Dewan Farooque applies for resuming car production

Published: August 11, 2016
Email
Will produce Daehan, SsangYong and Kia vehicles in Pakistan

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.

Dewan Farooque Motors distances itself as share price surges over 100%

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 rise and fall of Dewans

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 11th, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

Facebook Conversations

Reader Comments (20)

  • JSM
    Aug 11, 2016 - 7:16AM

    ssangyong is owned by Indian company- how can Pakistan permit prodcution of their vehicles in Pakistan?Recommend

  • point
    Aug 11, 2016 - 10:24AM

    I guess the businessmen knows more than you. Let them decide, they just don’t start making a thing but rather there is a long deal involved in between with the companies. Keep your little indian mind to your little work!!Recommend

  • Silent Conqueror
    Aug 11, 2016 - 10:48AM

    @JSM Even Land Rover is owned by an Indian company (Tata) and they have assembly plant in Pakistan for Defender. And Pakistan Army has procured these vehicles in large numbers.Recommend

  • Raisani
    Aug 11, 2016 - 11:30AM

    @ JSM:
    the same way as they permit Indian movies in Pakistan. got it?Recommend

  • Gemini
    Aug 11, 2016 - 11:42AM

    @JSM: Jaguar is also owned by TATA group.Recommend

  • Ch. K. A. Nye
    Aug 11, 2016 - 11:47AM

    @JSM:
    Amazing that anti-India mentality extends to the automobile industry. Why so? You think they will produce cars any inferior to those already being sold here?? Recommend

  • concerned
    Aug 11, 2016 - 12:38PM

    Apparently, this is why Pak Suzuki and Indus Motor took stay order from court on new auto policy to block incentives to Deewan Faruq.Recommend

  • irfan
    Aug 11, 2016 - 1:01PM

    @JSM: Dear it’s all about money . When it comes to business , all businessmen think about Dollar , not India-Pakistan.Recommend

  • Shakil Ahmed
    Aug 11, 2016 - 1:34PM

    @JSM owning shares in any international company doesnt really change its nationality! Jaguar Land Rover will loose all its sales if its renamed as TATA or you market as a Indian brand. same goes for other investment made by Indians in auto sector Daewoo is another one, very common name in Pakistan but its also owned by Indians. Recommend

  • Reader
    Aug 11, 2016 - 1:41PM

    Good newsRecommend

  • Tp
    Aug 11, 2016 - 1:52PM

    Next year Fauji Car is being introduced. Look out for the Fauji S500 model with sunroof.
    For protection it also has rocket launcher.Recommend

  • cbing
    Aug 11, 2016 - 1:57PM

    @Silent Conqueror:
    I don’t think Land Rover has an assembly plant in Pakistan. The particular Defender is assembled by a third party company only to be used by army. This agreement is upto a certain period of time, and was signed long before Tata acquired JLR. Recommend

  • cbing
    Aug 11, 2016 - 1:58PM

    @point:
    Oh, personal attack. Shows a lot about your big mind at work.Recommend

  • Sawaiz
    Aug 11, 2016 - 2:07PM

    Fruits of the new policy has started to ripe!!
    Beware Honda,Suzuki,Corolla!!
    U will get tough competitions from various companies!! Recommend

  • Haq
    Aug 11, 2016 - 7:42PM

    Land Rover was having agreement with HIT (long begore Tata acquired majority shares) & use to produce diesel version of Defender for army, as well as armoured vehicles for police. But as far as i know, these vehicles were having serious quality & reliability issue. Army degided to go back to Land Curiser II models, that has proven technology & still used widely for serious off roading in Middle East / AfricaRecommend

  • Asif
    Aug 11, 2016 - 10:19PM

    GoodNews. I am the biggest fan of Santro. Please launch Santro i10,i20 and i30 series in Pakistan. It will be total hit in Pakistan. If you put unit price around 7 lakhs.Recommend

  • Rustam
    Aug 12, 2016 - 12:29AM

    @Shakil Ahmed: You made the point that owning shares of a company does not change its nationality. It is a South Korean car and shall remains so.
    Secondly, an attemp to produce it in India has miserably failed there. Therefore, Mahindra was re-thinking its Ssangyong plan in March 2016 and intended to produce the cars in China. Indian entrepreneurs abandoning India! Let us see safron reaction to the emerging story.
    Read the Reuter story for further details
    http://www.reuters.com/article/us-ssangyong-mtr-mahindra-china-idUSKCN0W90HIRecommend

  • LS
    Aug 12, 2016 - 1:37AM

    …And the showroom’s artist rendering has logos of BMW and Mini :-) while the talk is about third rung passenger cars…Recommend

  • Shamshad Asif
    Aug 12, 2016 - 1:38AM

    I highly doubt dewan will start producing cars, the company is in financial turmoil so much so they can not even pay their employees their salaries. Even if they do start production, banks will step in to recover their money as yousuf dewan is a very big defaulter and the operations will close shortly after.Recommend

  • LS
    Aug 12, 2016 - 1:41AM

    Also.. Video says SsangYong of China which is incorrect.. It is South KoreanRecommend

More in Business