Ghandhara Nissan Limited (GNL), which acquired Brownfield status to manufacture Datsun cars in Pakistan, is still not certain about its future in the country amid lack of any road map provided by Nissan Motor Company Limited (NMCL).
According to Dawn News, the company reported its project’s progress file to the Pakistan Stock Exchange (PSX), and it says that the Nissan Motor Company has not yet confirmed the supply of Datsun parts, which may put the project on hold. GNL has invested a huge amount of money in the local sector to ensure a high level of localization in the best possible way.
The company had also planned to invest Rs.6.5 billion in the coming four years to launch the 1200 cc Datsun Cross by 2020. However, the management policy and business strategy of Nissan with respect to the Datsun segment has recently changed. The company also added that the Indonesian auto market has the largest plant to provide completely knocked down (CKD) kits, but in the current situation, it might not turn out to be a dependable source. Perhaps the company will only make a final decision on the project once Nissan clears the future road map to them.
Ghandhara Nissan Limited entered the local auto sector of Pakistan by acquiring Brownfield Status from the Ministry of Industries and Production (MoIP) under the Auto Development Policy (ADP) 2016-21 to manufacture Datsun cars. During October last year, the company indicated uncertainty regarding its future plans for Datsun cars in the country. This is primarily due to the prevailing economic crisis and the sharp depreciation of Pakistani Rupee against the US dollar that brings a high level of uncertainty for an investment of this magnitude. Furthermore, the project-related challenges have grown in the past year due to high-interest rates and demand a reevaluation of the project’s sustainability. The company also pointed out that the localization of some auto parts was potentially not possible in the short-term period due to the lack of the latest technology in the local sector. It had earlier planned to localize as much as 30% of the parts in its first three years. Apart from Datsun Cross, the company also aimed at introducing Datsun Go and Datsun Go Plus in the local sector. Ghandhara Nissan’s production plant is located in the Port Qasim area of Karachi.
On the other hand, Nissan Motors is looking out for global vendors for the import of parts along with CKD kits at a minimum cost. GNL is also running out of time now as the auto policy will expire next year. The company is only left with less than one and a half years to complete all its arrangements for starting commercial production of cars. After the deadline of 30th June 2021, the company will not be able to avail of the tax-based Brownfield Status incentives under ADP 2016-21. Since 2016, Pakistan’s auto sector has filled in with more than $1 billion of investment from new auto players through Greenfield and Brownfield Status.
It is pertinent to mention here that the current situation of the local auto market is not encouraging as the sales of even the existing automakers have declined by as high as 68% in the current fiscal year 2019-20. It’s largely due to the high exchange rate, increased additional customs duty on the import of raw material, and the imposition of 2.5-7.5% Federal Excise Duty (FED) by the government on locally produced cars. All these factors combined and resulted in a massive hike in car prices and decreased the buying power of the consumers. In such circumstances, it’s much more difficult for the new entrants to succeed or even survive in the local auto sector.
Will Ghandhara Nissan bring Datsun cars in Pakistan? Let us know your opinion in the feedback section. For more automobile-related updates, stay tuned to PakWheels.
This was bound to happen, after arrest of Nissan’s boss, they re-evaluated the strategy of Datsun brand and concluded that the volumes in markets like Indonesia and Russia were not justified as Nissan itself had a small lineup in these markets so having two brands for small volume and lineup was not feasible except for Indian market which had volumes and lineup size large enough to sustain presence of both Nissan and Datsun brands simultaneously. Hence Datsun will only exist in India which is it’s global production base and since Pakistan won’t allow import of cars or CKD parts and engine components from India there is no chance Datsun cars can see light of the day here. Honestly Pakistan’s auto market misses a lot of by banning imports from one of world’s largest markets which has great cars and technology available right at next door.
Pakistani government tries to follow Indian policy while ignoring the size of that market…. why do you think anyone should do business in Pakistan when more than 30 percent is paid in taxes for each car sold? It is top on the road tax and fuel tax which government collect. Secondly Pakistani manufacturers are illegally sending money abroad in the form of profits per car which are way too high. Pakistan should just place total ban on imports of parts like body and engine from outside to fix this auto mafia.
That is the issue, countries like India can afford to place high taxes on cars because they have a market size and maturity to justify the investment made by the manufacturers. Heck even Mercedes sells same number of cars in India as Honda sells City in Pakistan, infact Mercedes and Audi alone sell more cars in India than entire sales of Honda atlas in Pakistan but I don’t agree profits per car are too high in Pakistan infact I feel they might be lesser, take WagonR for example which is a fairly mass market car, Suzuki sells same number of WagonRs in just a month in India as it does in an entire year in Pakistan, hence the scale of our market is too low for the investment so costs rise up and hence the car becomes expensive and lacks features. This is the reason City in Pakistan is whole 2 generations behind international version, same is the case with WagonR, Kia Picanto etc.
Whole world has policies to keep out imports or to balance out trade. Pakistan has been ruled by mafias who just want to import products in order to hide wealth. Pakistani importers import all junk from China which will never even sell in poor Chinese villages. I don’t think it will be any better to import from India as Pakistan doesn’t have enough foreign exchange reserves. Pakistan should have a strict import policy like developed countries to keep out substandard foreign goods. Even America placed huge tariff on imported auto goods due to trade imbalance. Pakistan should just ban all non hybrid cars, and move on to electric ones ASAP.
It’s true but the point I was trying to make that if we do this, then every car has to be manufactured locally which isn’t feasible as local market size is too small and lacks both infrastructure and wealth though I agree with you that components imported from China are total junk.
Pakistan and India both countries can be hugely beneficial if they would allow trade of auto sector. India can give cheaper car options for Pakistani people with descent features and safety for price. India also will be beneficial having access to 0.5m car market which right next to her home. Scale of economy will always favour India but pakistan can use this for its people too. Just have to think from customer point of you. And If this happens new car market size and volume will grow. If it reaches to let s say 1.5 or 2 million per year pakistan can attract local manufacturing like Thailand, India, China.
Pakistan should only have barter trade with India …. period, we are already paying huge bills in dollars for import.