In FY12, India exported $5 billion worth of automobiles or parts, while Pakistan exported just $128 million worth of auto parts during the same period. PHOTO: FILE
KARACHI: The local automobile industry might be more concerned over prospects of trade liberalisation with India but its fate, according to a Global Research report, lies in the government’s upcoming new auto policy.
Looking at the reputation of a pro-business government, PML-N government is expected to give space to the struggling auto industry while continuing its plan on liberalising trade with India, the report said.
Uneven sales volume coupled with inconsistent policies in the recent past have resulted in an uneven performance of the auto sector in Pakistan. Resultantly, the domestic auto industry failed to escape from its nascent stage and still faces similar problems when it comes to meeting its targeted deletion (localisation) program, the report added.
In contrast, India is currently amongst the sixth largest manufacturers of vehicles – Passenger Vehicles (PV) and Light Commercial Vehicles (LCV) – in the world. It had an annual car production of 4.1 million units in fiscal year 2013 (FY13), which is 29 times higher than production in Pakistan, recorded at 0.14 million units during the same period.
Moreover, a similar case is seen on comparing auto sector exports. In FY12, India exported $5 billion worth of automobiles or parts, while Pakistan exported just $128 million worth of auto parts during the same period.
In the past, Pakistani auto assemblers have remained dependent on the supply of completely knocked-down (CKD) and semi knocked-down (SKD) kits from Japan, Thailand and Malaysia.
India remains excluded from this list because of trade restrictions between Pakistan and India and hence, Pakistan local assemblers could not reap the benefits of importing cheap supplies from India. Similarly, owing to trade restrictions, car importers in Pakistan have been importing cars from Japan – a distant market compared to geographically closer markets.
On the brighter side, if the government allows Pakistani auto assemblers to import auto parts from India (parts that Pakistan does not produce), while imposing a ban on import of new or used cars, it will allow local assemblers to reduce car prices, added the report.
It will also enable auto assemblers to introduce newer car models in the local market at affordable prices, the report said.
Furthermore, import of technology in the auto sector will further enhance the process of deletion levels in the country. Nonetheless, allowing imports of new or used cars from India (considering existing custom tariffs on imports) is likely to reap benefits to car importers at the cost of local industry growth.
Published in The Express Tribune, March 22nd, 2014.
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COMMENTS (4)
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I agree it Rizwan Afridi. The local assemblers will NOT reduce prices even if there is a ban on imported cars and every policy is made to their favor, they just don't want to let go of their profits. They make millions yet cry when a second-hand imported hatchback turns out to be better than their high-end models. they are FRAUDS and have been looting the nation since years with the Government remaining silent because they get their 'benefits' on the side. Let them go bankrupt if they cant produce quality cars. They don't deserve customers if that's the case.
Our auto industry forces Pakistanis to buy terrible Suzukis. Looking at a Pakistani street, you'd think every car is 25+ years old. Nope! Those are new Suzukis that just look old because our domestic auto industry wont produce better models!
If we can afford better cars from abroad, we should be able to buy them. Pakistan looks poorer than it is because our cars are garbage. Lets the domestic auto industry collapse if it cannot compete.
Uneven sales volume coupled with inconsistent policies in the recent past have resulted in an uneven performance of the auto sector in Pakistan
haha this year alone only Pak Suzuki profits jumped more than 80% for the sheer "CRAP" they sell in the local market exploiting the fact that they assemble cars locally with NO international safety features. I think it is about time they face some competition
These assemblers are jokers, for the 30 years plus they cant localise more than 30%. Rip off. Allow new & used cars from anywhere or everywhere including India. Market rules.
regards,