China’s Changan and Master Motor to set up auto plant in Karachi

Will also look to export units after setting up manufacturing facility

Bilal Hussain June 30, 2018
The venture will see a total investment of $100 million by the end of this year. Master Motor will inject 70% while the remaining amount will come from the Chinese company. PHOTO: REUTERS

KARACHI: Master Motor Corporation, part of the Master group, will collaborate with China-based Changan to manufacture crossover SUVs as well as light commercial vehicles in Pakistan, establishing a plant in Karachi with an aim to export units to other countries as well.

The facility will have an initial capacity of 30,000 units a year, chief executive officer (CEO) Danial Malik told reporters on Friday. "The joint venture is meant to tap Pakistan's auto market as well as export right-hand vehicles to SAARC and ASEAN countries especially Malaysia and Indonesia," said Danial.

The official said Changan's plan is to take advantage of China's Belt and Road Initiative (BRI) and install strategic manufacturing units along the way. The China-Pakistan Economic Corridor (CPEC), the flagship project of BRI, makes the country an important player in the company's aim.

The venture will see a total investment of $100 million by the end of this year. Master Motor will inject 70% while the remaining amount will come from the Chinese company.

A company official, requesting not to be named, said foreign partners usually contribute technical assistance and licensing to their local partner. "But in this case, an OEM will actually invest its own amount in Pakistan." On the other hand, Danial said the company would aggressively work for indigenisation and localisation of its vehicles, a move meant to reduce dependence on the exchange rate that pushes up prices whenever the Pakistani rupee loses value against the US dollar.

Assistant President of Changan Automobile and General Manager of Overseas Business Development Department Wang Huanran and Master Motor Limited Chairman Nadeem Malik signed the agreement with an ambitious aim to become Pakistan's leading automobile company by 2025.

"We are excited to see market potential not only in Pakistan but also the export opportunities we can tap. Changan has selected Pakistan as the base country for right-hand drive vehicles to be exported to other relevant markets," said Wang while talking to the media.

He added that Changan is the largest selling Chinese brand in China, touching an annual volume of 2,870,000 units with a wide range of products in the LCV, SUV, MPV and passenger cars' segments through joint ventures with manufacturers like Suzuki, Ford, PSA, Mazda, Bosch, Aisin and Scheffler.

Nadeem said that the Master Group has been involved in the auto sector for two decades, and has sold 17,000 units of trucks and bus brands in Pakistan.

"Pakistan has huge potential in terms of the Motorisation Index since its ranked 160th in the world with only 18 vehicles per 1,000 inhabitants. Together with Changan, we can tap the potential while leading on the technology front and offering latest products at affordable prices," he said.

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Danial said that the plant will start production in December 2018.

"We will start with a few thousand units a year and reach our full production capacity within 3 years' time," he added.

"We are in the process of selecting dealers to be part of our network to serve our customers better by ensuring services and spare parts' availability in all major cities," said Danial. The CEO added that in time the company would look to get listed on the Pakistan Stock Exchange, and expand its output.

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Pakistan's Auto Development Policy 2016-21 has been credited for paving way for new entrants and subsequently, breaking the monopoly of three Japanese manufacturers in the country's auto sector.

Published in The Express Tribune, June 30th, 2018.

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