Govt rejects Pak Suzuki’s demand, turns down Audi’s assembly-only plan

[VCheng]

Those plants have access to CA & Russia??

Yes, pretty good access, actually. Russia is already well-connected to both Europe and China, and all of the former Soviet Republics are well connected to Russia too. Plenty of excess capacity all over.

 

[Basel]

Yes, pretty good access, actually. Russia is already well-connected to both Europe and China, and all of the former Soviet Republics are well connected to Russia too. Plenty of excess capacity all over.

If that the case then Pakistan should also take advantage and make sure that cost of production remains low and quality good.

 

[VCheng]

If that the case then Pakistan should also take advantage and make sure that cost of production remains low and quality good.

Excellent suggestions, but the environment in Pakistan is not conducive to doing either of those things that would stand international competition.

 

[Basel]

Excellent suggestions, but the environment in Pakistan is not conducive to doing either of those things that would stand international competition.

Gawadar City can provide good, safe and low cost production facilities if Pakistan government work with China and other friendly countries.

 

[VCheng]

Gawadar City can provide good, safe and low cost production facilities if Pakistan government work with China and other friendly countries.

For producing cars? Which car company and what types of cars? Or even other types of vehicles? Assembly is much easier than actual manufacturing.

 

[Basel]

For producing cars? Which car company and what types of cars? Or even other types of vehicles? Assembly is much easier than actual manufacturing.

Chinese companies can start manufacturing vehicles in Pakistan as they can keep cost low, also SK and Japanese companies can also do that, cant say about EU or US companies.

 

[VCheng]

Chinese companies can start manufacturing vehicles in Pakistan as they can keep cost low, also SK and Japanese companies can also do that, cant say about EU or US companies.

Wasn't FAW from China supposed to be interested in doing that?

 

[Finer]

The VW Up range starts at about USD 10,000 dollars in most countries. The price in Pakistan, after taxes, would make it even more expensive, far above Suzuki. A super stripped out local model would make more sense, but only if it can be made within Pakistan, but the numbers simply do not work out under the present market and tax conditions.

That depends on the models. VW from Canada and USA starts with compact, not subcompact sedans/hatchback. With subcompact vehicles, it generally is affordable since Suzuku charges heck of money comparatively for compact and beyond except subcompact. With compact vehicles of VW, it is comparatively affordable given the cost of Corolla and Civic in Pakistan.

If people can afford Corolla and Civic in Pakistan, then people can afford VW compact vehicles never mind sub-compact vehicles.

 

[Basel]

Wasn't FAW from China supposed to be interested in doing that?

FAW is not at its full and the Pakistani company which bring FAW to Pakistan don't had good future and market vision, but still FAW is interested in investing more also Truck maker MAN is coming to Pakistan.

 

[VCheng]

FAW is not at its full and the Pakistani company which bring FAW to Pakistan don't had good future and market vision, but still FAW is interested in investing more also Truck maker MAN is coming to Pakistan.

Thus far, all the announced new entrants in the domestic market have not proven to be confirmed. MAN is only assembling some units without plans for a manufacturing plant, just like what Audi proposed.

That depends on the models. VW from Canada and USA starts with compact, not subcompact sedans/hatchback. With subcompact vehicles, it generally is affordable since Suzuku charges heck of money comparatively for compact and beyond except subcompact. With compact vehicles of VW, it is comparatively affordable given the cost of Corolla and Civic in Pakistan.

If people can afford Corolla and Civic in Pakistan, then people can afford VW compact vehicles never mind sub-compact vehicles.

Yes, people can afford them, but it is up to the company to decide what makes more sense for it: to set up a manufacturing plant, local assembly, or import the units. The first option simply does not make financial sense given the costs involved for a relatively small market.

 

[The SC]

As I said before, we can wait to see how Audi responds to its initial plan being rejected. I am only being realistic since the total numbers of sales in the Pakistani market for such cars are small relative to the investment needed for a full scale plant.

Do not forget CPEC and access to the Chinese market, while production cost will be lower in Pakistan.. Audi will certainly have its eyes on both..even if it is already established in China due to cost saving..

 

[Finer]

Yes, people can afford them, but it is up to the company to decide what makes more sense for it: to set up a manufacturing plant, local assembly, or import the units. The first option simply does not make financial sense given the costs involved for a relatively small market.

If the company is looking for the long terms where consumers pay a lot of money for compact sedans like Civic and Corolla that is actually cheaper in the rest of the world; on the top of it, Camry and Accord charges premium price for the non-premium models, even more than premium brands like Audi.

Then, VW/Audi isn not stupid to walk away from the potential goldmine where the market is literally open for grab given VW is bleeding to dry in North America to Japanese Automotive industry thanks to the diesel gate.

That's why Audi hasn't denied the plan so far. Right now, Audi is studying the political situation and surveying the possible plans through the third-party in Pakistan. VW cannot afford not to invest in Pakistan since the only competition is Toyota and Honda while others are yet to enter in the market that hasn't been properly sized up so far.

And of course, VW will struggle in the first few years due to poor resale value but VW is generous with reasonable incentive to attract the customers. In the long run, VW will make up with the future concept cars that is work in progress, not to mention VW is very flexible with the pricing unlike Japanese Automotive industry.

In fact, I have better chance of getting great deals with new US-specs Tiguan than RAV due to the pricing and incentives to make up for poor resale value.

 

[VCheng]

Then, VW/Audi isn not stupid to walk away from the potential goldmine where the market is literally open for grab given VW is bleeding to dry in North America to Japanese Automotive industry thanks to the diesel gate.

What "goldmine"? The Pakistani market is not at that level yet, and won't be for quite a while yet.

 

[Finer]

What "goldmine"? The Pakistani market is not at that level yet, and won't be for quite a while yet.

Pakistan market is already at that level. Only in Pakistan where Camry and Accord charges premium prices for non-premium models. Give me one example or one nation that charges charges premium price for non-premium models.

 

[Ryuzaki]

In the Financial Year 2014-15, the total number of passenger cars sold in Indian market stood at 23.56 lakh units while, in the same period, merely 1.52 lakh units were sold in Pakistan. India’s exports, in the same period, stood at 5.74 lakh units.

Pakistan is not a major automotive market by any standards and does not justify full fledged manufacturing.At best Pakistan can get SKD kits from India or Thailand.

The two-wheeler industry is beyond comparison. The four-wheeler segment forms a small part of the Indian vehicle market whereas the two-wheeler segment forms 81 per cent of the country’s automobile market. The Pakistani two-wheeler market, on the other hand, is catered by just three brands which sell about a dozen models — that’s less than the number of vehicles launched in India every year. In terms of numbers, the total two-wheelers produced in Pakistan in the year 2015 stand at 19.12 lakh units while, in the same period, the Indian two-wheeler market saw a total production of 1.61 crore units — that’s about eight times of Pakistan’s production. Even the number of two-wheeler exported from India, at 24.57 lakh units, was over 5 lakh units more than Pakistan’s total two-wheeler production.