What's new

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

There was some guy arguing with me trying to disprove my assessment of Audi not doing full fledge manufacturing in Pakistan. NO sane commercial entity ever invests more than it can recover from the forecasted volumes ideally within 3 years. they will make more money just by importing and catering to niche market.



Govt rejects Pak Suzuki’s demand, turns down Audi’s assembly-only plan
By Zafar Bhutta
Published: March 29, 2017
162SHARES
SHARE TWEET EMAIL
1368158-audi-1490762092-244-640x480.jpg

PHOTO: REUTERS

ISLAMABAD: The Board of Investment (BOI) has refused to cave in to the pressure from existing auto manufacturers, declaring categorically that it will not make amendments to the Auto Policy 2016 designed to bring new players, improve vehicle quality and ensure swift delivery.

Talking to a group of journalists on Tuesday, BOI spokesman Shah Jahan Shah insisted that the government was not willing to make revisions in the auto policy under somebody’s influence as it would bring a bad name to the country globally.

German truck maker MAN SE to set up assembly plant in Pakistan

ADVERTISEMENT






“Pakistan has already been criticised for an inconsistent policy, therefore, the government is not in a mood to amend the policy under any pressure to accommodate some auto players,” he remarked.

His remarks came following news reports that Pak Suzuki Motor Company would review its investment plan worth $460 million if the government did not pay heed to its request for incentives.

Shah pointed out that new players like Renault, Ghandhara Nissan, Nishat Group, Kia and Hyundai had contacted and applied for incentives.

Dewan Motors and Faw China have also sought incentives, but their cases are under consideration as they are in the grey areas.

Dewan Motors imported kits and sold in the market after June 2013, therefore, it did not fall in the category slated for incentives. Faw initiated its project and expanded the base without applying for incentives, so the company also did not qualify for the policy concessions.

The industrial units whose production plants were closed down before June 2013 have been allowed incentives for two years. The Ministry of Industries and Production is empowered to determine which incentives can be offered to the auto players.

Pak Suzuki Motor, which had been operating in Pakistan for a long time, did not fall within the greenfield or brownfield category and its demand for incentives was not valid, he said.

The auto policy has been designed for greenfield and brownfield investments with no incentives for the existing industry players. The automobile sector has grown 25% over the past two years.

“We faced a lot of pressure while framing the auto policy, which always happens,” he added.

Shah explained that policy incentives were for the new players who faced greater risks and required time to launch products in Pakistan.

“We promise to give some incentives to attract new entrants, however, no incentives are for the old players who have been working for more than 20 years in the country,” he said.

Loads Limited CEO more than just bullish on Pakistan’s auto sector

BOI has rejected new player Audi’s investment plan and suggested to come up with a fresh proposal.

“Audi representatives visited Pakistan and wanted to invest in MKD (medium knocked down) model with only vehicle assembly in Pakistan. It is against the auto policy,” he said.

“We want Audi to further strengthen the vendor base and the dealer network, besides creating employment.”

The rationale behind the policy is to discourage the booking of cars against full payment and delivery in six months to one year.

Prices of cars are also higher in the region and the emission and fuel consumption standards are absent.

“The policy reflects consumer welfare, quality improvement and enhancement in safety standards. It will promote fair competition among auto players,” Shah said. “Auto players should introduce new models in Pakistan market at reasonable prices.”

Published in The Express Tribune, March 29th, 2017.
 
By comments above, I just wonder how audi can help get rid of paksuzuki?
Cheapest of Audi (A1) may be 4times expensive than Bolan or Mehran.
 
Every company in world ask one question. What is ROI?
 
Respect for Govt.

Time for PakSuzuki to close down its existing teen tappar production facility too & shift to Iran as they 'claimed'.


Shutup butthurt fella.

I had same feeling. Why is he feeling hurt? This policy is actually good news. It could have been worse. Basically, the government just sent the message in stern clear to both old and newcomer; if you wanna invest, go for the long haul. That is healthy attitude to shape the future booming Automotive industry.

