‘Innovation only way out for auto industry’

Parts manufacturers fear open trade will sink them with Indian imports.

KARACHI:

The past few years have taught Pakistani auto-parts makers one very important lessons: only continuous innovation and diversification of the client-base can shield them from new challenges that the industry is facing today.

Leading auto parts makers say that frequent shocks that the auto industry has faced in the last few years have made auto-part makers realise that they need to innovate continuously or perish.

“I think the biggest challenge before auto part makers today is innovation,” Mansoor Ahmed, Managing Director of Omar Jibran Engineering Industries told The Express Tribune.

Ahmed, who heads one of the leading auto-parts makers of the country, says the auto industry has faced at least three patches of severe challenges in last two decades.

First, when the Nawaz Sharif government imported yellow cabs in 1992-93 that hit local car sales. Second in 2006-07 when auto sales plunged significantly owing to the world financial crisis. While the third was in 2011-12 when Pakistan imported 55,000 used cars, he elaborated.

Now the industry is holding its breath and eyeing the trade agreement with India with caution.

There is no dearth of fearful industrialists in auto industry who believe open trade with India would damage their prospects of selling car parts in Pakistan, but Ahmed believes that this could be an opportunity to create an export market in India.

“Innovation should be our top priority because if we innovate continuously, we can export our products to India mainly because of the relatively low cost of production in Pakistan compared to India,” said Ahmed.

“We have strong sister concerns that helped us float in the past, otherwise we would have drowned like many companies that were only making auto parts,” said Akbar Allana, director Alsons Auto Parts Private Limited.

Allana is not alone. Like other auto-parts makers, he is relying more on motorcycles and tractor industry compared to four-wheelers.

Published in The Express Tribune, July 31^st, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.