KARACHI: Master Motor Corporation, in collaboration with the Chinese auto leader Changan, is all set to kick-start the production of light commercial and passenger vehicles in April.
The $100-million investment venture, with Changan owning a 30% stake and Master Motor the remaining 70%, is going to assemble M9 and M8 pickups, and Changan Karwan van from the next month. The company also aims to assemble sports utility vehicle (SUV) CX70 in future, said an official, associated with the joint venture.
In January, the company first imported the completely built units (CBU) of Changan Karwan van and M9 pickup.
Due to high demand of the Chinese brand, it got advance bookings by March, according to Master Motors CEO Danial Malik. Master Motors has got a Greenfield status, which offers relaxation in taxes to new players. “This is the right time for the company to start assembling the vehicles as demand has picked up due to the removal of ban on non-filers of tax returns,” said Daniyal Adil, an analyst at Topline Securities.
The joint venture aims to meet an initial capacity of 30,000 units per annum. It has future plans to export right-hand vehicles to SAARC and ASEAN countries as well, especially Malaysia and Indonesia, according to the company official.
The auto imports have almost ceased due to strict conditions by the government. Last year, the volume of imported vehicles was 70,000 units annually, out of which 80% vehicles were less than 1300cc engines.
“It’s a big chunk, which will, of course, be available to these new locale assemblers,” said Adil. He said that even though, demand-wise, it is a good opportunity for incoming players, the competition will increase and margins of companies will contract. Many new entrants are entering Pakistan’s market as the country has a motorisation rate of only 18 vehicles in 1,000 people, which is a huge opportunity to tap, the analyst added.
Moreover, Kia Motor’s local production will commence in the first quarter of financial year 2019-20; while in early 2019, Hyundai will mark its entry, following six other players that have shown interest in the Pakistani market.
All the players will start assembling 10,000-15,000 units annually and will be adding to their capacity. Due to the rupee devaluation, prices have soared a lot, which has adversely affected the buying power of customers.
Published in The Express Tribune, March 24th, 2019.
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