Breaking monopoly: Volkswagen to plant its feet in Pakistan?

Published: June 10, 2015
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PHOTO: AFP

PHOTO: AFP

PHOTO: AFP According to Pakistani officials, Volkswagen was keen to do business and the government also wanted at least one European brand to set up a plant in the country. PHOTO: REUTERS
ISLAMABAD: 

The incumbent government has gotten a rare opportunity to break the decades’ old monopoly of local car assemblers as world-renowned auto manufacturer, Volkswagen, is keen to introduce its brands in Pakistan.

Germany’s biggest and the world’s second largest automobile manufacturer in terms of market share, Volkswagen, wants to do business in Pakistan, said an official of the Board of Investment (BoI).

A 14-member business delegation of Germany businessmen is visiting Pakistan including representatives of automobile company, Volkswagen, said Dr Cyrill Nunn, German Ambassador to Pakistan on Tuesday. He was addressing a press conference to share details of what he described as a “highly important” visit.

According to Pakistani officials, Volkswagen was keen to do business and the government also wanted at least one European brand to set up a plant in the country to break the monopoly of local car assemblers. They said the three local assemblers have colluded and resultantly, on average, a locally-assembled car is roughly Rs500,000 expensive.

In allowing the new manufacturer to set up plants, the government has to amend its existing automobile policy, said Pakistani officials. They added that the government has decided, in principle, to amend the automobile policy and will add medium-knocked down (MKD) units in the definition. The German officials had requested the government to accommodate semi-knocked down and MKD units in the automobile category.

The Volkswagen is said to be engaged in negotiations with prospective local partners, said Pakistani officials.

In the next two years, the government will try to introduce at least one European brand – German or Italian – said Miftah Ismail, BoI chairman, while talking to The Express Tribune. Ismail welcomed the German delegation, hoping that it will help strengthen bilateral economic ties.

“To get such a delegation into Pakistan, you have to persuade them and once they are in Pakistan they realise it’s a huge country,” said Dr Nunn.

Other areas of interest

Meanwhile, a multi-billion Euro energy giant, Voith, is also part of the business delegation. The company has won the contract for providing machinery and equipment for Dasu Hydropower Project and is now eying the Diamer-Bhasha Dam. Companies dealing in consumer goods and transportation are also part of the delegation, said the ambassador.

The delegation will hold meetings with Minister for Commerce, BoI, Chief Minister Punjab, besides meeting the business community leaders in Karachi.

The visiting delegation will be keen to know the steps the government was taking for economic reforms, reducing energy shortages and investment opportunities in Pakistan, said Dr Nunn.

Dr Nunn said that Pakistan’s decision to allocate funds for Diamer-Bhasha dam and two Liquefied Natural Gas-fired power plants in the new budget offers business opportunities and German companies will be bidding for these projects.

In 2014, Pakistan’s exports to Germany went up by 20% on the back of the Generalised System of Preference Plus scheme, said the ambassador. However, Germany’s exports to Pakistan plunged by 3.2% and this is also a reason behind the delegation’s visit, said the ambassador.

“The volume of bilateral trade, currently standing at €2.1 billion, is far less than the potential and even lower than Germany’s trade with countries like Bangladesh,” said Dr Nunn.

Published in The Express Tribune, June 10th, 2015.

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Reader Comments (80)

  • ahmed wani
    Jun 10, 2015 - 7:07AM

    So u guys are still assembling….and not manufacturing…remember..volskwogen will take its parts manufactured in india to pakistan….Recommend

  • Atif
    Jun 10, 2015 - 7:48AM

    I hope the existing auto mafia especially Paksuzuki is broken by some competition. Paksuzuki is producing obsolete vehicles in Pakistan with outdated technology and designs from 1970s and 1980s. These cars are no longer made and sold in any country asides from Pakistan. Pakistani cars and all Paksuzuki one don’t even have an airbag. Even to this day no engine of even Mehran is made in Pakistan. Japanese firms are taking full advantage of lack of government regulations and safety standards in the country.

