Competition intensifies among carmakers
Aamir Shafaat Khan
21 Dec 2020
Pakistanis drove only European and American cars until the 1960s. Then the Japanese automakers arrived. They received a cold response initially owing to concerns about the quality and reliability of their vehicles. With time, however, Japanese carmakers achieved domination. Their cars emerged as more reliable, durable and economical than European and American ones.
More recently, Chinese companies tested their luck in Pakistan’s auto market but failed due to outdated products and lack of features and quality. Another reason for their failure was their poor choice in terms of local partners. But the situation is different now. Chinese carmakers have been trying hard to improve their products, introduce advanced models and set up new plants.
With advanced technology and better safety features in commercial, passenger and SUV segments, some Chinese vehicles have attracted consumers and their acceptability ratio has gone up. This is the beginning of a new era and, the local assemblers of Chinese vehicles say, it will belong to the Chinese auto manufacturers.
However, price-conscious buyers still believe Chinese cars will take time in gaining trust of consumers who usually buy Japanese cars. They say that Chinese two-wheelers made deeper inroads into the Pakistani market owing to their lower prices (and despite not-so-great quality). But the car segment is a different ball game and they will take time to gain a bigger market share.
The Auto Policy 2016-21 opened up new avenues for the Korean and Chinese assemblers and brought millions of dollars of investment into the country. Korean vehicles like Hyundai (Tucson) and Kia (Sportage and Picanto), dubbed as arch-rivals of Japanese cars, are gaining popularity.
Lahore-based Regal Automobile Industries Ltd (RAIL) has now introduced Prince Pearl 800cc hatchback car. “We received 1,200-plus booking orders on its launch in February.
To date, 2,000 units have been sold,” RAIL Executive Director Anwar Iqbal said. The RAIL plant and offices located on an area of 435,600 square-feet and worth Rs15 billion employ over 1,000 people.
In 2016, a well-known company of China, DFSK Motor Company Ltd, an associate company of Dongfeng Motor Corporation, joined hands with RAIL to market its light commercial vehicles (LCVs) and SUVs in Pakistan.
He said the newest addition to their locally assembled range is a seven-seater SUV DFSK Glory 580 Pro 1.5-litre turbo-charged with a price tag of Rs4.4 million, which will be launched in the third week of December. It will compete with Proton X-70, the MG HS, Kia Sportage and Hyundai Tucson.
When asked if Kia Sportage is a better option at the given price point, he said Sportage does not compare to Glory Pro in terms of technology and safety features.
Earlier this year, the company sold 200 completely built-up (CBU) units of SUV Glory 580 in two variants. Due to the overwhelming response, RAIL enhanced its production and set up a new assembly line for the seven-seater SUV. He said the company is also rolling out a DSFK KO7 minivan and KO1 commercial loader.
“I foresee that 2021 will be a great year in terms of auto sales with 50pc growth in the industry,” he said. “Preparations are being made to introduce electric vehicles (EV) after the finalisation of EV policy for four-wheelers,” Mr Iqbal said.
On Dec 11, Master Changan Motors Ltd (MCML) unveiled Pakistan’s first Euro V engine, locally assembled Changan Alsvin sedan.
MCML CEO Danial Malik said the company is offering Alsvin in three variants. The first is the 1.37-litre smart manual transmission variant. Alongside, the car has 1.5-litre five-speed dual-clutch automatic transmission (DCT) and the top-of-the-line Lumiere edition with 1.5-litre DCT packed with latest features.
“Alsvin is our fourth locally assembled vehicle under Auto Policy 2016-21,” he said, adding that his company will
launch more vehicles in 2021. “After the approval of EV policy for four-wheelers, we will bring Changan right-hand drive EVs next year.”
He urged the government to incentivise EVs. The government should focus on giving incentives to EVs rather than hybrid technology as the latter are fading away all over the world, he added.
Mr Malik said his company, after acquiring the greenfield status under Auto Policy 2016-21, had entered into a joint venture with Changan with an initial investment of $100m. It set up a plant in Karachi with the annual capacity of 30,000 units. The JV invested another $36m to introduce Alsvin and aims to introduce more models by June 2021. The plant has created 1,800 direct jobs.
He said the company has focused on parts localisation. Caravan vehicles carry 50pc local parts while M9 vehicles have 40pc local parts. “We have planned 25pc localisation of parts in Alsvin in the first year,” he said.
On expected car sales in 2021, he said a lot depends on interest rates. A massive cut in the benchmark interest rate to 7pc from over 13pc in March had injected new life in car sales. The government should remove the federal excise duty and additional customs duty to help cut car prices, he said.
As for the lukewarm response to Chinese vehicles, he said people’s
mindset will change in coming years with more competitive prices and new technologies from Chinese assemblers. “Japanese cars had also taken too much time to attract buyers.”
Hyundai Nishat Motors has planned to introduce two new cars before the expiry of Auto Policy 2016-21 on June 30, 2021. One brand will compete with Toyota Corolla and Honda Civic while another Hyundai car will try to grab the market of Toyota Camry and Honda Accord. The Faisalabad-based company sold locally assembled 819 units of Tucson and 434 units of Porter from July to November. The company has created more than 750 new jobs at its plant and offices.
Isuzu D-Max Manager for Marketing and Sales Umair Saleem said that after introducing locally assembled Isuzu D-MAX pick-up single and double cabin in 2019, the company will launch a locally assembled MU-X SUV seven-seater to compete with Toyota Fortuner.
He said D-MAX had broken the monopoly of Toyota Hilux Revo by taking a 15pc share in 2019-20 with sales of 650 units.
Al Haj Automotive, in collaboration with a Malaysian manufacturer, launched Proton X-70 1.5L turbo in December to compete with Hyundai Tucson, Kia Sportage, DFSK Glory 580 and MG SUVs.
As completely knocked down (CKD) kits of X-70 will start from 2021, Proton is coming up with another Proton Saga while other models include Proton X-50 and other passenger cars.
Lucky Motor Corporation, in addition to locally assembled Kia Sportage and Picanto, will bring its third vehicle, Sorento SUV, in January 2021.
There is no signal from the three Japanese assemblers (Toyota, Honda and Suzuki) about the introduction of any new locally assembled vehicle. However, minor model changes in various vehicles are being made to compete with new entrants.
Market reports suggest all-new Honda City models will roll out after a gap of over a decade in the first half of 2021.
Published in Dawn, The Business and Finance Weekly, December 21st, 2020
