Ever since the announcement of entry in the local automobile industry of Pakistan, European auto manufacturers have been rather on the slower side with their investment, as compared to several other new entrants.
The Automotive Development Policy (ADP) 2016-21 has been the door-opener for several investments in the local automobile industry of Pakistan. A handful of global automakers expressed their interest to enter the auto sector of Pakistan with investments to build production plants in the country. The several incentives offered by the ADP for the companies setting up a new manufacturing plant has benefited the local industry in the shape of new entrants bringing more competition. The process has already kicked off as various companies have started rolling out their vehicles. On the other side, European auto giants have been rather slow in setting up their production which also indicates their lack of interest in the market.
Under the policy, the German Volkswagen and French Renault had expressed their willingness to enter the local market but the progress graph of both these European auto brands has been on the lower side right from the word go. Renault already acquired land at M-3 Industrial City in special economic zone of Faisalabad back in June 2018, to establish its assembly plant but since then, everything seems to be in a standstill position. There is a no different story in case of Volkswagen, who is yet to get the possession of the land for its assembly plant in Karachi.
The entry of new players in the auto sector is categorized into two types of investments as follows:
- Greenfield investment:
Under the Automotive Development Policy, this type of investment is referred to as the installation of a new automotive assembly and manufacturing plant.
- Brownfield investment:
The brownfield investment refers to the revival of an existing assembly or manufacturing unit which is non-operational since 1st July 2013.
The progress of other new entrants:
Apart from European auto manufacturers, several other new players have begun their operations in Pakistan while some are in the process of building their assembly plants. These new auto players include the following along with their progress and plans in the auto sector of Pakistan.
Ghandhara Nissan already has a history in producing its popular Nissan Sunny in Pakistan. The brand is making its comeback in the local auto sector once again in collaboration with Ghandhara. The auto manufacturer will be introducing its Nissan Crossover at the local assembly line in 2020 right after its global launch.
Daehan Dewan Motor Company:
Daehan Dewan Motor Company has already launched its small commercial truck ‘Shehzore’ for local consumers in Pakistan. The company is also looking to introduce an SUV with the Korean SsangYong Motor Company (SYMC). It has already submitted its plans to the Ministry of Industries and Production regarding the launch of its SUV in 2019. However, it reports that Shehzore might take some additional time due to certain technicalities.
KIA Lucky Motors:
The Korean auto giant KIA, in collaboration with Lucky group, has recently launched its Grand Carnival along with K2700 pickup truck. However, the company is expected to start the assembling of their SUV from July 2019.
Hyundai Nishat Motors:
Hyundai Nishat has marked its entry in the local auto sector with the launch of its completely built units (CBUs) of Santa Fe SUV and Grand Starex van. Grand Starex is a competitor to the Grand Carnival introduced by KIA. Hyundai has added Ioniq to its lineup as well. As far as the local assembly plant of the company is concerned, it’s near to completion in Faisalabad. The company’s locally assembled cars will be available by the start of 2020.
United Motors is not a new face in the auto sector of Pakistan as it has been the second largest motorbike manufacturer in the country. But, the production of cars after attaining the Greenfield status, is certainly a new aspect for the motorbike manufacturer. The company has launched 800 cc United Bravo in the local market till now.
Regal Automobile Industries:
The company has collaborated with the Chinese DFSK Motors to roll out small commercial trucks in Pakistan. Regal Automobile Industries has its assembly plant located in the provincial capital of Punjab.
The joint venture of Master Motors and the Chinese auto manufacturer Changan is constructing its plant at Port Qasim which is near to completion. However, the company has already launched its SUV and jeep. It will also offer cars and heavy trucks which are set to make their way by the mid of 2019.
There are a few other new entrants such as JW Forland, Sazgar Engineering and Khalid Mushtaq Motors gearing up to make their mark in the automobile industry of Pakistan. Overall, there are 14 Category A companies listed till now. The European key players including a few others are going really slow on their investments and falling way behind their planned schedule which is a sign of worry for the local market.
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