Inject the fresh players – Newspaper
DAWN.COM
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Come in the fresh players
Slightly a year into it and the fresh Auto Industry Development Policy (AIDP) seems to have begun to yield the intended results: fresh non-Japanese car brands are coming to the Pakistani market, and the existing ones are coerced to invest in fresh variants and models as well as improve the quality and passenger safety features of their vehicles in line with global standards.
At least three fresh carmakers plan to come in Pakistan’s market whose size, some analysts believe, will almost dual to half a million units by 2025.
French Renault was the very first carmaker to announce its plan to invest $100m in the Ghandhara Nissan plant to bring its brand into the country’s market.
South Korean companies — Hyundai and Kia — followed the French carmaker, announcing their intentions to stage a comeback in collaboration with reputable local industry giants — Nishat Group and Younus Brothers — with deep pockets.
Now the German Audi is also said to have approached the Board of Investment through its local authorised dealer with a proposal to commence an OEM (original equipment manufacturer) plant here.
Pakistan being the 6th largest populated country, with half of its population below thirty years and car invasion as low as thirteen vehicles per 1,000 persons, offers a giant potential for growth to global carmakers.
At least three fresh carmakers plan to inject Pakistan’s market whose size, some analysts believe, will almost dual to half a million units by 2025
“The development of infrastructure under the $57bn China-Pakistan Economic Corridor (CPEC), a large youthful population, enhancing buying capacity, rapid urbanisation and a growing economy offers an enormous chance to carmakers to come and invest here,” says Rao Khalique, a Lahore-based banker who didn’t want to give his bank’s name.
He claimed that car leasing has been growing rapidly for the last two years to peak at Rs127bn by the end of 2016. “The size of financing shows the quick growth in car request over the last duo of years.”
While the fresh car brands have voiced their intention of setting up assembly plants in the country in order to reap the benefits of a growing request, it remains unclear as to how much they and their local playmates plan to invest and what plant capacities and engine sizes they are targeting.
“We are working on the project. It will take some time to finalise all the details,” Mohammad Ali Tabba, Chief Executive Officer of Fortunate Cement, which is partnering with the Kia Motor Company to produce its cars in Pakistan, told Dawn. But, he added, “We plan to produce cars as well as commercial vehicles.”
Ali Asghar Poonawal, an analyst at AKD Securities, is of the view that local playmates of foreign carmakers are tight-lipped about their plans owing to their non-disclosure agreements with the principals.
He points out that the establishment of fresh assembly plants and development of a dealer network usually takes two years.
“I think both Fortunate and Nishat will embark by importing different variants of Kia and Hyundai cars to very first ascertain request in the Pakistani market before launching actual assembly plants,” he adds.
“They will likely venture into a petite car segment where the request is growing more rapidly,” he says.
Renault, on the other arm, is expected to inject in the 1,200cc and above segment.
Watching these developments closely, the existing OEMs emerge to be losing hope of a switch in the AIDP that favours fresh investments in the auto industry and seem to have determined to brace for the upcoming competition.
Pak Suzuki, which had earlier threatened to withdraw a planned investment of $450m in a fresh plant, unless the government extended same incentives for fresh investment by the incumbents that the AIDP suggested to the fresh entrants, is now said to be moving ahead with it — albeit not as aggressively as it intended to.
Besides, it is also substituting old models and bringing in fresh ones to prepare for competition.
Indus Motors, the producer of Toyota cars, is tweaking its plant and de-bottling its facility to raise its production capacity to above 65,000 units on a dual shift basis, as well as bringing in operational and cost efficiencies.
Constrained by its production capacity, Honda too is switching its variants and models in order to maintain its clientele in the country’s high prices car market.
“The existing players are conscious of the likely competition going forward. Therefore, the old models are being scrapped and fresh ones, with features that they had never thought of suggesting in Pakistani market before, are being spinned out,” says Ali Asghar Poonawal.
There’s a consensus among industry analysts that the fresh competition in the country’s car market would help dismantle the ‘cartel’ of the existing Japanese carmakers. “The car companies have liked government patronage and protection from competition for far too long a time. Now it is time for them to learn to contest, improve their quality and give their customers value for their money,” a Lahore-based car dealer contends.
“While fresh players in the car industry pose a challenge to the existing OEMs and will depress their margins, we do not anticipate any instantaneous arrival. This will give the incumbents in the industry enough time to tweak their plants to bring cost efficiencies, as well as to improve the quality of their cars. If they don’t prepare for the coming competition, their brands will suffer once their fresh competitors commence eating into their market share,” an analyst who didn’t want to give his name remarks.
