Long overdue: Auto policy tabled for approval

[Lavrentiy]

Resale in Pakistan depends on easy availability of spare parts rather than quality. These three monsters have learned this lesson.
When a person from far away city like Mianwali has to come to Lahore just for a side mirror or a little light, he won't buy that 2nd hand car.

Well said Sir. I concur

 

[RoadRunner401]

2 problems
a) don't mind paying taxes if it goes in public welfare fund or national treasure in spite of their own pockets;
b) no. of people paying taxes are same or maybe reducing but amount of taxes for people who pay is rising

FBR collected Tax goes into general revenue account of GOP not into politicians personal accounts. Pakistani( which i am one) complains, about incompetent government, and corrupt politicians, yet they are the ones who keep voting these unqualified people in power.

 

[Caprxl]

FBR collected Tax goes into general revenue account of GOP not into politicians personal accounts. Pakistani( which i am one) complains, about incompetent government, and corrupt politicians, yet they are the ones who keep voting these unqualified people in power.

Well , I will rephrase, from there it goes into their pockets as New Projects n kickbacks and what not.

 

[Donatello]

The Japanese have a VERY strong lobby in the Pakistani car market, specifically Honda and Toyota.. they pushed out the Koreans with total impunity and survived the import surge of the first 2000s. In addition, the sheer resale value of their product makes the entry of another competitor especially one from an asian country impossible.
The word Japan is associated with Quality whilst China still carries its stigma(not unjustified due to its flooding of the local electronics market with cheap and unreliable goods). Even Chevrolet did not break through because it was not able to break the overwhelming priority Pakistanis give to resale value over all else.

IF Volkswagen is able to break this lobby(and that too depends upon whether the Japanese are unsuccessful in their attempts to stop this by hook or by crook) they will perhaps have some chance to break into this market.

Funny story with this, back in the early days of Pakistan.. my maternal grandfather was a fairly affluent man and was about to go into the automotive parts business. With his reputation in the local market, he was approached by both Ford and Toyota for gaining exclusive rights to the local market.. back then.. Toyota wasn't the household name as it was soon to become and to him Ford seemed like the obvious choice. But as fate would have it, Ford died out in a few years leaving him bankrupt and into a struggling life while those that started off with Toyota as new paupers minted money.

See, the demand for cars is rising very fast. In 2008-9 year, a total of 85,000 cars were produced and sold in Pakistan. The important thing to note in Pakistan is that car are only produced when they have already been sold. Unlike many countries where dealers would order in advance and then struggle to sell the lot. In 20014-15 year, 150,000 cars were produced and sold, plus around 40,000 were imported (which are mostly the 3 year old used JDM cars like Prius, Vezel, Passo) so clearly the market is 190,000 cars per year now. In five years it will cross 250,000 mark, which means that now there is a sizeable market for a fourth major player to enter and offer cars in the 8-14 lakh rupees range. This is where Volkswagen can make it's mark because they have a nice offering of cheaper, smaller cars that are fuel efficient and reliable. Toyota, Honda and Suzuki are unable to meet the local demand now. Plus their offerings are poor, lacking many safety systems and emissions standard. But this is not because of Japanese themselves, but rather the Pakistani 'saith sahib' mentality that owns the rights to assemble the cars.

The moment Volkswagen/Ford come into Pakistan, you'll see the price drop and offerings go up.

The problem with Korean or American brand like Chevrolet is that while they had the service facilities in major cities, anything beyond Lahore/Islamabad/Karachi and you are dead in the heat. Just like Audi/BMW/MB....but then that is a different market altogether. People want parts cheap and easy.....and 3S dealers. Koreans were never able to do that.

I remember when Kia Spectra was launched, it was clearly superior to Civic/Corolla. It had a better engine and better gas filled springs.......yet that car hardly ever sold. That's because of our desi mentality......but then that is what works. Wait till you find someone who bought the awesome JDM Passso and he needs to get the transmission fixed......yea good luck with that.

You need full local presence....and only a big company like VW/Ford can do that.

 

[Faiez]

See, the demand for cars is rising very fast. In 2008-9 year, a total of 85,000 cars were produced and sold in Pakistan. The important thing to note in Pakistan is that car are only produced when they have already been sold. Unlike many countries where dealers would order in advance and then struggle to sell the lot. In 20014-15 year, 150,000 cars were produced and sold, plus around 40,000 were imported (which are mostly the 3 year old used JDM cars like Prius, Vezel, Passo) so clearly the market is 190,000 cars per year now. In five years it will cross 250,000 mark, which means that now there is a sizeable market for a fourth major player to enter and offer cars in the 8-14 lakh rupees range. This is where Volkswagen can make it's mark because they have a nice offering of cheaper, smaller cars that are fuel efficient and reliable. Toyota, Honda and Suzuki are unable to meet the local demand now. Plus their offerings are poor, lacking many safety systems and emissions standard. But this is not because of Japanese themselves, but rather the Pakistani 'saith sahib' mentality that owns the rights to assemble the cars.

interesting fact about the car market in pakistan, in current year (2015-2016), a total of around 200,000 cars will be made in pakistan and out of those, roughly 35,000 are of a massive government order to pak suzuki for taxi scheme. Pak suzuki's stock has roughly doubled since last year to date. And btw, pak suzuki is majority owned (73%) by suzuki motor corp, not by a saith....Although there's saiths in toyota and honda....

