Volkswagen set to launch two new vehicles in Pakistan

German giant will introduce Amarok and T6 on back of CPEC-related demand

KARACHI: Volkswagen Commercial Vehicles is in final talks with Premier Systems Private Limited - the authorised importer of Audi vehicles in the country - to set up a manufacturing/assembly plant for its Amarok and T6 (transporter range) models, The Express Tribune has learnt.

The launch of the two vehicles - Amarok is a direct competitor to Toyota’s Revo and the T6 is a multi-seat passenger van - comes on the back of forecasted demand arising from the China-Pakistan Economic Corridor, said an official familiar with the development.



“Volkswagen believes that such robust vehicles are a must in Pakistan,” the official told The Express Tribune. “There will be a large dealer development and the target is to have 40 dealerships across the country.”

Volkswagen Commercial will use the same plant Audi intends to build for the assembly of its own vehicles in Karachi. Audi AG, the German carmaker, is owned by the Volkswagen Group.

In November, The Express Tribune reported that Audi has expressed its interest to establish a plant in the Korangi industrial area. The plant will facilitate the assembly/manufacturing of Volkswagen vehicles as well and could see its passenger cars also making an entry.

Premier Systems will be making the necessary arrangements in Pakistan as Audi and Volkswagen both make their move to assemble vehicles.

Ali Khan, head of automotive at Premier Systems, was unavailable to comment.

Test vehicles, a standard practice before any new model is launched, will do trial runs across the country. The exercise is meant to gauge Pakistan’s terrain and roads with the vehicles being driven around in camouflage by German drivers. These will then be sent back to Germany for feedback and changes, if necessary.

One of the biggest reasons for the entry of Volkswagen will be the high-quality diesel Pakistan refineries are set to produce from July 1. Diesel will now be produced with a sulphur limit of 500ppm and facilitates sulphate particulate emission reductions, necessary for meeting emission standards for heavy-duty highway engines. Oil marketing companies are already importing the same quality of diesel.



Positive for Pakistan

The development is a huge boost to Pakistan, given low levels of foreign direct investment and falling exports. Experts say investment is the key to guarding against Pakistan’s economic woes such as a widening trade and current account deficits, slowdown in the growth of remittance and falling exports.

The Express Tribune reported in November that the Audi plant alone would mean an investment of around $30 million. The assembly of Volkswagen could take the amount way higher.

Competition in auto sector

The development follows multiple reports and announcements of various carmakers to venture into the Pakistani market. Recently, Nishat Mills - a textile giant - announced a joint venture agreement with Hyundai to assemble vehicles in Pakistan.

Lucky Cement - one of the country’s largest cement makers - has already announced to partner with Kia Motors and Renault is in talks with Ghandhara to use its plant for car assembly.

Pak Suzuki has also said that it is willing to bring in fresh investment while Honda also launched its flagship Civic model last year.

Published in The Express Tribune, February 14^th, 2017.

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