Here’s The Reason Why New Automakers Won’t Come To Pakistan

auto industry pakistan

Associations is the pseudonym of mafias and cartels, a group of people who combined forces to work towards nothing but the interest of themselves. It will be wrong to just call the political parties associations designed to cater to the benefit of the few, in fact, everyone in this great country has created associations to eliminate competition, and create a monopoly. See how today there’s no opposition. They are taking turns as a result of mutual agreement.

Similarly, whether be it an association of an unknown apartments in the density of Karachi’s urban populace, or it is the Pakistan Automotive Manufacturers Association (PAMA). Everyone has become selfish, and that selfishness is bringing destruction on not just the fabric of our society, but the reason of lack of competition and economic development as well.

Kids developing as tomorrow’s adults, are slowly being fed that there is no other way for things to operate and will eventually become part of the broken system.

If one can sell a car, then it means there exists a market and companies will come to take a chunk of that market but in Pakistan, you can’t so easily. The mafias have influenced our policies so much that no one even bothered to follow the deletion policy for long before it was dysfunctional.

But we’ve often been asked, what is the reason why new car manufacturer do not step into Pakistan? Why? We have a market here, which is starved like an animal without the smell of meat for weeks or months.

The reason is simple. I have this association of all the auto parts under my control, and then there are the ones’ that I own.

This past weekend, IMC held an event to celebrate some milestone but amongst the crowd was a familiar face, the man who brought Pakistan its 4th ever car, and the first ever mass-produced car. He is the vendor to the automotive industry of Pakistan and when he began producing his car, pressure tactics began and the Big 3 shifted out their orders from his company and other vendors who were providing parts were forced to minimized orders from the Big 3 until the vendors had to apologize for not providing the parts.

Vendors don’t like this attitude but they would provide parts to whoever has the volume of course. And wouldn’t allow anyone to pressure them to not provide parts if the new automaker has volume to promise.

When new entrants come into the automotive industry of our country, they rely on government incentives and the local vendor base until they develop a good enough infrastructure and demand. But before that time, they have to rely on the existing vendor industry, which is highly controlled and owned by the existing manufacturers.

For example; the group which owns the largest auto assembler in Karachi, also owns the only company which manufactures the air-conditioning units for vehicles. So you can imagine what will happen when you go and ask a few units for your own vehicles. Of course, you can go to the toothless government for some pressure but still, you know, the time bomb is ticking, and there will be problems in your supply chain.

The bigger loser here is the nation, with such monopolistic tactics, the development of not just the automotive sector, but the human resource, the capability to design, the capability to indigenously produce complex parts of a vehicle, is compromised and we’re left with nothing but the capability to put together parts of Toyota, Honda and Suzuki cars like a bright German kid who put together a Unimog Lego, by puberty, the sucker would already be building entire parts to put together himself.

This is a country which provided armed forces personnel to all the GCC countries to aid their development; has produced tanks, armed drones,  fighter jets; albeit it may be able to just compare with the first few blocks of the F-16, however, it is more of an ambition than a weapon. Imagine, we are here today, where can we be later on.

In the case of our automotive industry, unless an auto policy and department is created to thwart the influence and monopoly to attract and help sustain new automakers, the results will not only benefit the consumers but the economy as a whole.

Baber K. Khan

An auto enthusiast trying to bring car media mainstream.

  • munib

    Very well written. Our country is going down and down in every sector.

  • Fahad

    Exactly, me 100% agree with u

  • Hassan Abbas

    The answer to this is CKD. A CKD vehicle means a vehicle is assembled locally using all the major parts, components, and technology imported from the country of its origin. If the Government of Pakistan would implement a CKD tariff, every single manufacturer would be present in Pakistan. You have to understand that European manufacturer’s have technology and use materials which are not present in this country, and neither will be present for a long time. So we have to allow them to import everything, however they can assemble everything here, as manpower we have plenty. Look at our neighbors: Malaysia, India, China, Indonesia and Thailand. They are all doing CKD or MKD in the case of India.

  • RAYYAN

    They will come IA…wait and watch…if we buy a Mehran they will sell us one…Audi is here and happening….we bought imported Vitz and Prius now they are forced to bring it locally…we didnt agree to the CRZ’s price they brought it down by 10 lacks…the big 3 don’t control the auto industry…it is the consumer that does…it is US………..

