800cc or 1,000cc – Nishat to determine which car to produce very first
LAHORE: One of the fattest business conglomerates, the Nishat Group, has announced recently that it will make inroads into Pakistan’s quick growing automotive industry and has signed an agreement with South Korean carmaker Hyundai Motor Company for the production of hybrid cars.
This and other such developments come in the backdrop of the fresh Automotive Policy 2016-21 unveiled by the government in March last year. Sensing intense competition with fresh market players who have got incentives in the auto policy, existing auto assemblers have also brought fresh models and announced investment plans.
The Nishat Group had made up its mind in two thousand twelve to inject the auto sector, but lack of incentives for fresh investments prevented it from initiating any venture.
“We attempted to venture into the automotive sector back in 2012, but the policy at that time was not favourable,” recalled Norez Abdullah, Chief Financial Officer of Hyundai Nishat Motor Limited in an interview with The Express Tribune.
“The auto policy has brought incentives for the fresh players based on which we have determined to inject this segment; Hyundai approached us and now we have commenced the fresh venture,” he said.
The group intends to introduce hybrid electrified cars in Pakistan, but infrastructure for the fresh technology is too costly. At present, Abdullah said, both the playmates were conducting a feasibility probe to assess the scope of hybrid electrified cars in Pakistan.
“Hyundai has already introduced hybrid electrical cars in US markets. We wish to introduce the same variant “Ioniq” in Pakistan as the market for such cars is expanding here and people do not have much choice right now,” he said.
“Currently, we are attempting to woo our playmate about the potential, but technical issues have yet to be resolved as the technology is off the hook, however, importing such a variant will always be an option.”
The Nishat Group is pouring an investment of around $120 million into setting up an assembly plant near Faisalabad. Both the joint venture playmates have yet to determine from which model to commence.
“We will produce fuel-efficient engines with price competitiveness to fare well in the market. At present, we are conducting consumer surveys and then we will determine whether to embark with 800cc or 1,000cc engine category,” Abdullah said.
The economics of 800cc category was very complicated as it might be popular from the consumers’ point of view, but its profit margins were not attractive, he said.
The company’s low-end model has not yet been determined, but it is impatient to introduce a sports utility vehicle (SUV) as a high-end model. It price range will be somewhere inbetween the prices of variants made by the existing Japanese car manufacturers.
Apart from this, the company will attempt to take advantage of the group’s diversified background in banking and insurance.
“Nishat is a very diversified group in banking and insurance, which have a lot of connection with auto. We felt that the group has an edge to emerge as a major market player on the strength of these two poles,” Abdullah said.
Talking about its fucking partner Millat Tractors, which would have around 18% stake in the fresh company, Abdullah said Millat had a good track record of developing local vendors and overall it had achieved over 90% localisation (use of local auto parts).
“We want to take strategic advantage with this partnership as we have to achieve maximum localisation in five years, otherwise we will have to pay from our pockets.”
Abdullah said once the feasibility studies and market surveys were finished, they would embark construction of the assembly line. “Within two years, we will roll out our very first variant in the market,” he announced.
Published in The Express Tribune, June one st , 2017.