    A message to Japanese manufacturers :

    Stop exploiting our country and taking advantage of the incompetent government.Recommend

  • Ghost
    Jun 10, 2015 - 8:42AM

    Finally!! some possibly good news!! Prepare for an onslaught by PAMA because their monopoly is at risk :D Recommend

  • Hadi
    Jun 10, 2015 - 9:23AM

    That is a huge step. This will change the way automobile industry currently operates in Pakistan. Welcome Volkswagen!Recommend

  • haji
    Jun 10, 2015 - 9:30AM

    There is oligopoly of car manufacturers in Pakistan, not Monopoly. #themoreyouknowRecommend

  • Khurram
    Jun 10, 2015 - 10:12AM

    Way to go Pakistan!Recommend

  • Hassam tariq
    Jun 10, 2015 - 10:25AM

    it is a good opportunity for Pakistan as well,because a new company is going to be opened here and it’ll be an ice breaker for the local manufacturer’s monopoly,as they are selling their cars in huge prices and with least safety features.looking forward to this good news to be true.Recommend

  • Adeel Hassan
    Jun 10, 2015 - 10:35AM

    I represent Dasu hydropowr Proejct. It is to clarify and confirm that no contract has been awarded to Voith (German Company ) as yet as written in the above article. So the tribune moderators are requested to correct this .

    With Best REgards

    Adeel HassanRecommend

  • TARIQ AYAZ AHMED
    Jun 10, 2015 - 10:55AM

    THIS IS A VERY GOOD NEWS, WE WELCOME “VOLKSWAGEN” IN PAKISTAN. IN MY YOUTH DAYS I HAVE ENJOYED RIDE/DRIVE OF VOLKSWAGEN. NO DOUBT “GERMAN” PRODUCTS ARE ALWAYS BEEN KNOWN AS “.THE BEST “……
    VOLKSWAGEN…WELCOME IN PAKISTAN…
    REALLY WAITING FOR YOU…WELCOMERecommend

  • Saud
    Jun 10, 2015 - 11:05AM

    Excellent news!
    Let’s hop that the negotiations are fruitful and project is finalized. It will generate a lot of employment and give consumers choice and lower prices.Recommend

  • Salman
    Jun 10, 2015 - 11:07AM

    I hope they can Compete with Suzuki !Recommend

  • Mr Zee
    Jun 10, 2015 - 11:08AM

    Love the lines said by Dr. Nunn:
    “To get such a delegation into Pakistan, you have to persuade them and once they are in Pakistan they realise it’s a huge country”Recommend

  • Sohraab
    Jun 10, 2015 - 11:27AM

    Fantastic News. VW had almost finalized its plan for Pakistan during Musharraf’s time but had to abandon it due to change in Govt in 2008. So Welcome Back again!!Recommend

  • Abdul rehman
    Jun 10, 2015 - 11:29AM

    I think it is great step…welcome vwRecommend

  • AYK
    Jun 10, 2015 - 11:36AM

    beneficial for our economy as more jobs will be created through this and more competition in the market…Recommend

  • iLLPoPo
    Jun 10, 2015 - 11:58AM

    We are paying around 12000USD for 1000cc and 18000USD for 1300cc local made cars without power steering, air bags, power window with poor suspension, poor interior and nothing worth mentioning. Despite of that, sales are growing day by day due to demand and people are forced to buy substandard vehicles as there are lesser available choices! This should be good attraction for Volkswagen to invest here and offer some quality stuff!Recommend

  • Ibby
    Jun 10, 2015 - 12:23PM

    This would be a welcome change, but Government must make a comprehensive Auto Policy were the goal is to manufacture 100% complete Made in Pakistan Car. So far that has not happen with Japanese assemblers. Lets hope Italians or Germans, or even Chinese automakers can change that scenario. Recommend

  • Muhammad Kashif Iqbal
    Jun 10, 2015 - 12:25PM

    govt. should eye skoda as well. Recommend

  • N.S
    Jun 10, 2015 - 12:33PM

    Good news to end the car’s cartel and monopoly. More European variants should be introduced and encouraged in the local market. Cannot ignore a country of 200 million people. As big as Germany, France and UK combined, in population. Recommend