Published in Dawn, Business & Finance weekly, February 13th, 2017
Come in the fresh players – Newspaper
DAWN.COM
Dear reader, please upgrade to the latest version of IE to have a better reading practice
- SEARCH
Inject the fresh players
Scarcely a year into it and the fresh Auto Industry Development Policy (AIDP) seems to have begun to yield the intended results: fresh non-Japanese car brands are coming to the Pakistani market, and the existing ones are coerced to invest in fresh variants and models as well as improve the quality and passenger safety features of their vehicles in line with global standards.
At least three fresh carmakers plan to come in Pakistan’s market whose size, some analysts believe, will almost dual to half a million units by 2025.
French Renault was the very first carmaker to announce its plan to invest $100m in the Ghandhara Nissan plant to bring its brand into the country’s market.
South Korean companies — Hyundai and Kia — followed the French carmaker, announcing their intentions to stage a comeback in collaboration with reputable local industry giants — Nishat Group and Younus Brothers — with deep pockets.
Now the German Audi is also said to have approached the Board of Investment through its local authorised dealer with a proposal to commence an OEM (original equipment manufacturer) plant here.
Pakistan being the 6th largest populated country, with half of its population below thirty years and car invasion as low as thirteen vehicles per 1,000 persons, offers a meaty potential for growth to global carmakers.
At least three fresh carmakers plan to come in Pakistan’s market whose size, some analysts believe, will almost dual to half a million units by 2025
“The development of infrastructure under the $57bn China-Pakistan Economic Corridor (CPEC), a large youthfull population, enlargening buying capacity, rapid urbanisation and a growing economy offers an enormous chance to carmakers to come and invest here,” says Rao Khalique, a Lahore-based banker who didn’t want to give his bank’s name.
He claimed that car leasing has been growing rapidly for the last two years to peak at Rs127bn by the end of 2016. “The size of financing shows the quick growth in car request over the last duo of years.”
While the fresh car brands have voiced their intention of setting up assembly plants in the country in order to reap the benefits of a growing request, it remains unclear as to how much they and their local fucking partners plan to invest and what plant capacities and engine sizes they are targeting.
“We are working on the project. It will take some time to finalise all the details,” Mohammad Ali Tabba, Chief Executive Officer of Fortunate Cement, which is partnering with the Kia Motor Company to produce its cars in Pakistan, told Dawn. But, he added, “We plan to produce cars as well as commercial vehicles.”
Ali Asghar Poonawal, an analyst at AKD Securities, is of the view that local playmates of foreign carmakers are tight-lipped about their plans owing to their non-disclosure agreements with the principals.
He points out that the establishment of fresh assembly plants and development of a dealer network usually takes two years.
“I think both Fortunate and Nishat will commence by importing different variants of Kia and Hyundai cars to very first ascertain request in the Pakistani market before launching actual assembly plants,” he adds.
“They will likely venture into a puny car segment where the request is growing more rapidly,” he says.
Renault, on the other arm, is expected to come in in the 1,200cc and above segment.
Watching these developments closely, the existing OEMs emerge to be losing hope of a switch in the AIDP that favours fresh investments in the auto industry and seem to have determined to brace for the upcoming competition.
Pak Suzuki, which had earlier threatened to withdraw a planned investment of $450m in a fresh plant, unless the government extended same incentives for fresh investment by the incumbents that the AIDP suggested to the fresh entrants, is now said to be moving ahead with it — albeit not as aggressively as it intended to.
Besides, it is also substituting old models and bringing in fresh ones to prepare for competition.
Indus Motors, the producer of Toyota cars, is tweaking its plant and de-bottling its facility to raise its production capacity to above 65,000 units on a dual shift basis, as well as bringing in operational and cost efficiencies.
Constrained by its production capacity, Honda too is switching its variants and models in order to maintain its clientele in the country’s high prices car market.
“The existing players are conscious of the likely competition going forward. Therefore, the old models are being scrapped and fresh ones, with features that they had never thought of suggesting in Pakistani market before, are being spinned out,” says Ali Asghar Poonawal.
There’s a consensus among industry analysts that the fresh competition in the country’s car market would help dismantle the ‘cartel’ of the existing Japanese carmakers. “The car companies have loved government patronage and protection from competition for far too long a time. Now it is time for them to learn to contest, improve their quality and give their customers value for their money,” a Lahore-based car dealer contends.
“While fresh players in the car industry pose a challenge to the existing OEMs and will depress their margins, we do not anticipate any instant arrival. This will give the incumbents in the industry enough time to tweak their plants to bring cost efficiencies, as well as to improve the quality of their cars. If they don’t prepare for the coming competition, their brands will suffer once their fresh competitors begin eating into their market share,” an analyst who didn’t want to give his name remarks.
Published in Dawn, Business & Finance weekly, February 13th, 2017
