Insecurities: PM’s visit reignites hope in auto-industry turnaround

Published: March 9, 2014
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Prime Minister Nawaz Sharif (C) is given a tour of the Pakistan Association of Automative Parts and Accessories Manufacturers Show at the Lahore Expo Centre on Thursday. PHOTO: APP

Prime Minister Nawaz Sharif (C) is given a tour of the Pakistan Association of Automative Parts and Accessories Manufacturers Show at the Lahore Expo Centre on Thursday. PHOTO: APP

KARACHI: 

Despite government’s apparent confusion over the upcoming auto policy, the industry has pinned its hope on Prime Minister Nawaz Sharif’s wish to see a ‘Made in Pakistan’ car, expecting to get some incentives.

The local auto industry partly succeeded in getting the attention of the prime minister, who inaugurated the Pakistan Auto Show 2014 in Lahore on Thursday. However, it failed to get any promise from him on the two biggest issues of the industry — a blanket ban on imported used cars and the issue of liberalising trade with India.

Nevertheless, the prime minister’s directive to the government officials to immediately sit with the industry officials and chalk out the future policy has given hope to the local industry. “We are hopeful of getting government support including the national car policy that the prime minister indicated in his speech at the Pakistan Auto Show 2014,” said Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Usman Malik.

Malik, who represents over 2,800 industrial units that produce auto parts, is confident that the prime minister’s directive to the government officials would bring some policy changes. “We’re especially looking forward for the national car policy as it will support the local manufacturing and assembling industry,” he added.

Auto assemblers say their fate hangs in the balance owing to the uncertainty in policies especially on liberal trade with India and the country’s import policy of used cars.

Automobile analysts say that the unusual delay in the announcement of the Auto Industry Development Programme II (AIDP II) suggests that the government is facing problems in dispelling the pressures of the two competitors: carmakers and car importers.

“The government seems confused over the much-awaited AIDP II, which is why it has taken several months in announcing it,” said JS Global Capital analyst Atif Zafar. “It is certainly under pressure from carmakers and car importers who have considerable influence in government circles.”

The delay in auto policy has fuelled speculations. Some say the policy will increase the age-limit for used cars from the current three years to five years, while others say the government may give some incentives to the car assemblers.

Another headache for the auto industry is its clear divisions on the issue of the trade with India. While the only representative of auto parts’ makers, Paapam, is dead set against the liberal trade with India, Pak Suzuki – country’s largest carmaker – is openly supporting the cause.

Pak Suzuki seems more enthusiastic unlike the other two carmakers – Honda Atlas Motors and Indus Motors – because of Suzuki Maruti, an affiliate of Suzuki Japan with over 50% market share in India from where it can import cheap parts for its cars in Pakistan.

Zafar believes the auto part makers in Pakistan are more vulnerable to liberal trade with India compared to the local car assemblers.

“In case Pakistan and India start trading, the likelihood of Pakistan importing car parts is much higher than the import of Indian cars. This is why Pakistani car part makers are more exposed to competition,” he added.

Former Paapam chairman Syed Nabeel Hashmi said that auto part makers just need an assurance from the government that a liberal trade regime with India will not hurt their interests.

Published in The Express Tribune, March 9th, 2014.

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Reader Comments (3)

  • Mar 9, 2014 - 3:03PM

    import of auto parts from India may be linked to setting of a joint venture of production facility in Pakistan. This will help in improvement in quality and ultimately the industry and the consumers.

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  • Asad Khan
    Mar 9, 2014 - 9:32PM

    a blanket ban on imported used cars and the issue of liberalising trade with India.

    Automotive Parts and Accessories Manufacturers are the biggest Jokers if not crooks if I may say so.

    20+ years and the auto assembles can not produce beyond 40% local parts and they want blanket ban to enslave masses for their right of free choice?, spare me the bull.

    I am not a staunch supporter of trade with India. I put India on an arms length BUT I will happily buy an improved, economical, efficient Indian auto product rather than waste my money & time on some pathetic local product which can serve me on for break even.

    Enough time spent on jingoism. Now lets complete with India with Afridi style. Produce good economical efficient auto products, if not, then lump it up.

    regards,

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  • Zane
    Mar 9, 2014 - 10:51PM

    The best thing for Pakistan to promote Auto Industry is to Break up the current Auto-Assembler Mafia’s stangle hold. It is badly affecting the whole country. Look at all other countries like Malaysia, India, China, even Iran. They all started same or later than Pakistan on developing their own National Car, and now they all have more than one National car brands all entirely made in their own countries. Pakistan has been trying for the last 50 years, starting from 1960s to make a car of its own. There were some successes like Profient Pick Up in late 1980s and Adam Motors Revo, the first true Pakistani Designed Car in 2005, but lack of interest from Public and no care attitude from the government, which slapped 70,000 Rupees tax on Revo, instead of giving tax breaks for some initial years, killed that car. The best hope is from Individual investors partnering with other foreign car makers from all over the world, not just from Japan. The government can help by giving Tax Holiday to the new entrants.

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