Here’s How The New Auto Policy Is Actually Beneficial To Pakistan

Plant2-superJumbo

All three automakers of Pakistan are hitting back hard on the new auto policy and while they have the direct numbers to our representatives in the government, to call or email to express their disappointment, the people of Pakistan don’t but they have strongly come out in support of the new auto policy. We’ll be talking about how this auto policy is actually beneficial for Pakistan as opposed to what the big three of Pakistan are calling it.

Economic Co-ordination Committee (ECC) approved the much awaited Auto Policy on March 15, 2016. The ultimate objective of the policy is meant to address the existing drawbacks in the locally manufactured vehicles and help them in achieving the following goals:

  1. Modernization of overall auto industry
  2. Improvement of locally manufactured car quality and standard
  3. Enhancing consumers welfare
  4. Protection of local manufacturers
  5. Attraction of new entrants of the markets to enhance competition
  6. Improving inflow of foreign investment
  7. Getting in line with international quality practices

The previous auto policy is highly criticized by the consumers for failing to providing value for money cars. For more than a decade, Pakistani consumers witnessed no improvement in quality, standard, safety and/or security of the locally manufactured vehicles. The best example there is of Suzuki Mehran; there is no difference in shape, body and interior. Even the new Swift is still going on since 2010 without any revision as well as the Honda City. There are lack of options in the market for news cars and thus, buyers are forced to buy the same ol’ Mehran. This is expected to change through the new auto policy.

In addition, there was no compliance or a roadmap to international automobile standards; whereas the research and development (R&D) was almost useless during the last decade. Our universities are not employed for research and design purposes because its mostly done away in Japan. And thus, we are unable to produce the talent that’s required to take the industry to an independent one.

The new policy benefits the three major stakeholder (government, new car makers, and the consumers) in the following ways:

1. Government

  • Improved government image that they care for public.
  • Enhance welfare of the consumers by providing much safer and better quality cars.
  • Generate higher revenue. Increased production means higher income for the government in the form of income tax and sales tax.
  • Stable auto industry environment as its long term policy.
  • Enhancing inflow of foreign investment and market competition by entrance of new players.
  • It provides vision for auto industry.

2. New car makers

  • Enable the new players to build their assembling and manufacturing units. As the policy allowed duty free imports of plant and machinery.
  • New entrant would be able to import 100 vehicles at 50% off on import duty for market testing.
  • Reduction of 50% import duty on localized parts for five years.

3. Consumers:

  • Competitive prices and value for money.
  • New and improved models on regular basis.
  • Instant delivery of new cars.
  • Cheaper spare parts and its availability.
  • Benefiting lower income groups by introduction of car finance schemes and manufacturing of 800cc or lower vehicles (small cars).
  • Motorbike riders can switch to small cars, as the price gap would be reduced.

Currently there are three major players in Pakistan’s auto industry, which have captured the local market:

  1. Indus Motors Company Limited (Toyota Motors)
  2. Pak Suzuki Motors Company
  3. Honda Atlas Cars (Pak) Limited ( Honda Motors)

The expected new entrants that can benefit from the new policy are:

  1. Fiat: Largest and most famous carmaker in Italy.
  2. Audi: German car makers.
  3. Volkswagen: top selling German brand and second largest automaker in the world.
  4. Ford: American multinational car maker, produce variety of automobiles and commercial vehicles.
  5. South Korean car makers: Hyundai and Kia.
  6. Mazda

So we don’t entirely understand how the big three term the new auto policy a ‘disaster’. Moreover, we’ll soon be writing about the cars that these auto makers can bring to Pakistan that may enjoy success here.

Mian Saddam Sarwar

Mian Saddam Sarwar has life-long love for automobiles and has experience of driving many local and imported vehicles. He is pursuing Chartered Accountancy and is Senior Audit Associate in a Big4 Accountancy firm in Islamabad.

  • Mike Branson

    Nice article……….. Pakistan is not suitable for new car makers else they plan to produce and Export…. Export of cars from Pakistan is the only way new entrants can survive here, else they will have to shut down and new auto policy would be big disaster for them. It is important that new entrants first look at the availability of RAW materials , which are used to manufacture cars , like steel and plastic… They must produce gear boxes, body and plastic plus the electrical circuits here in Pakistan…. We have thousands of fresh engineers here in Pakistan.. Let’s hire engineers on merit…………

  • Jayy Khan

    thats exactly what I was thinking, The Big 3 in Pakistan will give them hard time, and they might suffer on one point ( Resale Value )

  • Dr. Aamir Liaquat Hussain

    Mian saab proof reading bhi ker liya karen article.

