LAHORE: Nishat Group’s plan to introduce hybrid-electric vehicles in the local market is facing a delay as regulatory and related issues cause the conglomerate to adopt a wait-and-see approach.
To recall, the group has partnered with Korea-based Hyundai Motor Company (HMC) to set up an assembly/manufacturing plant in Pakistan where it will produce passenger cars and 1.5-ton range commercial vehicles.
While the newly-formed company, Hyundai Nishat Motors Limited, will produce standard vehicles at its plant in Faisalabad, its plan to introduce locally-assembled hybrid cars is being hindered by issues.
Chief Financial Officer Norez Abdullah told The Express Tribune that there are impediments to introducing hybrid or electric variants locally and said that under the current policy the company does not see any advantage in adding extra investment through this category.
“We have to see how much of an incentive the government gives auto players on introducing such cars,” said Abdullah. “This technology is expensive. It may become affordable after a while, but right now it is not. Even imported hybrid-electric vehicles are subsidised. They are then able to pass on the benefit to the consumer.”
Expected to roll out first vehicle in December 2019
Recently, the company held the ground-breaking ceremony for its car-assembly plant in Faisalabad. At an investment of $120 million, the first variant is expected to be rolled out in December 2019. However, under the Greenfield investment category, the company will import 100 vehicles before 2019.
In time, the company plans to produce 800, 1,000, 1,300, 1,600 and 2,000cc engine category vehicles, along with commercial vehicles. “We aren’t sure sure which engine category we will start off with. However, all engine categories will be produced by the company over a period of time,” Abdullah said.
“Pakistani market is unique in the sense that it not only requires CKD but also local indigenisation. The incentives for us are time bound, and we may like to create a market,” he said.
“We have to consider the entire supply chain issues, our dealers’ network, among other issues. We have made some outlines of variants but in a year’s time, with the consensus of Hyundai, we will be able to tell exactly which engine category we are starting off with.”
The company will simultaneously launch 1.5-ton light commercial vehicles as demand related to the China-Pakistan Economic Corridor propels the need.
“We are very positive that there is an opportunity in the local auto market. Volkswagen, Renault, Kia and Hyundai are coming. This is foreign direct investment and it comes after intelligently assessing an opportunity in Pakistan.”
Talking about technology, Abdullah said that Pakistanis are fast followers and are always ready to embrace technology, but hurdles remain in different forms. “I see a big market share of hybrid and eclectic vehicles, and our intentions are clear.”
Abdullah said fuel quality will remain an issue and Pakistan would need to upgrade if it wants locally-assembled hybrid vehicles.
“Koreans haven’t said no to us (on the plan), but if fuel regulations are not upgraded our parent company will never allow us to produce hybrid cars in Pakistan.”
Published in The Express Tribune, December 31st, 2017.