Hyundai partners with local player to set up assembly plant

Al-Haj Group will produce different truck variants and luxury buses as CPEC projects gain speed

KARACHI: Al-Haj Group in partnership with Hyundai Motor Company (HMC) has decided to assemble different truck variants and luxury buses in Pakistan at an expected investments of Rs4 billion.

The company has already purchased 30 acres of land outside Karachi as it aims to start production in the next 12 months.

In Phase 1, Al-Haj Hyundai (Pvt) Limited, a separate company, will initially invest Rs1.5 billion through its own resources.



However, if the two partners agree to move forward, Hyundai may invest in Phase 2 that is expected to start in 2019. Al-Haj Group has a market presence since 1960 and is currently assembling Chinese trucks and passenger cars.



“Hyundai had so many options to partner in Pakistan, but we believe they chose us because of our experience in the heavy vehicles’ market,” Al-Haj Hyundai CEO Bilal Khan Afridi said while talking to reporters on Thursday.

Afridi said that his company is aiming to tap the growth in heavy vehicles in the coming years, as the China-Pakistan Economic Corridor (CPEC) projects gain speed.

The company will set up a Green-field project - completely new infrastructure - with an aim to take the advantage of tax benefits the government provided in the new Automotive Development Policy (ADP) 2016-2021.

After a gap of over seven years, sales of trucks and buses have rebounded strongly due to relative improvement in security and macroeconomic stability in the country. Pakistan produced a record 6,736 units of trucks and buses in fiscal year 2015-16.



Al-Haj Hyundai will initially introduce a heavy duty truck Hyundai XCIENT with different variants and Hyundai UNIVERSE luxury buses for inter-city travel. It will also launch Hyundai MIGHTY medium and light duty trucks. Later on, the company also plans to introduce various other products of Hyundai in Cargo and passenger handling segments.

Hyundai Global Motors Co Ltd Chairman Kyung Sik said that his company is confident that its partnership with Al-Haj Group will help both players because Pakistan is a big market with a growing population.



Current market

There are now four Chinese truck assemblers in Pakistan. Chinese truck assemblers claim that they have already grabbed up to 40% market share in a short period of 10 years while the rest is in the hands of well-established Japanese players who have historically dominated.

The prices of Chinese trucks are in the lowest band. For instance, if a Chinese truck is available in Rs7.8 million it can go up to Rs12.6 million in the Japanese range. Price of a high-end European brand like Volvo goes up to Rs16.5 million, partly because they are not assembled in Pakistan.



Al-Haj Hyundai officials say they are confident that they would grab the market share of both the Chinese and Japanese. The prices of Hyundai trucks will be higher than Chinese brands but at least 10% to 15% cheaper than the Japanese ones.

Industry officials say German truck maker MAN SE is also setting up a plant in Pakistan.

Truck assemblers in Pakistan say that CPEC is expected to generate huge demand for trucks and buses in Pakistan. However, much to the satisfaction of local players the demand is growing even before the launch of the CPEC projects thus, creating opportunities for all companies from mid-tier to high-end categories.

Published in The Express Tribune, May 19^th, 2017.

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