  • Pak Soul
    Jun 10, 2015 - 12:44PM

    Wonderful news. Welcome here. I’m sure people in Pakistan would love to buy Volkswagen cars.Recommend

  • Blitzer
    Jun 10, 2015 - 1:00PM

    We’d welcome Volkswagen with open arms (only if it doesn’t fall prey to the dirty practice of introducing safety-less and feature-less cars in Pakistan). Recommend

  • Kam
    Jun 10, 2015 - 1:23PM

    Now India will have problem with this too.Recommend

  • Irtiza
    Jun 10, 2015 - 1:26PM

    Please come fast, we are fed up of Mehran/CultusRecommend

  • Aftab Ali
    Jun 10, 2015 - 1:36PM

    They should break the monopoly of Japanese and local car manufacturers who make pathetic cars such as the City, Liana and CultusRecommend

  • Ashraf
    Jun 10, 2015 - 1:39PM

    Asian Tiger in the making !Recommend

  • Gemini
    Jun 10, 2015 - 2:02PM

    Rest in Peace Toyota, Honda and Suzuki.Recommend

  • Arslan Khan
    Jun 10, 2015 - 2:07PM

    Being a student of automotive engineering in Germany, nothing can be any good news for me than this.Recommend

  • Shakil
    Jun 10, 2015 - 2:14PM

    This is excellent news, hope the kickbacks will not stop Germans once again as it was happened in the past during Mr 10% asking Mercedes and they said no and moved to India instead.
    VW will bring much needed good standards of motoring in to Pakistan. The local cartel will do everything to stop this.Recommend

  • Moin
    Jun 10, 2015 - 2:34PM

    I am glad to hear that a volkswagen wants to invest in Pakistan other automobile jaints like Mercedes ,Audi ,BWM and Porche should also open their plants in Pakistan . There is a huge scope of investment and margin of profit the companines can make . Moreover in Oil & gas Russian companines should invest in pakistan Grazprom Rosneft in Shale gas exploration and setting up new refineries . This will help pakistan overcome unemployment and increase foreign exchange Recommend

  • haris
    Jun 10, 2015 - 2:37PM

    I have been hearing for long that Renault, Peugeot and Fiat wanted to establish a plant Pakistan. But they never came. But let me not too much pessimistic and believe in the report. here are my assessment:

    VW is much more stable, strong and wonderful to drive but all these typical German Engineering features comes at a decent cost.
    If VW has to compete with Suzuki, Toyota or Honda in Pakistan then they had to degrade their automobile standards and lower the cost which might seems little difficult for them.
    But yes, there are no shortage of riches in our country so probably Volkswagen (literally translated: People’s Auto) would transform to Luxurious Auto in Pakistan.Recommend

  • Bewildered
    Jun 10, 2015 - 2:44PM

    Will Volkswagen be manufacturing Beetles also in Pakistan as they are doing in Brazil? Pakistan has a huge fan base of this beauty.Recommend

  • Sanjat swamimurthy
    Jun 10, 2015 - 2:45PM

    Haha Pakistan should keep dreaming, it’s a poor minnow country is every regard, no brand will ever invest Pakistan so don’t even try to compare or match India.Recommend

  • ali
    Jun 10, 2015 - 2:47PM

    Please Nawaz don’t create hurdles anymore let our country growRecommend

  • nadeem
    Jun 10, 2015 - 2:56PM

    It would be wonderful to see German auto makers set up shop in Pakistan. I would probably be their first customerRecommend

  • Tariq Babar
    Jun 10, 2015 - 3:05PM

    Sir,Pakistan is in a need of foreign investment but we should also rise our exports Germans are great people and we should take advantage from their experiences. Salzgitter is the biggest example.Recommend

