It is 2013. On a summer afternoon, a small car turns into a narrow lane in Orangi Town, one of Karachi’s most impoverished neighbourhoods. Sunlight reflects off the car’s shiny blue bonnet and the hubcaps glitter. The driver honks the horn and children come running out of the 80-square-yard house. Father has just bought the family’s first car, and it’s an occasion for celebration.
The children are not embarrassed to be travelling in their new car, small and inexpensive though it may be; a far cry from the luxury vehicles they see on TV. After all, practically everyone in the neighbourhood has rushed to buy one since this set of wheels first hit the market. The milkman, the clerk, the factory supervisor, the shopkeeper and the compounder — all from the neighbourhood — own one of these new snub-nosed vehicles.
Previously, motorcycles used to be the main mode of transportation among these families. Often four or five family members would go attend weddings on their CD70 motorbike, and that was both dangerous and embarrassing. Now, they comfortably drive over in their little car.
This was the dream that Feroz Khan, chairman of the now defunct Adam Motors, had seen for Pakistan; a country where more than 20 million people use motorcycles and where 1.5 million new motorcycles are produced every year. Where others saw only numbers, Feroz saw an entrepreneurial opportunity and decided that he would build an economical car for people who would like to have a four-wheeler but cannot afford it. With persistent hard-work and careful observation, he turned the dream into a reality, long before most of us had even heard of India’s Tata Nano that is now famous as the world’s cheapest car.
He called the car Revo, short for revolution, and successfully launched it in 2005. But, within a year, it ran into trouble and the plant had to be shut down. Soon enough, consumed by their daily struggles, Revo’s target market forgot about it. Seven years later, the only fleeting reminders of Revo that are still on the roads have broken back lights and cracked bumpers.
The 800cc car was priced at Rs269,000, which was 15 per cent cheaper than the hugely-popular Suzuki Mehran at the time. It was labelled the first Pakistani car, as it was fully designed locally. But despite all its promise, the company could sell only 600 cars, most of which were sold in Karachi.
Muhammad Jamil, a resident of Rawalpindi, bought a Revo in 2006 for Rs320,000, when Mehran cost over Rs400,000.
“As far as the drive was concerned, the car was in perfectly fine shape. I have no complaints with the engine, transmission system or gearbox,” says Jamil, who used the car for six years. “I can’t find body parts. No one in the market seems to have them. That is my only problem.”
Although he’s now putting up his car for sale, he still has good things to say about it. “One thing I would like to emphasise is the strength of this car. The body is very strong.”
Jamil’s woes are genuine as Adam Motors no longer makes accessories such as lights, side mirrors, headlights and interior parts. “There is no point as dealers aren’t willing to stock them in the absence of economies of scale,” explains Feroz.
So what exactly went wrong, despite all the optimism surrounding the project? Was its design faulty, its marketing strategy a failure or its financial plan flawed? The answer, it seems, is all of the above.
“I can assure you, there was a lot of demand,” says Javed Hussain, the salesman who sold the first Revo car that rolled out of Adam Motors’ Sindh plant. “The first car was delivered nine months after booking. Customers wouldn’t have waited that long if they didn’t really like it,” he reasons.
And it wasn’t just the fantastic price of the car that created the demand for it, he says. “Besides that, what people liked about the car was that it was really spacious. You could sit inside it comfortably without having to adjust your position frequently,” he says.
But, Hussain adds, the car wasn’t perfect and there were some things that put the buyers off. “People instantly disliked the speedometer. It was round and small, a poor copy of what you’ll find in Volkswagen’s Beetle.”
There were other minor but niggling issues too, says Hussain. “Sometimes the horn wouldn’t work, the nuts and bolts were missing and often the doors would make a strange sound when you shut them.”
Baber Khan, who works for www.Pakwheels.com, one of the best sales-only platforms for vehicles, points to Pakistani buyers’ preferences for Revo’s failure. “The car was in demand but most Pakistanis are cautious buyers who give the vehicle’s resale value preference over safety. This is a point you cannot ignore,” he says. But to develop that kind of reputation, a company must stay in business for a number of years and Adam Motors lasted for far too few.
Feroz admits that such issues did surface in his cars but pointed out that the car’s design was specifically tailored to the local market, which ensured that having those issues fixed wasn’t going to be much trouble. “There was nothing in it that a roadside mechanic could not fix. The body was very strong, it was collision-safe. We had made energy absorption zones in the car’s body,” he explains.
The car’s design, perfect for a certain kind of family, could be attributed to Feroz’s own life experience. Born to homeless migrants from India, he grew up in Karachi’s low-income Lalukhet neighbourhood with five siblings. After attending a government school where he gave his matriculation exams, Feroz earned a scholarship to DJ College, Karachi, and then another to NED University, finally graduating as a mechanical engineer. After doing odd jobs in Karachi, he decided he must go abroad and broaden his experience if he were to achieve something big. Thus, he borrowed $300 from his sister in 1972 and began a long journey to Germany by bus.
On his way, he visited shrines in Kabul and Herat in Afghanistan, Mashhad, Tehran and Kirmanshah in Iran, and Baghdad in Iraq, to pray for a job. “I’m not religious but am definitely spiritual. God is very important. If you don’t have a God, then create one!” he says.
