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

[DJ_Viper]

How many cars do you think Audi can sell per year in Pakistan and at what price points?

Sir, when one makes business investments, they don't just look at "how many cars we can sell from tomorrow". These are long term decisions and strategies. What goes is Audi's favor is the younger generation all across the globe and its clear message "Audi is youth's Benz". There is a commercial (pretty funny) on it where a Merc S-550 has an old man with white hair and a young guy in it. They go car shopping and the next scene shows them the old man leaving in his S-550 and the young guy following him in an A-8. So that's what Audi's after, the youth. In Pakistan, there is almost 60% population that's considered youth, between ages 15-28. Plus the economy is grown which means the middle class will grow. Guess who is Audi after? These young men and women.

Audi sells less than half a million cars every quarter, world-wide. That means, if it can ever sell 40K cars per year in Pakistan, or manufactured in Pakistan and shipped elsewhere, that would be a 10% increase from its total global sales. That's a lot of cars. 5% means selling 20,000 cars. I can see this happen easily.

Read below:
http://www.best-selling-cars.com/china/2016-q1-german-luxury-car-sales-worldwide-china/

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.

Sir, wrong comparison. India and Pakistan are two separate markets. The entire globe has started to look at it that way. I suggest you should too. You can't compare two countries, with 4 times the size and 5 times the population gap. Its like comparing the sale price of Mercedes Benz S class with a low end Boeing 737. Size, capacity, market, cost, all are different. VERY different.

 

[VCheng]

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.

Blame the taxes for the outrageous prices.

Sir, when one makes business investments, they don't just look at "how many cars we can sell from tomorrow". These are long term decisions and strategies. What goes is Audi's favor is the younger generation all across the globe and its clear message "Audi is youth's Benz". There is a commercial (pretty funny) on it where a Merc S-550 has an old man with white hair and a young guy in it. They go car shopping and the next scene shows them the old man leaving in his S-550 and the young guy following him in an A-8. So that's what Audi's after, the youth. In Pakistan, there is almost 60% population that's considered youth, between ages 15-28. Plus the economy is grown which means the middle class will grow. Guess who is Audi after? These young men and women.

Audi sells less than half a million cars every quarter, world-wide. That means, if it can ever sell 40K cars per year in Pakistan, or manufactured in Pakistan and shipped elsewhere, that would be a 10% increase from its total global sales. That's a lot of cars. 5% means selling 20,000 cars. I can see this happen easily.

Good points, but it is not me who needs to be convinced of all that, but the Audi leadership. Their initial plan was rejected. Now let's see if they come back with another plan, and if they do, what it looks like. (20k Audi sales per year seems like a bit of a stretch to me, even 10k will be decades away.)

 

[DJ_Viper]

Good points, but it is not me who needs to be convinced of all that, but the Audi leadership. Their initial plan was rejected. Now let's see if they come back with another plan, and if they do, what it looks like. (20k Audi sales per year seems like a bit of a stretch to me, even 10k will be decades away.)

The Audi leadership is convinced. That is why they submitted a plan to begin with . But this is called negotiations. And I know there are strong emotions of some about the Pakistani government, but I am partial to that drama. So I can state the facts about some of their business ventures. They are good negotiators like any businessman. Audi wants something from the Pakistani market, Pakistani government wants to put modern vehicles in Pakistan. So to give Audi run for their money, they will reject the plans and will ask for a better one. The Audi guys will put their best foot forward and will show the real "juicy" proposal which would then be accepted. Been a part of these deals for so long, know every aspect of them. The rule of thumb in business is "give some and take some" and all parties benefit. Audi will come back with a better proposal.

They'd be silly not to try to dominate one of the fastest growing economies of the future. Every business wants to be the first "market entrant". The second or third guy never really become anything. Take a look at the US brands.....Clorox is a bleach and there are others out there. How many do you know? Probably not many as that was the First entrant. Same with Boeing aircraft.....LM/GD/McDonald Douglas, all can make civilian planes easily. Some do make small ones. Why not compete against Boeing? Because of it being first and not leaving much room behind. Same with Starbucks.....it dominated the nation. Now you'd barely know others in the same league. Google, Microsoft, etc. So Audi would for sure want to be that brand in Pakistan's top car brands.

