Contemplate expanding capacity, target more export markets. PHOTO: FILE
LAHORE: Improving macroeconomic indicators and a phenomenal increase in auto sales have convinced local part makers that this might be the right time to invest and expand their businesses.
For long, Pakistan has suffered from economic stagnation, but increased auto financing and falling oil prices have spurred spending in the auto sector, leading stakeholders to ponder, much more seriously, over increasing capacity.
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“We are getting orders and the pace is increasing,” said Sultan & Kamil International CEO Faisal Mahmood on the sidelines of the 12th Pakistan Auto Show 2016 being held at the Lahore International Expo Centre. Mahmood’s company makes more than 350 automotive parts and exports to all major automobile markets in the world.
He is not alone. Almost every other exhibitor was hopeful of improved business activity in both local and international markets in coming months.
Pakistan Association of Automotive Parts & Accessories Manufacturers (Paapam) Senior Vice Chairman Mashood Ali Khan said the industry is growing every year.
The size of the global aftermarket (automotive part dealers other than Original Equipment Manufacturers) is over $600 billion, and Pakistan can tap into this huge market, he said.
“Pakistan is producing parts of good quality and at economical rates,” said Khan. “What it lacks is better marketing, which is a vital skill needed to tap into the robust international market.”
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Paapam is planning to arrange a three-year export coaching programme with the government of Netherlands for engineering goods manufacturers of Pakistan. They say it will bring significant change in how Pakistani exporters approach foreign buyers.
Some exhibitors were also optimistic about the China-Pakistan Economic Corridor (CPEC) and the business it is expected to generate related to the engineering sector.
“Chinese truck manufacturers are thinking of setting up manufacturing facilities here because they think CPEC will increase truck demand in the country,” a car company official said requesting not to name him or his company.
The exhibition has attracted 17 international exhibitors, most of which are from China.
Organisers say the annual event is gradually gaining credibility in European auto parts buyers, but it is taking time because business deals in automobile sector usually takes two to three years to mature.
Published in The Express Tribune, March 6th, 2016.
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