle class. For now, there may be enough growth to go around, but these fresh faces — which include the likes of Renault of France and Kia Motors of South Korea — could menace the dominance of Japanese makers.
Pakistan witnessed a record high of toughly 218,000 passenger cars sold in fiscal 2016, which ended last June. The leader was Pak Suzuki Motor, a subsidiary of Suzuki Motor, which landed an order from the eastern province of Punjab for 50,000 cars. The province’s government plans to use the vehicles as taxis as part of a job-creation program.
Indus Motor, a joint venture inbetween Toyota Motor and local conglomerate House of Habib, is doing well with its mainstay Corolla, reporting that sales grew 11% on the year to 65,000 in fiscal 2016. “The market is so brisk that production can’t keep up,” Indus Motor Vice Chairman Toshiya Azuma said. Azuma expects even more growth to come. “Request in India, our next-door neighbor, is about four million cars [including commercial vehicles] a year, so annual sales of about 600,000 cars is well within reach in Pakistan.” The country has a population one-sixth that of India.
Indus Motor Chairman Ali S. Habib, a member of the family behind HoH, visits the company’s auto plant every week for meetings. While he is cautious about ramping up production too quickly — “Safety is our priority. We’d like to avoid too much overtime” — he is positive about the future. “The market is very strong. [Expansion will be] step by step,” he said.
Honda Motor joint venture Honda Atlas Cars also witnessed record-high sales, at 35,000 Civic and City units for calendar 2016, up about fifty percent on the year. Atlas group No. Two and CEO of Atlas Honda (a separate entity from Honda Atlas Cars) Saquib H. Shirazi said, “The fresh Civic is the primary driver. We’re expecting sales of around 50,000 in 2017.” These automakers are benefiting from a number of converging tailwinds. Household incomes are rising along with Pakistan’s growing economy, while prices for gasoline and diesel fuel are on a downward trajectory. Interest rates on auto loans have fallen sharply, averaging below ten percent compared with almost eighteen percent in fiscal 2008.
More recently, the China-Pakistan Economic Corridor initiative has spurred investment in the country’s infrastructure, raising hopes that Pakistan’s highway network will be finished before long. Pak Suzuki sold about 128,000 cars in Pakistan in fiscal two thousand sixteen and managed about fifty eight percent of the passenger car market. “Sales of models other than taxis, which are subject to special request, grew by about twenty percent on the year,” Managing Director Hirofumi Nagao said. In response to this spike in request, the company plans to invest $460 million in a fresh plant.
In March 2016, the government unveiled its Automobile Development Policy 2016-2021, which provides various incentives for automakers coming in the market, such as diminished import taxes on parts. Seizing the chance, Kia Motors has partnered with Fortunate Cement, the core company of the Yunus Brothers Group, one of Pakistan’s leading conglomerates. The two companies plan a total investment of $115 million. “We will undertake full-segment production, from compacts to sedans,” Fortunate Cement CEO Muhammad Ali Tabba said. The company plans to embark producing 25,000 cars annually by the end of two thousand eighteen at its plant in the Port Qasim Industrial Zone in the Karachi suburbs.
“The car market in Pakistan has been monopolized by Japanese brands. Now, request will go up, a lot of fresh highways are coming, and consumers’ minds are very active. So it is a good time to come in the market,” Tabba said. The company will target a segment inbetween Suzuki’s compacts and Toyota’s Corolla, considered a luxury model in this market. Renault is making a similar stir, applying to the government for an automaking permit at the end of last year. Hoping to commence production in 2018, it has signed a memorandum of understanding with the Sindh Board of Investment and has begun a feasibility examine. The SBOI says investment will total $100 million, with production to begin with 6,000 cars in the very first year and eventually expand to 50,000.
Audi of Germany has also voiced interest in production in Pakistan. Opinions are split over the policy of providing newcomers special treatment.
Nagao of Pak Suzuki has asked the government for a two-year tax break as a condition for its investment in a fresh plant. But Azuma of Indus Motor is more upbeat: “The ADP can be seen in a positive light, as it will promote the medium- and long-term growth of the automobile and automotive parts industries in Pakistan by attracting fresh entrants.” Shirazi of Atlas is likewise positive, telling, “We don’t mind more automakers coming, because consumers will have more choice.” Such a screenplay is looking increasingly likely given the many tailwinds sucking through Pakistan’s automotive market.
Pakistan’s thriving car market attracts global attention
Pakistan’s flourishing car market attracts global attention
In the backdrop of the surge in passenger car sales that recently crossed 200,000 units for the very first time in Pakistan, all of the country’s automakers are planning production increases to please brisk domestic request.