 

[VCheng]

The Audi leadership is convinced. That is why they submitted a plan to begin with . But this is called negotiations. And I know there are strong emotions of some about the Pakistani government, but I am partial to that drama. So I can state the facts about some of their business ventures. They are good negotiators like any businessman. Audi wants something from the Pakistani market, Pakistani government wants to put modern vehicles in Pakistan. So to give Audi run for their money, they will reject the plans and will ask for a better one. The Audi guys will put their best foot forward and will show the real "juicy" proposal which would then be accepted. Been a part of these deals for so long, know every aspect of them. The rule of thumb in business is "give some and take some" and all parties benefit. Audi will come back with a better proposal.

They'd be silly not to try to dominate one of the fastest growing economies of the future. Every business wants to be the first "market entrant". The second or third guy never really become anything. Take a look at the US brands.....Clorox is a bleach and there are others out there. How many do you know? Probably not many as that was the First entrant. Same with Boeing aircraft.....LM/GD/McDonald Douglas, all can make civilian planes easily. Some do make small ones. Why not compete against Boeing? Because of it being first and not leaving much room behind. Same with Starbucks.....it dominated the nation. Now you'd barely know others in the same league. Google, Microsoft, etc. So Audi would for sure want to be that brand in Pakistan's top car brands.

You might be correct, but I would prefer to wait and see what happens next. In fact, I hope you are correct.

 

[Finer]

Blame the taxes for the outrageous prices.

You are missing the point. People still pay premium prices for non-premium models. That is inclination Audi/VW needs and i bet they are already working on it since people are ready to pay premium prices for non-premium models. That's what i have been trying to make points which appears to have escaped from your attention.

 

[VCheng]

You are missing the point. People still pay premium prices for non-premium models. That is inclination Audi/VW needs and i bet they are already working on it since people are ready to pay premium prices for non-premium models. That's what i have been trying to make points which appears to have escaped from your attention.

Let's see if you are betting correctly if and when Audi comes back with a better proposal. We can talk about it then.

 

[Finer]

Let's see if you are betting correctly if and when Audi comes back with a better proposal. We can talk about it then.

Are you telling me people who pay premium price for the non-premium brands will not be able to pay premium price for the premium brand?

 

[VCheng]

Are you telling me people who pay premium price for the non-premium brands will not be able to pay premium price for the premium brand?

All I am saying is that we can resume this discussion if and when Audi comes back with a new proposal. What people want to pay is not the matter here. It is if Audi will make a new and better plan to invest in Pakistan's car market after the government rejected its previous plan.

 

[Finer]

All I am saying is that we can resume this discussion if and when Audi comes back with a new proposal. What people want to pay is not the matter here. It is if Audi will make a new and better plan to invest in Pakistan's car market after the government rejected its previous plan.

If people are willing to pay crazy prices for the cheap models, that is inclination VW/Audi needs to make fully committed with Pakistan. That's how VW has done well so far especially with their calculated risks in China, South America for long invested on most plants which not long ago was not ideal time and place to invest on.

Instead of waiting for VW/Audi, i can bet you that VW/Audi is going all-board with Pakistan just like VW/Audi did with China and South America in the past. Besides, they are desperate for the market which they are bleeding to dry in North America is the motivation enough for VW/Audi for many reasons.

In the next five to ten years, you will be seeing VW/Audi/Skoda, Hyundai/Kia/Genesis, Nissan/Renault/Mistubishi joining Pakistan market to brighten the competitive fields.

 

[VCheng]

If people are willing to pay crazy prices for the cheap models, that is inclination VW/Audi needs to make fully committed with Pakistan. That's how VW has done well so far especially with their calculated risks in China, South America for long invested on most plants which not long ago was not ideal time and place to invest on.

Instead of waiting for VW/Audi, i can bet you that VW/Audi is going all-board with Pakistan just like VW/Audi did with China and South America in the past. Besides, they are desperate for the market which they are bleeding to dry in North America is the motivation enough for VW/Audi for many reasons.

As I said before, I hope that Audi are as desperate as you think they are to enter Pakistan. I sure hope so.

In the next five to ten years, you will be seeing VW/Audi/Skoda, Hyundai/Kia/Genesis, Nissan/Renault/Mistubishi joining Pakistan market to brighten the competitive fields.

InshaAllah.

 

[Hamartia Antidote]

sorry going a bit off topic here but i always wanted to ask someone who worked in the industry
whose fault is it for stripping the basic safety features from the car like corolla and city which cost well above 1 million and when their international models comes with all the bells and whistles ?and why they do that?

sell "special" tin can versions of their popular cars in central and South America too. You wouldn't want to be in an accident in one of them.

You think Volkswagen would even dare selling a deathtrap like this in the US or Europe? They happily sold it in China.