Japanese Govt Rescuing BIG 3 Amid Export Violations
Pakistan’s auto industry is nourished under the shadow of protectionist policies with no competitive atmosphere. Meanwhile, Japanese companies including Indus Motor Company (Toyota), Honda Atlas Cars Pvt. Ltd (HACL) and Pakistan Suzuki Motor Company (PSMC) enjoyed a comfortable position. However, winds of change are sweeping the dominance of BIG 3, ushering in a new era of challenges and opportunities.
Suffice it to say, there is no cozy environment anymore as policies have changed. Opening the market for new entrants in Completely Knocked Down (CKD) segment and relaxing the regulation pertaining to used import cars has unleashed a much-needed competition.
A Policy Shift
This change in policies is an open directive for three Japanese car giants to enhance their exports reaching 10% of their total imports by 2025-26. And surprisingly, Japanese has threatened World Trade Organization (WTO) intervention over auto export policy.
In simpler terms, Pakistan says it’s following the rules of WTO. The problem will be talked about by both Pakistan and Japan, and if they don’t agree, it might go to the WTO for a formal decision.
The Challenges
Car makers say they can’t compete in selling cars abroad because of extra taxes, no agreements for trading car parts freely, and not many people wanting the kind of cars they make. They want agreements where there are no taxes and to help build up the car industry in Pakistan to be better at selling abroad.
As the government nudges towards export targets, Japanese dominance faces a formidable challenge from Chinese contenders.
With expertise in Electric Vehicles (EVs) and a willingness to tap into new markets, Chinese manufacturers pose a credible threat. Already, Chinese entrants are exploring export avenues, leveraging Pakistan’s strategic location and right-hand driving market alignment.
In this evolving landscape, adaptation is imperative for Japanese assemblers. Rethinking strategies to enhance localization value and embracing innovation in export endeavors are crucial