According to Nikkei Asia Review Web, fresh players are also flocking to this market of two hundred million, lured by government incentives and the chance to tap a growing middle class. For now, there may be enough growth to go around, but these fresh faces — which include the likes of Renault of France and Kia Motors of South Korea — could menace the dominance of Japanese makers.
Pakistan spotted a record high of toughly 218,000 passenger cars sold in fiscal 2016, which ended last June. The leader was Pak Suzuki Motor, a subsidiary of Suzuki Motor, which landed an order from the eastern province of Punjab for 50,000 cars. The province’s government plans to use the vehicles as taxis as part of a job-creation program.
Indus Motor, a joint venture inbetween Toyota Motor and local conglomerate House of Habib, is doing well with its mainstay Corolla, reporting that sales grew 11% on the year to 65,000 in fiscal 2016. “The market is so brisk that production can’t keep up,” Indus Motor Vice Chairman Toshiya Azuma said. Azuma expects even more growth to come. “Request in India, our next-door neighbor, is about four million cars [including commercial vehicles] a year, so annual sales of about 600,000 cars is well within reach in Pakistan.” The country has a population one-sixth that of India.
Indus Motor Chairman Ali S. Habib, a member of the family behind HoH, visits the company’s auto plant every week for meetings. While he is cautious about ramping up production too quickly — “Safety is our priority. We’d like to avoid too much overtime” — he is positive about the future. “The market is very strong. [Expansion will be] step by step,” he said.
Honda Motor joint venture Honda Atlas Cars also eyed record-high sales, at 35,000 Civic and City units for calendar 2016, up about fifty percent on the year. Atlas group No. Two and CEO of Atlas Honda (a separate entity from Honda Atlas Cars) Saquib H. Shirazi said, “The fresh Civic is the primary driver. We’re expecting sales of around 50,000 in 2017.” These automakers are benefiting from a number of converging tailwinds. Household incomes are rising along with Pakistan’s growing economy, while prices for gasoline and diesel fuel are on a downward trajectory. Interest rates on auto loans have fallen sharply, averaging below ten percent compared with almost eighteen percent in fiscal 2008.
More recently, the China-Pakistan Economic Corridor initiative has spurred investment in the country’s infrastructure, raising hopes that Pakistan’s highway network will be ended before long. Pak Suzuki sold about 128,000 cars in Pakistan in fiscal two thousand sixteen and managed about fifty eight percent of the passenger car market. “Sales of models other than taxis, which are subject to special request, grew by about twenty percent on the year,” Managing Director Hirofumi Nagao said. In response to this spike in request, the company plans to invest $460 million in a fresh plant.
In March 2016, the government unveiled its Automobile Development Policy 2016-2021, which provides various incentives for automakers injecting the market, such as diminished import taxes on parts. Seizing the chance, Kia Motors has partnered with Fortunate Cement, the core company of the Yunus Brothers Group, one of Pakistan’s leading conglomerates. The two companies plan a total investment of $115 million. “We will undertake full-segment production, from compacts to sedans,” Fortunate Cement CEO Muhammad Ali Tabba said. The company plans to embark producing 25,000 cars annually by the end of two thousand eighteen at its plant in the Port Qasim Industrial Zone in the Karachi suburbs.
“The car market in Pakistan has been monopolized by Japanese brands. Now, request will go up, a lot of fresh highways are coming, and consumers’ minds are very active. So it is a good time to come in the market,” Tabba said. The company will target a segment inbetween Suzuki’s compacts and Toyota’s Corolla, considered a luxury model in this market. Renault is making a similar stir, applying to the government for an automaking permit at the end of last year. Hoping to embark production in 2018, it has signed a memorandum of understanding with the Sindh Board of Investment and has begun a feasibility investigate. The SBOI says investment will total $100 million, with production to begin with 6,000 cars in the very first year and eventually expand to 50,000.
Audi of Germany has also voiced interest in production in Pakistan. Opinions are split over the policy of providing newcomers special treatment.
Nagao of Pak Suzuki has asked the government for a two-year tax break as a condition for its investment in a fresh plant. But Azuma of Indus Motor is more upbeat: “The ADP can be seen in a positive light, as it will promote the medium- and long-term growth of the automobile and automotive parts industries in Pakistan by attracting fresh entrants.” Shirazi of Atlas is likewise positive, telling, “We don’t mind more automakers coming, because consumers will have more choice.” Such a screenplay is looking increasingly likely given the many tailwinds deep throating through Pakistan’s automotive market.