  • Waleed Ahmed

    Nice Article Mian Saahib, Very well elaborated & nice thinking about the Possible Outcomes of the New auto Policy.

  • Waleed Ahmed

    To all the Foul writers who have already started to curse the entry of other auto Co.s, I think I better say in Urdu for understanding of all “Pehlay aghaaz tu karnay do, Har kaam ki kahi sy tu shuruaat hoti hai, Pehlay he,(Maazrat k saath) Nahoost daali jaa rahii hai, Indus, Atlas or PS ka bhi tu kbhi pehla din tha he, Pr Pta nai tm log itnay he Under ho Big 3 k? Nikal ao unki Naakis wadon say jo puchlay 30 Saal say kr rahay hain”

  • Waleed Ahmed

    Please, Try to think Outside of the Typical Resale Value, They don’t even provide us cars that can save our lives in case of any incident, & Please keep your pessimistic thoughts to yourself.

    & With due Respect, If you’re an Indian(Name), You already have soo many well diversified & large variety Car Brands, Stop bothering us, It’s a ray of hope for us.

  • Waleed Ahmed

    Dear Branson or whatever you really are,

    Please stop being pessimistic about Pakistan Auto industry, this is a start, everything has a start even the Big 3 had & we’re looking forward to it. In the era of Gen.Musharraf Chevrolet, Mitsubishi, Kia, Hyundai have came to Pakistan, & If you’ve seen the previous article the Hyundai had made an assembly plant on a high scale, & was very successful (Shezore, Santro) If you ever had moved on the roads of Just Lahore, you can see many expensive imported cars, & by that even I can see the potential buyers, these companies have done some feasibility studies before planning to come here, they’re not some babies with cho cho toys that they had decided to came here.

    & May be by any chance you’ve seen that in auto policy they’re providing them oppurtunity to bring the assembly machines on very lower duty, & YAMAHA had came here & settled a major plant, & they’ve plan to export bikes from this region, May be they’ll also think about it.

  • Jayy Khan

    Ohh well, I want Suzuki to run out of business, they literally abused Pakistani public, and I myself don’t give a damn about resale, it’s a Pakistani typical mindset I was on about. Thanks

  • Muhammad Ali

    does it impact on old car prices will resale of our car goes down in that case this plicy is crap

  • Dr. Aamir Liaquat Hussain

    Suzuki mehran trying to suicide after auto policy but save by people’s.

  • Lazy Sapper

    resale value won’t go down until new companies start producing cars here or current assemblers decrease the prices.

  • M Maani

    where is Nissan?

  • Zulfiqar Ali Soomro

    resale will go down and for good because ppl will obviously switch to better quality cars in the same price bracket.

  • Zulfiqar Ali Soomro

    yehi masla hai apni awaam ka. kehti hai SHOUQEEN LOG HAIN HUM (car enthusiasts) pr gaadi lene se pehle resale ka sochti hai. whattay joke

  • Zulfiqar Ali Soomro

    Pakistanis must move on from this ‘resale nai hai yaar’ mindset. It’s pathetic. It is the very reason why Toyota and Suzuki (to some extent Honda too) have managed to sell cheap cars that are not value for money, no way. Time for change. And this is actually a blessing in disguise, these 3 automakers will be forced to up their game which will be healthy overall for consumers: more options.

  • shelmak

    People like you think about yourself only. You are not seeing this for whole nation.

  • shelmak

    I agree with you 100%.

  • Muhammad Yasir

    exactly !
    this resale bullshit has held us back for too long

  • Muhammad Yasir

    dirty hypocrites ! thats what they are !

  • Muhammad Yasir

    we’ve talked about this mindset long enough … time to bring it down !

  • Muhammad Yasir

    i really like your style of commenting here !

    well done !

  • Muhammad Yasir

    Quoting from Article : ” Benefiting lower income groups by introduction of car finance schemes and manufacturing of 800cc or lower vehicles (small cars). ”

    DOES THIS MEAN THAT … we’ll have cars for student-class and budget sector too ? something priced v.feasibly ?

  • Muhammad Yasir

    Mr.Saddam , what about chinese entrants ? last i heard , they were crazy about entering the local market ?

