Automakers look for more export avenues

Industry notes increased interest from African, Central Asian and ME markets

LAHORE:

The automotive sector is showing signs of becoming another avenue for fetching export revenue, as many companies, both four- and two-wheelers, strive to make progress in line with the auto policy 2021-26.

The reasons for exporting four-wheelers are obvious, ie, the auto policy 2021-26, however, many experts believe that unstable local demand and inflationary pressures in the country have pushed big Japanese players to look for export opportunities.

"Companies have achieved a decent level of localisation but local demand has been dwindling for a couple of years, which is putting a strain on these companies, who are forced to close down their production units or reduce work shifts owing to thin demand and high prices," remarked an official of a Japanese car manufacturer.

"As the industry has matured, key players see opportunities to position Pakistan as a competitive exporter in regional and global markets," he added.

For 2024, Pakistan's automobile export numbers are modest but are steadily rising. The automotive sector, including four- and two-wheelers, has observed increased interest from markets in Africa, Central Asia and the Middle East.

Motorcycle exporters, in particular, have shown considerable promise, with leading manufacturers like Atlas Honda and United Motors making inroads into these regions.

In addition, Indus Motor has recently announced the export of their vehicles whereas China's Master Changan Motors has already shipped its variants from Pakistan last year.

Exports of auto accessories, ranging from spare parts to custom modifications, are also gaining pace as demand for affordable yet durable components grows globally.

In 2023, Pakistan exported around 10,000 vehicles, including a mix of cars, motorcycles and heavy-duty vehicles. While this is a small fraction of global automotive trade, it represents a 20% increase from the previous year, signaling the industry's potential.

"Auto industry can make inroads into emerging markets, as our industry has grown significantly over the years," commented an industrialist while talking to The Express Tribune.

He added that the key to unlocking the potential lay in scaling up production capacity, enhancing product quality and adhering to international standards. "Pakistan's strategic location, low labour costs and evolving technical expertise are considered strong advantages in achieving this goal."

Auto sector analyst Rameez Ahmad believes that with proper government support and industry collaboration, Pakistan could emerge as a significant player in the international auto market.

"Demand for two-wheelers in developing countries is immense and Pakistan is well-positioned to cater to this need. By leveraging our manufacturing strengths and investing in R&D (research and development), we can carve out a niche for ourselves," he said.

While the potential is significant, the path to becoming a major exporter is full of challenges. The industry needs to overcome hurdles such as inconsistent quality control, high production costs and the lack of better integration into global supply chains.

"The government and private sector must work together to address these challenges. Building a strong brand reputation, ensuring competitive pricing and adhering to global quality standards are crucial for success in international markets," said an official of Pakistan Automotive Manufacturers Association (Pama).

To support this growth, the government should take some initiatives like providing incentives for export-oriented manufacturers and signing treaties with potential export markets. These measures, coupled with strategic partnerships with international players, are expected to provide the necessary boost to the sector, he added.