Auto companies say local part makers can meet demand

Official says local parts keep cost low

KARACHI: Local parts manufacturers have succeeded in gaining the confidence of new auto companies who are in initial stages of establishing new assembling plants in the country.

The development is a positive for Pakistan since foreign companies have, from time to time, expressed doubt on the ability of local auto parts manufacturers to be able to meet high demand and quality standards.

“We have no doubt that we need to buy local auto parts to keep our cost low,” said a top company official whose company is busy setting up an auto assembling plant in Pakistan.

There are a number of car companies that are currently establishing their plants in Pakistan and are in search of suitable partners through whom they can produce economical and quality parts for passenger cars and heavy vehicles. “Pakistan’s auto part industry is now strong enough to meet our requirements. We have no concerns in this regard,” the official commented on condition of anonymity because he is not authorised to talk to the media.

Domestic auto parts manufacturers are showcasing their products in Pakistan Auto Parts Show (PAPS) 2017, a three-day event, which will be concluded till Sunday at Karachi Expo Centre. The show has given a chance to new car companies to meet dozens of companies under one roof.

The official revealed that his company is targeting to produce 25,000 to 30,000 units in the next five years and it is doing market surveys to know the market demand.

New auto companies want to take full benefits under the new five-year auto policy, which was announced in 2016 in which the government tried to provide maximum tax benefits to new entrants to encourage car assembling in Pakistan. Currently, the market has only three car makers in Pakistan.

Big names like Renault, Kia, Hyundai and Audi have recently announced their intention to assemble vehicles in Pakistan. Nishat Mills Limited is establishing a car assembling plant in collaboration with Hyundai Motor Corporation in Lahore while Lucky Cement is going to set up a plant in partnership with Kia Motor Co in Karachi.

This could be a potential bonanza for local auto parts makers because car sales are already growing and new players are likely to count on domestic players to keep their cost of production low.

This year more than three dozen Chinese auto part manufacturers are exhibiting in PAPS 2017. However, instead of being threatened, local auto parts manufacturers are pleased to welcome them as they are expecting to see joint ventures between Pakistani and Chinese companies in the near future.

Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Mashood Ali Khan believes the domestic industry will grow much faster in the coming years. For the first time, Pak Suzuki Motor Company has helped export sub-assemblies manufactured in Pakistan to other Suzuki plants in the world. This new Pak Suzuki policy has resulted in the export of locally-manufactured fuel tanks to Suzuki Vietnam.

Published in The Express Tribune, March 5^th, 2017.

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