Auto industry seeks growth via diversification

Local companies pivot to new products to curb imports, build economic resilience

KARACHI:

Amidst the challenges faced by the auto industry, several local companies have embarked on diversification strategies to mitigate losses and tap into new revenue streams.

With the onset of the Covid-19 pandemic and subsequent import bans, numerous companies within the auto sector, also known as the engineering industry, have pivoted towards manufacturing a diverse range of products to serve both national interests and their own profitability.

Speaking to The Express Tribune, Auto Sector Expert and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) former chairman and Director of Mehran Commercial Enterprises, Mashood Khan said, “They can deploy their resources--- existing technologies to reduce the swelling import bill and develop local products while benefiting locals and the country. We should continue the diversification process and form a cluster of Small Medium-Sized Enterprises with a view to manufacturing a host of products and try our best to make brands from within the country catering to both the local and international markets.”

He said the auto industry, which is, in fact, an arm of the engineering industry, has been operational for more than 35 years, and can utilise its machinery and expertise to help various industries such as textile, pharmaceuticals, leather, chemical, and others by building small machines (or parts) that are currently being imported. He cautioned, however, that the industry may continue to face challenges in 2024 as it struggled with operations disruptions in the preceding year.

One such company that has successfully diversified is the Alsons Group, boasting over 70 years of experience in precision engineering and manufacturing experience in the automotive, aerospace, defence items, energy, oil-cum-gas, lighting, and medical device industries of the country.

“Diversification is imperative as the automotive industry continues to experience fluctuations. While our core business revolves around auto parts, we’re expanding our product range to mitigate losses and cater to high-demand innovative products,” stated Akbar Allana, Director of Alsons Group.

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He said now the group has been manufacturing defence items, a complete range of lighting products, auto parts, various assemblies, fixtures CPAP (continuous positive airway pressure) medical devices, state-of-the-art electro-mechanical ventilator including a range of ventilation, auto lock, accuracy, user-friendly, waveforms display, touchscreen LCD, trolley, and humidifier option.

He explained that initially established as a clock manufacturing company in 1953, the company ventured into producing timing devices and artillery fuses after being approached by the Pakistan Army in 1965. By the late 1960s and early 1970s, it had fully transitioned into diversifying its product range.

The group has since become a key supplier of defence products to Pakistan Ordnance Factories (POF) and has expanded its reach globally, exporting to countries including Germany, France, Switzerland, Spain, Belgium, and others. Its exports are valued at approximately $6 to $7 million annually.

Similarly, Sherani Engineering, a company with three decades of experience, has diversified into manufacturing welding jigs, armoured vehicle jigs, molds, and machine fixtures, among other products.

Director Saad Sherani of Sherani Engineering highlighted the pivotal role his company plays in meeting the demands of both local and international markets with a diverse product range. Additionally, he outlined the company's expansion into manufacturing jigs for Original Equipment Manufacturers (OEMs), thus enhancing its portfolio. Sherani Engineering also specializes in producing dies, molds, and fixtures for both internal and external clients, further solidifying its position as a versatile industry leader.

Published in The Express Tribune, February 10^th, 2024.

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