Also, the minimum efficient scale in auto assembly is quite big....And the market size is not big enough for that. The best thing to do is to remove import restrictions. People will import cars and the market size in terms of number of cars will grow sharply. They will develop taste. And if then a manufacturer feels it can produce at a lower cost locally inside pakistan, it will setup a plant. You can't force local manufacturing. It's demand/supply. If there's a demand for something, someone will create a supply for it. Current market is artificial. The gov. restricted the supply to raise prices enough for cars to be produced locally profitably. As soon as import restrictions are removed, these local manufacturers will collapse and rightly so.

 

[Lavrentiy]

Also, the minimum efficient scale in auto assembly is quite big....And the market size is not big enough for that. The best thing to do is to remove import restrictions. People will import cars and the market size in terms of number of cars will grow sharply. They will develop taste. And if then a manufacturer feels it can produce at a lower cost locally inside pakistan, it will setup a plant. You can't force local manufacturing. It's demand/supply. If there's a demand for something, someone will create a supply for it. Current market is artificial. The gov. restricted the supply to raise prices enough for cars to be produced locally profitably. As soon as import restrictions are removed, these local manufacturers will collapse and rightly so.

Just give them one last chance and then let them drown if they don't improve.

 

[Faiez]

Just give them one last chance and then let them drown if they don't improve.

they have no reason to improve.

 

[Donatello]

interesting fact about the car market in pakistan, in current year (2015-2016), a total of around 200,000 cars will be made in pakistan and out of those, roughly 35,000 are of a massive government order to pak suzuki for taxi scheme. Pak suzuki's stock has roughly doubled since last year to date. And btw, pak suzuki is majority owned (73%) by suzuki motor corp, not by a saith....Although there's saiths in toyota and honda....

Also, the minimum efficient scale in auto assembly is quite big....And the market size is not big enough for that. The best thing to do is to remove import restrictions. People will import cars and the market size in terms of number of cars will grow sharply. They will develop taste. And if then a manufacturer feels it can produce at a lower cost locally inside pakistan, it will setup a plant. You can't force local manufacturing. It's demand/supply. If there's a demand for something, someone will create a supply for it. Current market is artificial. The gov. restricted the supply to raise prices enough for cars to be produced locally profitably. As soon as import restrictions are removed, these local manufacturers will collapse and rightly so.

The reason government will not lift import restrictions is that they earn lots of duty/customs form there. Secondly, not everyone wants to buy pikachu JDM cars. Third, importing means you will not have after sales service or warranty honors here in Pakistan.

For the third reason alone, it is better to have a local assembler. People want cars that can be serviced and sold easily. If you have an imported car and i know it's parts are hard to get by, then i will not buy that car no matter how cheap you sell it to me.

 

[Faiez]

The reason government will not lift import restrictions is that they earn lots of duty/customs form there. Secondly, not everyone wants to buy pikachu JDM cars. Third, importing means you will not have after sales service or warranty honors here in Pakistan.

For the third reason alone, it is better to have a local assembler. People want cars that can be serviced and sold easily. If you have an imported car and i know it's parts are hard to get by, then i will not buy that car no matter how cheap you sell it to me.

What nonsense are you talking about.....?

The only reason major auto companies don't have presence in pakistan is due to high duties. Reduce/Remove the duties, you'll see many major car companies setting up dealerships and providing proper after sales service.

local assembly or not, who cares....Pakistan is not good at cars due to many reasons, including high energy cost and small market size. Let major auto companies come here and setup their dealerships so we can buy some decent cars at a decent price.

 

[Donatello]

What nonsense are you talking about.....?

The only reason major auto companies don't have presence in pakistan is due to high duties. Reduce/Remove the duties, you'll see many major car companies setting up dealerships and providing proper after sales service.

local assembly or not, who cares....Pakistan is not good at cars due to many reasons, including high energy cost and small market size. Let major auto companies come here and setup their dealerships so we can buy some decent cars at a decent price.

You do realize that there are high duties on import in a lot of developing countries of the world...even some developed ones, like Norway/Singapore. You cannot simply reduce duty and expect them to start supplying cars. I mean, if the duty was lifted, and a imported Camry cost the same as it does, say in USA, it does not mean that the demand for cars has gone up.
40,000 cars are imported under the 3 year used scheme......even if you removed the duty on brand new or used cars.....how much the market would be? 100,000? Nope.

 

[Faiez]

You do realize that there are high duties on import in a lot of developing countries of the world...even some developed ones, like Norway/Singapore. You cannot simply reduce duty and expect them to start supplying cars. I mean, if the duty was lifted, and a imported Camry cost the same as it does, say in USA, it does not mean that the demand for cars has gone up.
40,000 cars are imported under the 3 year used scheme......even if you removed the duty on brand new or used cars.....how much the market would be? 100,000? Nope.

Car market size in terms of units will definitely increase as more people will be able to buy cars and those already able to buy cars will buy more cars. And those not buying cars because they think they're not worth buying in pakistan will also buy cars.

It's not about forcing supply into market....You just remove all barriers in the market and let the free market do its thing. If there is demand for cars, companies will start supplying....