Dewan Farooque applies for resuming car production

Will produce Daehan, SsangYong and Kia vehicles in Pakistan

ISLAMABAD: Dewan Farooque Motors Limited has applied for resuming vehicle production at its closed unit next month, a development that should spark competition and help the company take some market share away from the three dominant players.

The company’s share rose 3.95% Wednesday, finishing at Rs19.21, with around 7.5 million shares changing hands.

In a statement, the Engineering Development Board (EDB) commented that the Automotive Development Policy (ADP) 2016-21, prepared by the Ministry of Industries and Production, had started producing results.

Encouraged by the incentives given for the revival of closed units, Dewan Farooque Motors has applied for reviving its vehicle production plant and come up with a plan to produce Daehan, SsangYong and Kia vehicles. The application has been sent to the Board of Investment (BoI) and the EDB.



The disclosure comes in the backdrop of a report that appeared about a month ago that talked about a massive surge of around 100% in the share price of Dewan Farooque Motors over the course of five months in the stock market.

The company at the time denied that it had anything to do with the interest of investors in its shares and blamed stock traders for encouraging speculation and spreading rumours.

Production plan

The resumption of production by Dewan Farooque Motors will commence with the re-launch of Shehzore 1-ton single rear wheel truck along with Hyundai Powertrain in September 2016. These will be followed by Shehzore 1-ton truck with dual rear wheel in October 2016.

Later, the company will introduce 1.5-ton Shehzore truck and a 1,600cc engine capacity sport utility vehicle (SUV) in collaboration with Ssangyong China in 2017. It also plans to launch passenger cars, light commercial vehicles and SUV in collaboration with Kia Motors, Korea in the next three years.

The Dewan Group has finalised an agreement with SsangYong Motor, the fourth largest automobile manufacturer in South Korea.

Separately, its negotiations with Kia Motors, which is part of the Hyundai Motor Group, are at an advanced stage for the production of KIA range of vehicles in Pakistan.

Kia’s entry into Pakistan depends on the availability of brownfield investment facility under the recently announced ADP.



The EDB has started reviewing the request for the resumption of vehicle production by Dewan Farooque Motors and is likely to give its approval soon.

With the re-entry of Dewan Group, competition in the domestic car market will intensify, particularly after the launch of Kia cars.

Both the BoI and EDB welcomed the proposed investment plan and assured the company of their support in a meeting held on August 3. It was chaired by BoI Chairman Miftah Ismail and attended by the BoI secretary, EDB chief executive officer, executives of Dewan Farooque Motors and senior government officials.

A similar application by a large Lahore-based motorcycle manufacturing company seeking permission for the production of cars and light commercial vehicles is also under consideration.



Published in The Express Tribune, August 11^th, 2016.

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