  • when the new policy is going to implemented and when we see price drop , any ideas

  • Imran Baloch

    doesnt seem like it

  • Sanjay Natarajan

    Ha ha….perfectly timed click! 🙂

  • Aqeeq Ansari

    Hopefully if we see a bunch of F-150s on the road, we just might see some improvement in the quality of Toyota HiLux junk we spend so much money on

  • Faisal Inayat

    when does production of Mehran stops

  • Muhammad Yasir

    well … shit

  • Umar Aftab

    I don’t know why my people are not ready to think beyond the junk they are receiving. Yes new automakers coming to Pakistan indeed will take a while. But after they have set their milestone, there is going to be a substantial change in one’s consideration while buying either a new or a used car. There will be German, Koren and American automakers that gives you a lot more wider range to pick from. we never know if this auto policy gets settled here or not, since its just an initiative, its not a good one, its a great one. Once our domestic auto market gets rampaged by newer, and yes more cooler vehicles, the competition slope is going to get a lot more steeper and the ones to fall would be the big three that have ruled the market enough now. What i am really happy about is that majorly the big 3 will have to come up with enhanced and more updated features if they have to stand by major automakers of then because they would never be able to stand against them. I personally ride a bike but just saying if there is no huge difference of price between a Honda and VW then why not German technology. Many people are right here, our mentality would never part from “BHAI RESALE HI NHI HAI” but its been very well said “Be the change you want to see”. The bigger part of the picture is clearly right there so lets hope for the best.

  • Akhtar Mir

    The three automakers of Pakistan,Indus Motors,Atlas Honda & Suzuki Motors have enjoyed the monopoly for last thirty years. They virtually wiped out all out other manufactures who either tried to enter Pak market most important was Cheverolet . These three used all sorts of dirty tactics to fail any new comers simply to avoid competetion and maintain share of the three. The result obviously was increasing in prices every year at their will and most IMPORTANT THERE HAS BEEN NO IMPROVEMENT IN QUALITY ADDING VALUE TO QUALITY AND INNOVATION.They are still turning out the old fashion engines and charge extra for simple items like powered windows and electric door locks which has become standard in the world. The policy will allow Pakistanis access to modern fuel efficient ,cars with safety features like seat belts and air bags at least for the driver as standard equipment in all cars. The rouge. TRIO will never ever allow the new policy to work because they will have to work hard and be honest. I hope the new policy succeeds and we will see quality cars like Audi, VW.

  • Tanzeel Khan

    FAW is getting in market. Atleast not par with JDM’s but still better then locally made suzuki. We need to support the new entrants.

  • Afzaal M. Khan

    We have to look at the Indian car market and its success story , supurb but reasonably priced makes like Skoda are also available in addition to the jap3..

  • Rizwan Arfi

    Do we have space on our roads to accommodate these new entrants? Make roads, make them safer first then make cars and think of safety.

  • SM

    We have plenty of space on our roads. The road sizes here are amazing when compared to roads in other nations. The issue is no one here knows how to drive. There is no concept of a line. The number of cars here in Pakistan are nothing compared to smaller nations in South-east Asia, for example.

  • Muhammad Aamer

    Thanks to Allah Pak for the new auto policy finally approved. I am also hopeful that new brands will be introduced and the salvage like Mehran will be removed permanently. In Sha Allah. Hope for the BEST.

  • Love

    Other nations have forced minimum speed limits. Anyone driving slower is punished because he/she is hogging the road and depriving others of their right of movement. But here we like to villianize speed and promote laziness. The slower the merrier.

    Also, we have encroachments. Need to deal with them.

  • samy

    dear corrupt pakistan . includes pakistani people , the govt and all institutions . i heard some where indus motor is upgrading the quality of its cars only so it can quickly sell it to iran bc it would take 3 yrs for toyota to set up new plant there . bc now every one is rushing to iran to produce and sell quality products there . iran has so much better quality control standards . funny part indus motor plans to sell cars cheaper there and give them much better European quality cars . what a shame for corrupt pakistan and its people .. pls let them all go and import cheaper and much better cars from india . u can accomodate work force lost in service sector for imoprt cars. stupids

  • Fahad

    Resale will go down with the price decrease of new cars. Cheers

  • Yasir Mirza

    We as a nation have a mindset of doing investment of every penny so when we go to purchase a car we think about resale that after 5 years what will be the RO. I talk to few people brought a Mehran as first car they have spend all savings to buy worthless car without anything even lives are not save in it. They are start playing with emotions too. Pakistan Government should take action on Auto industry standards.

Top