  • Ali
    Jun 10, 2015 - 3:26PM

    @Moin:
    Just for your interest VW Group owns Audi and PorsceRecommend

  • Syed
    Jun 10, 2015 - 3:39PM

    It is a good news at European cars are coming to Pakistan. They are far better in quality then Japanese ones.
    Also, it will create a healthy environment of competition.Recommend

  • Yahya
    Jun 10, 2015 - 3:43PM

    Again local manufacturers will bribe the government out ! No foriegn cars unfortunately. But hey be optimistic its pakistan u never know anything can happen !!!!Recommend

  • Mohammad
    Jun 10, 2015 - 4:23PM

    Thank God.. finally we are going to have some good value of Money.. breaking the monopoly of existing car manufacture providing low standard of cars comparing to world, specially Suzuki.. seriously we need to get rid of Suzuki and to have good but cheap alternative. Recommend

  • Adeel
    Jun 10, 2015 - 5:14PM

    I wish that WV will focus on the need of majority of pakistani otherwise we are being looted by honda and toyota from decades. I dont include pak suzuki as looting is not a word for suzuki who are selling there flagship swift without their flagship K12 engine instead using M13 engines of late liana in pakistan.Recommend

  • Shakeel
    Jun 10, 2015 - 5:27PM

    This would be brilliant news. In the short to medium term if they want to break the local manufacturing monopoly, make it easier to import cars. My 15 year old BMW I sold last summer was a much much better car than the 2013 Corolla I rented in Pakistan during my holiday. If It was economically feasible I would have imported my car over. I sold that car for the equivalent of Rs 2 lakh, but under current laws i’d have had to pay like 20 lakhs custom duty on it. Recommend

  • Me
    Jun 10, 2015 - 6:09PM

    Yes please come quickly we are fed up with Suzuki and Toyota.Recommend

  • Samkelly
    Jun 10, 2015 - 7:13PM

    The Japenese automobile companies wont let Pakistan open up a European automobile plant in any part of Pakistan, the Japenese companies bribe the government to not open any European car plants in Pakistan, they fear they will lose revenue if any other foreign company opened up a plant. The both European and American automobile companies wanted to open there plants in Pakistan since 2000 and numerous European car companies delegation visited Pakistan but government were forced by the Japenese to turn down any contract deal with them therefore no agreement could had been achieved. Pakistan is a major source which contributes to the Japenese economy by buying 100k japenese cars every year.Recommend

  • Moeen Khan
    Jun 10, 2015 - 7:25PM

    I am sure we have a chance to break the monopoly but the culprits behind the monopoly is corrupt and sluggish Govt of Pakistan.Recommend

  • Faraz
    Jun 10, 2015 - 7:53PM

    The market isn’t large enough to accommodate another player. Government will have to make promises of higher tariff barriers on imported used cars. The end result will be that the local auto assembler’s cartel will have yet another member.

    The government and people of this country need give up this dream of an auto industry. It hasn’t happened after all these years. It’s not going to happen now. Allow free imports. The local assemblers will either sink or swim but whatever happens consumers will have more choice. Our oil import will also go down because imported Japanese small cars are much more fuel efficient than anything assembled locally.Recommend

  • zed
    Jun 10, 2015 - 8:15PM

    good stuff… VW recenty expanded its manufacturing unit in India, total investment of few billion dollars, specifically to export cars from India to middle east, africa, latin america. We can import these cars from India at lower cost. Good… Recommend

  • Hassan Zahoor Khan
    Jun 10, 2015 - 8:15PM

    Welcome !! Welcome !! Volkswagen please set-up your plants as soon as possible, really happy to hear the new.Recommend

  • Shakil
    Jun 10, 2015 - 8:27PM

    WV is a group make Porches, Audi, Bugatti, Bentley, Lambo at the top end and VW, Skoda at the budget end so it will bring success for middle class of Pakistan Recommend