  • Mushtaque

    Biased again! 🙂 I know its your bread n butter to write masala stories. Try not be biased

  • Baber

    What is this biased against? :/

  • Mushtaque

    your article against Pakistani automobile companies. Portraying them as a Mafia with guns to stop others to do business.
    Com’on, anyone can do business in Pakistan but for that you have to be clever enough to respond to market needs with given set of resources available.
    How other companies are surviving in Pakistan? because of their business models not because of threatening vendors.
    Try to write stories with real “facts” and authentic profs. Don’t play with words 🙂

  • Baber

    Just Google how Adam Revo got away. These are all facts, shared with me by the new and existing automakers of Pakistan.
    There were more facts that I was hoping to reveal but held back on to them.

    Not a word here was biased. Though I appreciate your concern and do welcome you to share your input.

  • Fazal Wahab

    There are Cartel everywhere in country.. cement , sugar , fertilizer.. I am not surprised these are available in auto industry as well. And CCP.. competition commission whose aim is to implement fair trade is actually sleeping and looks like part of cartel as well.

  • Muneeb

    I honestly appreciate the effort you guys put in for the Paki Auto industry. This was a well written article, although am sure you can go into more detail to alleviate the concerns that Mushtaque has expressed. I would read it!

    Like the piece on Hyundai that was published here a couple of weeks back on their compatibility with our market. I was having the same thoughts when I saw their line up, and soon enough there was an article on it. Kudos!

  • Abdul Rahim

    I am agree to Baber, I wish we have a free market and want to see, Elentra, Accent , sonata, Cerato and Other cars on Roads and I can own a Elentra as well 😀

  • Mushtaque

    Babar, if you had shared one of the official’s message or interview from Adam Motor. I would have appreciated that you genuinely did effort to bring the issues on board. I would suggest your team to go and visit vendors, suppliers and OEM plants. only then you will able to gather facts about Pakistan Auto Industry.
    I can write hundreds of articles with the data available on “google”, there are better sources available around 🙂

  • Baber

    That’s the problem. We actually drove hours in to the Bin Qasim area and met with manufacturers, vendors and everyone involved. And everyone, chose to remain anonymous. This information isn’t taken from Google, rather, it was compiled after talking to most people. In fact, this is the first such information has come into Google. I just asked you to google for Feroz Khan’s interviews from the past.

    Did you also know, that one vendor who I talked to, prefers taking payment in cars, as cash payments take so long to come, that they instead get the a car for payment against parts provided. And then they sell the car and get their money back. No one would allow us to quote them on such topics as that would affect their relationship with the companies.

    Man, I wish I could quote people here. But Mushtaque saab, I welcome you to join us on a trip to Bin Qasim. But if you still doubt me. Just explore this website so you can better relate: http://www.thalengg.com/

    Again, alone, we’re no body, so your input and support helps. I will try to get someone to allow me to mention their name with their quote in my next story.

  • chandler bing

    FYI, the only company which completely assembles its cars using kits in India is Jaguar. Even the German “Big 3” source their parts in India which is upto 35% in case of Audi, and Mercedes is already provided engines by Force Motors, whereas BMW is about to sign an agreement for engines from the same company. And all other cars are manufactured completely inside including screws. Companies like Nissan, Renault, Ford, Hyundai even export knocked kits to few countries.

  • Talib Haider

    Pakistan just does not have the required volume of new vehicles. That is the primary reason why no auto manufacturer is looking to step into the country.

    A tier 2 vendor (parts supplier) from Japan requires a parts volume of approximately 1,000,000 parts to set up shop in the country. India already has a large enough market and is currently exporting vehicles to Australia (Hyundai) and other countries.

    As long as Pakistan relies on importing major parts such as engine and transmission from abroad, the industry would never grow to an acceptable degree and prices would never come down.

  • Uzair Muftee

    Hi I know the post is around a year ago but I am doing a small research for a university project and want to know the difference between CBU, CKD and semi-KD
    As far as I could found out the three big producers in Pakistan Suzuki, Honda and Toyota all make cars with CKD
    But at the same time people told me that they have localized 60-60% production so I wanted to know what all is produced in Pakistan and what is imported in the form of ckd don’t need to know the exact components but if u know then hurray 😀

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