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    Auto Industry: A Quick Flashback and Way Forward: April 18, 2013

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    Moiz Hussain
    The auto industry in Pakistan has struggled for decades as customers prefer imported vehicles over local alternatives due to issues like inefficiency and policy inconsistency. In 2012, sales increased due to a government taxi scheme but then declined when older models were banned and the scheme ended. To boost sales, two companies introduced new models in 2013 but the overall industry still saw declines. While steel and currency prices moved in favor of local manufacturers, they did not lower prices sufficiently. The industry needs innovations like new models, rational pricing, and a new government development plan to truly become competitive.

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    Auto Industry: A Quick Flashback and Way Forward: April 18, 2013

    Uploaded by

    Moiz Hussain
    25 views2 pages
    The auto industry in Pakistan has struggled for decades as customers prefer imported vehicles over local alternatives due to issues like inefficiency and policy inconsistency. In 2012, sales increased due to a government taxi scheme but then declined when older models were banned and the scheme ended. To boost sales, two companies introduced new models in 2013 but the overall industry still saw declines. While steel and currency prices moved in favor of local manufacturers, they did not lower prices sufficiently. The industry needs innovations like new models, rational pricing, and a new government development plan to truly become competitive.

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    The auto industry in Pakistan has struggled for decades as customers prefer imported vehicles over local alternatives due to issues like inefficiency and policy inconsistency. In 2012, sales increased due to a government taxi scheme but then declined when older models were banned and the scheme ended. To boost sales, two companies introduced new models in 2013 but the overall industry still saw declines. While steel and currency prices moved in favor of local manufacturers, they did not lower prices sufficiently. The industry needs innovations like new models, rational pricing, and a new government development plan to truly become competitive.

    Copyright:

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    Download as docx, pdf, or txt
    25 views2 pages

    Auto Industry: A Quick Flashback and Way Forward: April 18, 2013

    Uploaded by

    Moiz Hussain
    The auto industry in Pakistan has struggled for decades as customers prefer imported vehicles over local alternatives due to issues like inefficiency and policy inconsistency. In 2012, sales increased due to a government taxi scheme but then declined when older models were banned and the scheme ended. To boost sales, two companies introduced new models in 2013 but the overall industry still saw declines. While steel and currency prices moved in favor of local manufacturers, they did not lower prices sufficiently. The industry needs innovations like new models, rational pricing, and a new government development plan to truly become competitive.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    Auto Industry: A quick flashback and way forward

    April 18, 2013 BR Research 0 Comments

    Auto firms in Pakistan have been operating for decades now. Yet they havent been able to outsmart the imported cars. Whatever may be the reason inefficiency on the manufacturers front or policy inconsistency, the outcome remains unfavourable for the lo cal industry as customers prefer imported variants over local alternatives.

    In the first half of 2012, Punjab government Taxi scheme provided the industry a breather by significantly buttressing its sales volume. However, the termination of the scheme in the latter half of the year coupled with a ban on the production of non Euro-II compliant cars Alto and Cuore mired the industry in gloom yet again.

    To recoup the industrys lost appeal, Indus Motors and Atlas Honda introduced new variants of their respective flagship brands Toyota Corolla and Honda City in 2HFY13.

    While the new variant of Honda City was highly lauded by the market, giving a phenomenal boom of 103 percent to the companys sales volume in 1HFY13, the collective sales of the new mo dels of City and Corolla couldnt mask the slide in industry sales as it bade Alto and Cuore farewell.

    Market experts pointed out that international steel prices took a significant dip of 10.9 percent in 1HFY13. Moreover, Pak Rupee appreciated by 17 percent against Japanese Yen since November 2012. Despite this, local automakers couldnt trim their margins, giving imported cars a golden opportunity to grab customers attention by offering attractive prices.

    Over the years, local auto industry has demonstrated strong aversion to competition by blaming the imported cars for grabbing their market share. To gratify them, the government reduced the age-limit of imported cars from 5 years to 3 years in December 2012. Still, industry fortunes have not ramped up for three months now.

    Besides constant upward price revisions by local manufacturers, which dejected the customers, the amnesty scheme presented by FBR to release the smuggled cars by paying 1 percent duty, took its toll on local sales volume by allowing customers to smuggle the cars and discharge it on easy terms. Although car sales numbers for March witnessed a step up of 6 percent on month-on-month basis, yearon-year analysis shows a massive dip of 20 percent. This casts shadows on monthly improvements,

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    Indus Motors took a bold step of tapping a niche market by launching Fortuner, the only locally manufactured SUV at a price 35 percent less than its imported equivalents. Fortuner received an encouraging response with sales having reached 228 units in March 2013. In addition, according to Topline Research, Pak Suzuki is considering to re-launch its old Alto with new features (shaped like the Indian Alto) within 3-6 months.

    Innovations like this coupled with rational pricing and sliding Yen could attract the customers. However, the auto sales largely hinges on to the introduction of Auto Industrial Development Plan (2013-18).

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