  • tariq
    Jun 10, 2015 - 8:39PM

    DAS AUTO!Recommend

  • Grace
    Jun 10, 2015 - 9:29PM

    @Sohraab: Give it a rest. Musharraf brought nothing but terrorism and instability in his decade dictatorship. It’s a democratic government that brings in investment since no one wants to invest in a dictatorship that makes the country look like a Banana Republic. Pakistan is one of the few Muslim democracies. Hopefully it will become a role model with the economic progress being made and the economic corridor being built under Nawaz Sharif. VW along with more German investment is welcome and appreciated but thanks goes to the current government for turning things around for Pakistan.Recommend

  • Rizwan
    Jun 10, 2015 - 9:33PM

    When people see images of PakistanI cities, it looks like a much poorer country than it is because all our cars look like they’re from the 1980s. Little do they know those cars are brand new!Recommend

  • Rizwan
    Jun 10, 2015 - 9:34PM

    @ahmed wani:

    If parts are to be imported, they’ll come from China and Iran, not india.Recommend

  • hellboy
    Jun 10, 2015 - 9:42PM

    @Irtiza: Don’t worry Vollswagen has many menufacturing plants in India and it export it to many EU,Mid-east and south-east asian countries.Next time check all parts that are assembled in Pakistan all have made in India logo.Recommend

  • hellboy
    Jun 10, 2015 - 9:44PM

    Is it a big news for Pakistan !!Recommend

  • Ahmad Ali
    Jun 10, 2015 - 11:34PM

    @Sanjat swamimurthy: yep. India is a ‘giant’ with the heart of a mouseRecommend

  • mohib khan
    Jun 11, 2015 - 12:40AM

    I feel we should sincerely go ahead with the projects. Wv is a leading manufacturer and the beetle from 1960 can still be seen plying on the roads. We have been dependent on one technology for a very long time its time we invite more people to do business. In the end we have everything to gain and nothing to loose from itRecommend

  • Maria
    Jun 11, 2015 - 3:00AM

    @ali: But VW is coming because of improving situation of economy due to Nawaz Sharif so why would he create hurdles for them? Your logic is off.Recommend

  • Faizan
    Jun 11, 2015 - 5:10AM

    don’t be so negative mate. long may the poor people of south asia see progress @Sanjat swamimurthy: Recommend

  • sajo
    Jun 11, 2015 - 5:54AM

    Keep Western countries out of Pakistan no chance to NATO war criminels avoid purchasing theier products.Germany fought a war in a muslim country. We muslims are stupid they bomb your countries and we love to buy theier products.Do it like the chinese orl indians create muslim brands don’t purchase western products you will become soon poor.Recommend

  • Shakil
    Jun 11, 2015 - 6:17AM

    @Sanjat swamimurthy this “poor” country has actually set up Suzuki plant when you guys were still using ambassadors Suzuki AKA Maruti got to India almost decade later!Recommend

  • reman
    Jun 11, 2015 - 7:11AM

    to all indians, our industry was closed to protect our local industry so we didnt have that many options with cars. its ok if u got it before usRecommend

  • Car lover
    Jun 11, 2015 - 7:18AM

    Good. European and American cars are way better than Japanese ones. Recommend

  • Sohraab
    Jun 11, 2015 - 10:28AM

    @ahmed wani: Its Volkswagen not wogen. Secondly, For your kind information most of the parts are coming for either China or Germany and few are made in India…so come out of the dreamworld.Recommend

  • Sohraab
    Jun 11, 2015 - 10:29AM

    @Muhammad Kashif Iqbal:
    SKODA is a Volkswagen subsidy.Recommend

  • Sohraab
    Jun 11, 2015 - 10:33AM

    @haris: Volkswagen doesn’t have to degrade its quality. It has successfully competed with Brands Like Toyota & Nissan in China and have captured the market. Similarly, their new products are well positioned against the likes of Corolla, Camry, Civic & Accord with same if not better in quality & Price. HUGE opportunity for Volkswagen & Pakistanis together!!!Recommend

  • Wajahat Ali Chowdry
    Jun 11, 2015 - 10:43AM

    Its good to have new investment and job opportunities for the People of Pakistan. Further the monopoly of the Toyota and Suzuki shall be broke down. Recommend

