New market entrant: Renault to begin assembling cars by 2018
Initially French automaker will introduce SUV Duster at attractive price
Initially French automaker will introduce SUV Duster at attractive price. PHOTO: EXPRESS
ISLAMABAD:
French automobile manufacturer Renault has decided to start assembling cars in Pakistan, a move that is expected to break the monopoly of existing industry players besides providing a chance to consumers to buy better-quality vehicles at comparatively lower prices.
“Renault has decided to invest in Pakistan and will start assembling cars by 2018,” the Board of Investment (BOI) announced on Thursday.
In the beginning, the company will introduce its top-of-the-line SUV, Duster, at a price that will be far lower than existing prices for vehicles in this category being sold by dominant players in the country, according to officials of the BOI.
Duster could be available at around Rs2.5 million, which was lower than prices of 1,500cc Japanese-made cars, the officials said. The company will also introduce up to 1,200cc cars to cater to the needs of upper-middle class.
“Renault will invest $100 million to expand the capacity of Ghandhara plant where it will assemble the vehicles,” revealed BOI Chairman Miftah Ismail while talking to The Express Tribune.
Breaking monopoly
Pakistan has long been struggling to bring at least one foreign new brand to break the monopoly of existing three dominant players. It wants to shake up the car market dominated by Japanese brands Toyota, Honda and Suzuki, whose locally assembled cars are sold at relatively high prices but lag behind imported vehicles in terms of quality and specifications.
Renault is a multinational automobile manufacturer established in 1899 and produces a range of cars and vans. It is one of the top 10 global manufacturers in terms of market share. In Europe, the group had a market share of over 10% last year on the back of Renault and Dacia brands, buoyed by the success of Clio, Captur, Duster and Sandero in particular.
Ismail said the French company would do business in Pakistan under the existing automobile policy and no new benefits had been offered to it.
The entire objective of the auto policy was to bring a new player and Renault promised to launch fuel-efficient, high security-feature vehicles at reasonable prices, said Ismail.
Benefits for local market
The move is expected to force the existing car assemblers to reduce prices of their brands. In the last fiscal year, sales of locally assembled vehicles rose 12% to 257,752 units, according to data compiled by the Pakistan Automotive Manufacturers Association.
In comparison, the import of used vehicles increased around 67% last year. Around 53,600 used vehicles were imported in fiscal year 2015-16 compared to 32,100 units in 2014-15.
In March this year, the government unveiled a new policy to attract Greenfield investment as well as revive the closed auto assembly units in the country.
The Engineering Development Board prepared the engineering side of the draft policy whereas the BOI chairman prepared the financial part of the policy, said the BOI.
The government has been trying to lure foreign companies like Volkswagen, Peugeot, Renault and Nissan. During Eidul Azha holidays, Finance Minister Ishaq Dar and Ismail visited France and met top executives of Renault.
“Next year, Nissan will introduce its Datsun model in Pakistan,” said Ismail. Renault has 50% shares in Nissan.
For the revival of sick units, the new auto policy allows import of non-localised parts at 10% duty and localised parts at 25% for three years.
The government has also allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility.
It has permitted import of 100 vehicles of the same variant in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after groundbreaking of a project.
A major incentive for new investors is the reduced 10% customs duty on non-localised parts for five years against the prevailing 32.5%. For existing investors, the duty was slashed by 2.5% to 30% from fiscal year 2016-17.
Published in The Express Tribune, November 4th, 2016.
French automobile manufacturer Renault has decided to start assembling cars in Pakistan, a move that is expected to break the monopoly of existing industry players besides providing a chance to consumers to buy better-quality vehicles at comparatively lower prices.
“Renault has decided to invest in Pakistan and will start assembling cars by 2018,” the Board of Investment (BOI) announced on Thursday.
In the beginning, the company will introduce its top-of-the-line SUV, Duster, at a price that will be far lower than existing prices for vehicles in this category being sold by dominant players in the country, according to officials of the BOI.
Duster could be available at around Rs2.5 million, which was lower than prices of 1,500cc Japanese-made cars, the officials said. The company will also introduce up to 1,200cc cars to cater to the needs of upper-middle class.
“Renault will invest $100 million to expand the capacity of Ghandhara plant where it will assemble the vehicles,” revealed BOI Chairman Miftah Ismail while talking to The Express Tribune.
Breaking monopoly
Pakistan has long been struggling to bring at least one foreign new brand to break the monopoly of existing three dominant players. It wants to shake up the car market dominated by Japanese brands Toyota, Honda and Suzuki, whose locally assembled cars are sold at relatively high prices but lag behind imported vehicles in terms of quality and specifications.
Renault is a multinational automobile manufacturer established in 1899 and produces a range of cars and vans. It is one of the top 10 global manufacturers in terms of market share. In Europe, the group had a market share of over 10% last year on the back of Renault and Dacia brands, buoyed by the success of Clio, Captur, Duster and Sandero in particular.
Ismail said the French company would do business in Pakistan under the existing automobile policy and no new benefits had been offered to it.
The entire objective of the auto policy was to bring a new player and Renault promised to launch fuel-efficient, high security-feature vehicles at reasonable prices, said Ismail.
Benefits for local market
The move is expected to force the existing car assemblers to reduce prices of their brands. In the last fiscal year, sales of locally assembled vehicles rose 12% to 257,752 units, according to data compiled by the Pakistan Automotive Manufacturers Association.
In comparison, the import of used vehicles increased around 67% last year. Around 53,600 used vehicles were imported in fiscal year 2015-16 compared to 32,100 units in 2014-15.
In March this year, the government unveiled a new policy to attract Greenfield investment as well as revive the closed auto assembly units in the country.
The Engineering Development Board prepared the engineering side of the draft policy whereas the BOI chairman prepared the financial part of the policy, said the BOI.
The government has been trying to lure foreign companies like Volkswagen, Peugeot, Renault and Nissan. During Eidul Azha holidays, Finance Minister Ishaq Dar and Ismail visited France and met top executives of Renault.
“Next year, Nissan will introduce its Datsun model in Pakistan,” said Ismail. Renault has 50% shares in Nissan.
For the revival of sick units, the new auto policy allows import of non-localised parts at 10% duty and localised parts at 25% for three years.
The government has also allowed one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility.
It has permitted import of 100 vehicles of the same variant in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after groundbreaking of a project.
A major incentive for new investors is the reduced 10% customs duty on non-localised parts for five years against the prevailing 32.5%. For existing investors, the duty was slashed by 2.5% to 30% from fiscal year 2016-17.
Published in The Express Tribune, November 4th, 2016.