Pakistan’s thriving car market attracts global attention
Pakistan’s thriving car market attracts global attention
In the backdrop of the surge in passenger car sales that recently crossed 200,000 units for the very first time in Pakistan, all of the country’s automakers are planning production increases to please brisk domestic request.
According to Nikkei Asia Review Web, fresh players are also flocking to this market of two hundred million, lured by government incentives and the chance to tap a growing middle class. For now, there may be enough growth to go around, but these fresh faces — which include the likes of Renault of France and Kia Motors of South Korea — could menace the dominance of Japanese makers.
Pakistan witnessed a record high of harshly 218,000 passenger cars sold in fiscal 2016, which ended last June. The leader was Pak Suzuki Motor, a subsidiary of Suzuki Motor, which landed an order from the eastern province of Punjab for 50,000 cars. The province’s government plans to use the vehicles as taxis as part of a job-creation program.
Indus Motor, a joint venture inbetween Toyota Motor and local conglomerate House of Habib, is doing well with its mainstay Corolla, reporting that sales grew 11% on the year to 65,000 in fiscal 2016. “The market is so brisk that production can’t keep up,” Indus Motor Vice Chairman Toshiya Azuma said. Azuma expects even more growth to come. “Request in India, our next-door neighbor, is about four million cars [including commercial vehicles] a year, so annual sales of about 600,000 cars is well within reach in Pakistan.” The country has a population one-sixth that of India.
Indus Motor Chairman Ali S. Habib, a member of the family behind HoH, visits the company’s auto plant every week for meetings. While he is cautious about ramping up production too quickly — “Safety is our priority. We’d like to avoid too much overtime” — he is positive about the future. “The market is very strong. [Expansion will be] step by step,” he said.
Honda Motor joint venture Honda Atlas Cars also witnessed record-high sales, at 35,000 Civic and City units for calendar 2016, up about fifty percent on the year. Atlas group No. Two and CEO of Atlas Honda (a separate entity from Honda Atlas Cars) Saquib H. Shirazi said, “The fresh Civic is the primary driver. We’re expecting sales of around 50,000 in 2017.” These automakers are benefiting from a number of converging tailwinds. Household incomes are rising along with Pakistan’s growing economy, while prices for gasoline and diesel fuel are on a downward trajectory. Interest rates on auto loans have fallen sharply, averaging below ten percent compared with almost eighteen percent in fiscal 2008.
More recently, the China-Pakistan Economic Corridor initiative has spurred investment in the country’s infrastructure, raising hopes that Pakistan’s highway network will be finished before long. Pak Suzuki sold about 128,000 cars in Pakistan in fiscal two thousand sixteen and managed about fifty eight percent of the passenger car market. “Sales of models other than taxis, which are subject to special request, grew by about twenty percent on the year,” Managing Director Hirofumi Nagao said. In response to this spike in request, the company plans to invest $460 million in a fresh plant.
In March 2016, the government unveiled its Automobile Development Policy 2016-2021, which provides various incentives for automakers injecting the market, such as diminished import taxes on parts. Seizing the chance, Kia Motors has partnered with Fortunate Cement, the core company of the Yunus Brothers Group, one of Pakistan’s leading conglomerates. The two companies plan a total investment of $115 million. “We will undertake full-segment production, from compacts to sedans,” Fortunate Cement CEO Muhammad Ali Tabba said. The company plans to commence producing 25,000 cars annually by the end of two thousand eighteen at its plant in the Port Qasim Industrial Zone in the Karachi suburbs.
“The car market in Pakistan has been monopolized by Japanese brands. Now, request will go up, a lot of fresh highways are coming, and consumers’ minds are very active. So it is a good time to inject the market,” Tabba said. The company will target a segment inbetween Suzuki’s compacts and Toyota’s Corolla, considered a luxury model in this market. Renault is making a similar budge, applying to the government for an automaking permit at the end of last year. Hoping to begin production in 2018, it has signed a memorandum of understanding with the Sindh Board of Investment and has begun a feasibility examine. The SBOI says investment will total $100 million, with production to begin with 6,000 cars in the very first year and eventually expand to 50,000.
Audi of Germany has also voiced interest in production in Pakistan. Opinions are split over the policy of providing newcomers special treatment.
Nagao of Pak Suzuki has asked the government for a two-year tax break as a condition for its investment in a fresh plant. But Azuma of Indus Motor is more upbeat: “The ADP can be seen in a positive light, as it will promote the medium- and long-term growth of the automobile and automotive parts industries in Pakistan by attracting fresh entrants.” Shirazi of Atlas is likewise positive, telling, “We don’t mind more automakers coming, because consumers will have more choice.” Such a screenplay is looking increasingly likely given the many tailwinds gargling through Pakistan’s automotive market.