By comments above, I just wonder how audi can help get rid of paksuzuki?
Cheapest of Audi (A1) may be 4times expensive than Bolan or Mehran.

Audi is VW and VW is Audi. Audi's non-premium model is VW. Audi can be nice compliment for non-premium models like Accord and Camry that charges premium price more than Audi while VW is nice and affordable car comparatively; even more cheaper than inferior non-premium models that do not belong in 21st century.
 
Market "Open for grabs" does not equate a business plan or analysis to justify capital investment.

As someone who worked for Indus Motors Company, let me tell you something: It is GOP policies that keep car manufacturers at smaller volumes. If Pak Suzuki is doing business in Pakistan that seems unfair to some, then the blame ought to be put on the government.

There is a lot of sense in what @Syed.Ali.Haider is saying, but some posters are busy finding fault with his account instead of challenging his rationale.
 
Market "Open for grabs" does not equate a business plan or analysis to justify capital investment.

As someone who worked for Indus Motors Company, let me tell you something: It is GOP policies that keep car manufacturers at smaller volumes. If Pak Suzuki is doing business in Pakistan that seems unfair to some, then the blame ought to be put on the government.

There is a lot of sense in what @Syed.Ali.Haider is saying, but some posters are busy finding fault with his account instead of challenging his rationale.

I think you can respond better to this:

AUDI sells about 1000 cars per year if take an average its about $50-$60 million per year its pretty good

Is 1000 cars per year sufficient to justify setting up a new manufacturing plant in Pakistan? Even 10,000 per year is not enough.
 
Last edited:
Market "Open for grabs" does not equate a business plan or analysis to justify capital investment.

As someone who worked for Indus Motors Company, let me tell you something: It is GOP policies that keep car manufacturers at smaller volumes. If Pak Suzuki is doing business in Pakistan that seems unfair to some, then the blame ought to be put on the government.

There is a lot of sense in what @Syed.Ali.Haider is saying, but some posters are busy finding fault with his account instead of challenging his rationale.
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?
 
Shahji,

If Audi sells 1000 cars, they will have to make minimum USD7-8K per car to get good ROI. Do Audi cars enjoy that kind of margin per car. Maybe some auto expert here can throw some light?

SAH sb,

Even 10,000 per year is not be enough.

You have a point there (as usual). Audi India sells a little over 10K units per year and its manufacturing plant in India is substantially assembly, there is only a small value add here.

Regards
 
Audi assemble should be installed in Pakistan along with spare parts production industry, this will help Pakistan a lot.

When Audi comes to Pakistan then so will other car making giants will surely come to Pakistan.

In my personal opinion, Suzuki Pakistan is making piece of shit cars & if a proper quality test is run on Pak Suzuki they won't even pass the quality test.
 
I think you can respond better to this:



Is 1000 cars per year sufficient to justify setting up a new manufacturing plant in Pakistan? Even 10,000 per year is not enough.
its not the amount of car its about the price they are making around $50-$60 million a year (new is from 2012 could have risen by now) and they are rising keep in mind only few people know that they are available in pakistan many people wont buy it cause of spare parts issue and price
but i have seen many audi in karachi and many are in my area so yes their sells could have risen
 
Why all this hate for Pak Suzuki? The cars are well-suited to the Pakistani market: affordable to buy, cheap to run, easy to maintain, relative to other available options. No wonder they sell every unit they make.

its not the amount of car its about the price they are making around $50-$60 million a year (new is from 2012 could have risen by now) and they are rising keep in mind only few people know that they are available in pakistan many people wont buy it cause of spare parts issue and price
but i have seen many audi in karachi and many are in my area so yes their sells could have risen

What does a new modern manufacturing plant cost in comparison?
 
SAH sb,

What is the entry level model for Suzuki in Pak- petrol version that is? What is its price in USD and size in terms of CC?

Regards
 
If it is only 800cc then of course it is hugely overpriced even taking low range price of USD 6500. M800 in India (now discontinued) costed around 5000 USD (a second hand M800 which cost me INR 40K in 2000 was my first car incidentally!)

Regards
 

Pakistan Defence Latest Posts

Back
Top Bottom