Italian automobile companies keen to invest in Pakistan

[Lavrentiy]

Pakistan's automobile market is too small for a new car maker to invest in local production. The only feasible investment could be local assembly of cars. It just doesn't make sense to completely build cars for such a small market where Japanese car makers have a monopoly.

 

[VCheng]

Well, Pakistan is a gold mine for any automobile company. See, no safety features required, no call backs whatever the issue, no quality standards required, a logo sells, and no one cares what the price is as long as it is a car with 4 wheels people shell out 0.8 million for a mehran and 2.5 million for a watered down Altis, what else would a automobile company want. Finding a local partner to take care of the assembly and happy company.

All of that may be true. But Pakistan's value as a gold mine is only relative to other countries of the world. Investors will judge returns against risks for their investment and put their bets on the bigger, safer gold mine, relatively speaking, of course.

 

[Sucha Kuggu]

Excellent cars by Italy. Fiat was introduced in last decade, but bad body/power/flue combination (hatchback/1.7/diesel) combination failed it. It should have been Uno/1.0/petrol.

 

[airmarshal]

Italian cars have a good record in Pakistan type environment.

India's Padmini was a Fiat re-badged in India and it proved reliable and cheap car for decades.

Pakistan should pursue companies like Dacia. Its a Romanian company now owned by Renault. Its Dacia Sandero is the cheapest car in Europe. It cost 6000 pounds in UK. Pakistan needs cheap cars not in the range of PkR 1.5 million and above. Pakistan has a growing middle class and it needs automobiles that its general population can afford.

 

[denel]

Italian cars have a good record in Pakistan type environment.

India's Padmini was a Fiat re-badged in India and it proved reliable and cheap car for decades.

Pakistan should pursue companies like Dacia. Its a Romanian company now owned by Renault. Its Dacia Sandero is the cheapest car in Europe. It cost 6000 pounds in UK. Pakistan needs cheap cars not in the range of PkR 1.5 million and above. Pakistan has a growing middle class and it needs automobiles that its general population can afford.

You must be kidding me. Fiat is one of the worst cars in terms of reliability.

 

[Path-Finder]

Italian cars have a good record in Pakistan type environment.

India's Padmini was a Fiat re-badged in India and it proved reliable and cheap car for decades.

Pakistan should pursue companies like Dacia. Its a Romanian company now owned by Renault. Its Dacia Sandero is the cheapest car in Europe. It cost 6000 pounds in UK. Pakistan needs cheap cars not in the range of PkR 1.5 million and above. Pakistan has a growing middle class and it needs automobiles that its general population can afford.

bro you can't be serious. Fiat and its Italian cousins should be avoided at all cost.

 

[airmarshal]

Fiat has serious reliability issues no doubt but I dont think you have tried local Suzuki and other Japanese brands being assembled in Pakistan.

My family bought Suzuki Alto. Its a Japanese car, right? Since day one it had brake issues. Its brakes have failed 3 times in last 8 years. Every time we have gone to Suzuki dealership and bought genuine parts and even replaced the brake booster which was quite expensive. Brakes again failed 3 months ago!

So reliability has to be seen in context.

Fiat has built cars in India for a long time. They started building Fiat in 1960s. Indian environment is not very different than Pakistan. So I dont see how worse will Fiat will be when most reliable car makers building their models in Pakistan are absolute trash at exorbitant prices.

 

[ziaulislam]

All of that may be true. But Pakistan's value as a gold mine is only relative to other countries of the world. Investors will judge returns against risks for their investment and put their bets on the bigger, safer gold mine, relatively speaking, of course.

well, in worse case scenario at current growth rate(5.5%) in 10 years Pakistan economy will growth 1.5 x times
this is assuming that growth will not pick up (which is unlikely)
this will mean Pakistan economy will be 1 trillion and in top 20 by nominal, its already in top 25 by purchasing power which tells you alot

so even in worse case scenario Pakistan will be a huge market

in most likely scenario , economy is probably going to cross 1 trillion mark by 2025 (assuming a growth of average 6% with inflation of 4-5% and adding 25% for undocumented economy by WB estimates)

 

[airmarshal]

Pakistan automobile growth is stunted because there are levels of tariff on automobiles right from import of components and the finished product. This makes the final product very expensive and no competitive.

Its because fundamentally the government is run by thieves who dont want to expand the tax base. Once the tax base is not expanded, the government is forced to tax heavily whatever revenue streams it has.

You must be kidding yourself if you believe new Suzuki Cultus (Celerio) is worth Rs 1.4 million. Its top spec model in UK is about 1 million Pakistan Rupees. You pay these prices because you are paying the government very high taxes.

If taxes and import duties are reduced, its natural prices will come down.

 

[VCheng]

well, in worse case scenario at current growth rate(5.5%) in 10 years Pakistan economy will growth 1.5 x times
this is assuming that growth will not pick up (which is unlikely)
this will mean Pakistan economy will be 1 trillion and in top 20 by nominal, its already in top 25 by purchasing power which tells you alot

so even in worse case scenario Pakistan will be a huge market

in most likely scenario , economy is probably going to cross 1 trillion mark by 2025 (assuming a growth of average 6% with inflation of 4-5% and adding 25% for undocumented economy by WB estimates)

It is not just the overall economy. Car manufacturers look at Pakistan's present ranking at #41 in terms of vehicle sales and its rate of growth, and then prioritize their investments accordingly by setting up plants elsewhere.

 

[BATMAN]

Italian mainstream cars suck ...

They make most appealing designs and they sell at low cost.

If Pakistan govt. put ban on imported cars like india did for decades, our local industry will take off.

 

[denel]

Fiat has serious reliability issues no doubt but I dont think you have tried local Suzuki and other Japanese brands being assembled in Pakistan.

My family bought Suzuki Alto. Its a Japanese car, right? Since day one it had brake issues. Its brakes have failed 3 times in last 8 years. Every time we have gone to Suzuki dealership and bought genuine parts and even replaced the brake booster which was quite expensive. Brakes again failed 3 months ago!

So reliability has to be seen in context.

Fiat has built cars in India for a long time. They started building Fiat in 1960s. Indian environment is not very different than Pakistan. So I dont see how worse will Fiat will be when most reliable car makers building their models in Pakistan are absolute trash at exorbitant prices.

I have no idea about Suzuki; it is not a car we get here. This is purely a Toyota/VW (60/40) land. Why are there no plans like we had back from the 70s to force local manufacturing in terms of content just KDAs.

Fiat... well Uhnnooo noooo. just joking. Uno saved my friend's life in head on collision.

 

[airmarshal]

I have no idea about Suzuki; it is not a car we get here. This is purely a Toyota/VW (60/40) land. Why are there no plans like we had back from the 70s to force local manufacturing in terms of content just KDAs.

Fiat... well Uhnnooo noooo. just joking. Uno saved my friend's life in head on collision.

Thats what I think about and I dont get answers. Why is there no effort to become a manufacturing base instead of just bringing in more assemblers? Why not lower tariffs and taxes to lower price of automobiles so that more people can afford it and more automobiles are produced?

If the Pakistani market is small, then how about Morocco? How did Morocco become an export hub for Europe for Renault?