And God has been by his side. Before he could reach Europe, Israel’s Olympic team was killed by militants, prompting Germany to stop issuing visas. Four months after being on the road and with only $100 in hand, Feroz was stranded in Beirut. As fate would have it, and even without having a sponsor in Saudi Arabia, he managed to get a visa for the kingdom and landed a well-paid job in Saudi Aramco. By the time he left Saudi Arabia in 1978, Feroz had made enough money to buy 42.5 per cent shares in a company in England that made thread protectors for oil pipes.
After two years in England, he moved to Texas, US, and set up a company called Tubular Protection of America. Eventually, he returned to Pakistan in 1990 and established Omar Jibran Engineering, an auto parts maker. OJ Engineering, as it came to be known, started manufacturing auto parts for Pak Suzuki Motors. Over time, they forged a good reputation as vendors for Pak Suzuki and more customers, including Toyota and Honda, awarded them contracts. To this day, trophies and appreciation letters from the car assemblers decorate his office.
In the 2000s, Feroz made the risky decision to divert his attention from OJ Engineering and move on to becoming a car manufacturer under the name of Adam Motors. He was now coming into direct competition with the customers of his auto parts business — the Japanese car assemblers. This also led to other problems. “While everyone was placing their bets on Revo’s performance, local assemblers whom Feroz’s auto parts business was servicing were pressuring Adam to close shop by pulling out their orders from its parent Omar Jibran Engineering Engineering,” says Baber.
Unlike most industrialists, Feroz went ahead without asking the government for any subsidy, not even for research and development — something which the well-established textile industry continues to receive. “I started the business with just $10 million. That was a great achievement, as you need hundreds of millions of dollars for making a car,” he says, with a hint of pride.
But just six years later, the experiment had gone bad. Dissatisfied customers sued Feroz in different courts and banks that had helped finance the project began pushing him to pay back their loans. Even OJ Engineering, which had been previously been very stable, took a serious financial hit.
Critics started raising questions over Revo’s claim that it was completely “made in Pakistan”. It may have been designed in Pakistan but its engine was imported from China, they pointed out.
“Well, design is all about putting a thousand moving parts together,” responds Feroz. “If the project had survived, we would have begun making the engines in Pakistan by 2007.”
Although he offers a spirited defence of some of these critiques, Feroz is not shy of self-criticism and is quite clear about the reasons that caused Adam Motors to go bankrupt.
“I had launched the car in a hurry,” he says, admitting that the financial planning had been poor. “There were also problems with marketing,” he adds. Before Revo, Adam Motors used to make trucks and Feroz had thought that the same dealers would be able to market a car as well. “I was wrong. The truck dealers knew nothing about customer service. So that kind of backfired.”
Other reasons that were not in Feroz’s control were also at play. The government may have lent some superficial support to the project — salesman Hussain vividly recalls Revo’s launch where then prime minister Shaukat Aziz had himself taken the car for a test drive and proudly announced that Pakistan had joined the list of countries that design their own cars — but industry stakeholders and academicians all agree that the overriding factor in Revo’s demise is the discouraging government policy. In that, even Feroz himself feels cheated.
At the groundbreaking of the factory in 2003, former prime minister Aziz, then finance minister, had promised a push-start. “I needed no subsidy or undue support. It was a matter of acceptance,” says Feroz. “Each year, government buys thousands of cars for its officials. I wanted to be among the listed firms. I would have automatically won the bid as Revo’s price was the lowest,” he points out.
To survive and improve upon the car’s design, the company had needed confirmed yearly sales of 5,000 units, which was not unrealistic in a market of over 160,000 cars annually, and with government support, it was a very achievable target for Adam Motors. That support never came and Adam Motors couldn’t make it to the approved list. As it turned out, the actual government policy was to award a contract to a car maker that has an international presence and annual sales of 200,000 units. Adam Motors, clearly, did not fit the bill.
Baber agrees that this policy was a great hurdle in Adam’s path and points out that developed countries have gone beyond just subsidising their own companies. “Ferrari’s annual production during its founding years was just a few units, as is the case with Lamborghini and Pagani even today. They never imposed such regulations on their industry as taking small steps is the way for a country to create its own auto industry,” he says.
He also claims that the country does have the resources to manufacture a car’s chassis and body and outsource the rest of the items to other manufacturers, allowing a company to gradually sustain itself.
One wonders if the policymakers have already decided that Pakistan will produce only vendors and suppliers of parts. That certainly seems to be the case as the Auto Industry Development Plan, the official policy for the industry, does not even refer to the possibility of a local entrepreneur rising to make a car.
Today, the Revo plant located at Pakistan Steel Industrial Estate near the giant Pak Suzuki manufacturing facility is closed. It has been shut for over five years now and there are little chances of its revival.
But even then, the ever-optimistic Feroz refuses to give up on his dream. “To have a dream, and to try and to fail is better than not having tried at all. And it’s a game of striking at the right time. I will keep the plant and will make a better, smarter car,” he says. And, perhaps struck by his sheer will-power, I somehow believe him.
Published in The Express Tribune, Sunday Magazine, September 30th, 2012.