  • abdul rehman
    Jun 11, 2015 - 11:01AM

    I am happy to imagine that the future of Pak Suzuki is either over or they will improve. Pak Suzuki has looted us for years.I would definitely buy VW . (if it is Made or assembled in Pakistan) Recommend

  • Virkaul
    Jun 11, 2015 - 11:10AM

    @Atif:
    It is not fault of Japanese companies but the environment you have opted for Pakistan. Automobile accessories like brake pads and shoes, steering system, windshields, electronic harnessing, head lights, bumpers,uphistery, wipers, etc are supplied by local suppliers manufactured according to international standards. First, emphasis is to be given to manufacture ypthese parts. Gearbox and engine are main components that automobile manufacturers like to keep to themselves. Recommend

  • Imtiaz Lalani
    Jun 11, 2015 - 12:54PM

    The way Pak Suzuki, Toyota and Honda operates in Pakistan, playing on the level that should not be accepted was largely the reason Hyundai cannot make its space in local market.

    I hope VW will be done with their homework before coming in.

    Welcome Das Autos!Recommend

  • Obaid Raja
    Jun 11, 2015 - 2:39PM

    this is amazing , welcome in Pakistan.Recommend

  • Aftab
    Jun 11, 2015 - 3:41PM

    @Sanjat swamimurthy:

    Than why half of the Indian working out of India think about Indian the cheapest labour in the world and make such filthy comments.Recommend

  • Lolz
    Jun 11, 2015 - 5:52PM

    @Grace: A democratic party that couldn’t get a new leadership face in more than 30 years, just one family and two brothers, LOLZ! and be careful, Nawaz Sharif and his brother were saved by a Saudi dictator/monarch and were given shelter for nearly 10 years whereas all the rest of their party members were being tortured in their home country….. In a democracy people do not forget and should not forget!!!!!Recommend

  • Tahir H
    Jun 12, 2015 - 3:58AM

    Great news. VW should launch urgently to rid us all with this cartel of sub standard Suzuki, Corolla and Honda – the exploiters. Recommend

  • khanomei772
    Jun 13, 2015 - 12:30PM

    That’s good** new for us guy’s and after a long thank God some one came to realize that our country is huge or fruitful. we welcome to all good people to invest over here because it’s the time for investment.strong textRecommend

  • Osman Rahi
    Jul 3, 2015 - 2:17PM

    @Adeel Hassan:
    Good to hear from you bro :)Recommend

  • sD
    Sep 9, 2015 - 10:12PM

    if government really wants reduction in vehicle prices than it should first review tax policy about car else i don’t think there will any change for consumer period.Recommend

  • Syed zair abbas zaidi
    Sep 14, 2015 - 9:24PM

    Great news for pakistani people .

    Internationally Labour is an important factor that lead various western brand to look for the alternative place for manufacturing of automobile .
    Asia especially subcontinent have a potential to help in making affordable car

    Ford ,GM and other small brand also look up and invest in pakistanRecommend

  • Intizar hussain
    Oct 13, 2015 - 9:19PM

    Many many well come to pakistan, we love you, plz kick out indus vehicles Recommend

  • Malik waqar waqar
    Oct 16, 2015 - 11:19PM

    This a good desetion of pakistan goverment to interduce a new auto mobile combanies in pakistan and volkswagon is one of the mose famous company of the world and we need small auto gares in pakistan but in cheep prise so every on can buy it so keep it up and interduse y cars in pakistan as soon as possible i am also relate with auto mobile bussines in islamabd waitin for new brands.Recommend

  • Waqar
    Oct 16, 2015 - 11:24PM

    This a good desetion of pakistan goverment to interduce a new auto mobile combanies in pakistan and volkswagon is one of the mose famous company of the world and we need small auto gares in pakistan but in cheep prise so every on can buy it so keep it up and interduse y cars in pakistan as soon as possible i am also relate with auto mobile bussines in islamabd waitin for new brands.we are wating for new companiesRecommend

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