New Automakers Likely To End Monopoly In Pakistan’s Automobile Industry

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Pakistan’s automotive sector has long been dominated by the three main Japanese automakers, Toyota, Suzuki and Honda. For the past few decades they have had the market in a stranglehold as they continue their regime of manufacturing sub par vehicles at exuberant prices, these iterated vehicles that they introduce each year feature little to no innovation in comparison to the previous variants. A prime example being the current generation Honda City that has been the recipient of two face lifts, each time only showcasing minor cosmetic and mechanical upgrades. All this could be coming to end soon as the government has just recently given permission to three new automakers to dive into the country’s automotive sector and set up manufacturing plants within the country bringing in a total investment of US$ 372 million.

These companies investing include Kia-Lucky investing US$ 190 million, Nishat Group investing US$ 164 million and United Motors investing US$ 18.1 million. The introduction of these new manufacturers means the automotive sector in Pakistan will finally be free of the tyrant rule enforced upon it by the current Japanese manufacturers. The introduction of these new manufacturers within the country was primarily done to loosen the grip the current Japanese manufactures have on the market and to finally introduce competition within the space. The introduction of these new manufacturers is of utmost significance and importance to the country, here’s what there establishment within the automotive sector means for the people of Pakistan.

Competition Within The Marketplace

Once these new automakers will start production, what entails will be proper competition in the automotive marketplace for the first time since the country’s inception. Competition in the industry is what drives innovation within the segment and primarily means better products at a lower rate for the consumers. Toyota, Honda and Suzuki have operated in the country with little to no competition over the past few years. Competition will finally force these manufacturers to innovate and introduce new models within their current range, at lower prices, and with better features if they are to have any hope of surviving.

Even before these automakers have had a chance to set up show manufacturers like Suzuki have already begun feeling the heat as they threatened to withdraw a planned investment of $450m in a new plant, unless the government extended the incentives offered to the new entrants in the market to the current established brands as well.  Indus motors, the manufacturer of Toyota cars are planning to set up production to 65,000 units, as well as increasing the overall efficiency of their manufacturing processes, Honda Atlas is also taking steps in the same general direction.

An Abundance Of Choice In Each Segment 

We will definately seean abundance of new models in each segment within the next few years as well, currently if you take a look at the market place you will find the 800cc segment completely dominated by the likes of the Suzuki Mehran. This trend will inevitably fade away with time as with the introduction of new models within each segment by the new automakers, consumers will have an abundance of choice when it comes to choosing their next vehicle. Thus ensuring that rather than consumers having to compromise there will be model to meet each consumers specific needs within each segment.

Lower Prices

The prices of automobiles within Pakistan have been steadily rising over the past few years, again this is a trend that we hope we see eliminated as when the market place is eventually flooded with the influence of the three new automakers, this will require all the players within the country’s automotive sector to reduce their prices in order to stay relevant. When faced with stern competition, automakers all around the world resort to reducing the pricing on their models to keep sales consistent. In some cases they even offer deals such as offering optional extras such as sunroofs or an upgraded stereo system for free.

 

What do you think the introduction of these new automakers will entail for the automaker sector in Pakistan? Do you think they will bring significant changes, or they will fail to bring about any change at all, tell us by leaving a comment down below.

Notable Replies

  1. Rugal says:

    This article is mostly rhetoric, diatribe and conjecture.

    Lets focus on quality content rather than quantity of content being published.

  2. ennay says:

    We had kia, hyundai, cherry, daihatsu and many more manufacturers in the past, but the monopoly of these Japanese sellers never ever had any threat. So I doubt your claim that now this time their monopoly will end.

  3. Well now things are a bit different. Cars are selling in more numbers. Markup rate is less so leasing is cheaper. Also, good incentives have been given to new players in new auto policy. If any good company like hyundai or vw launches sensible models at competitive price then people will buy it. Santro and shehzore were sold in good numbers. Even kia sportage was sold in reasonable numbers despite its hefty price tag at that point in time. I hope things will get better in two years.

  4. Properly priced cars will surely increase the competition. Suzuki Ciaz was launched at slightly higher but still competitive price. It was welcomed to add competirion in 1300 to 1600cc segment but then Suzuki has hit its own toes by increasing the price. Lets hope new comers try to be sensible and penetrate in market.

  5. PS. I didn't bother reading the article :slight_smile:

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