Local auto industry lags far behind

While domestic car sales stood at 17,86,899 units in FY14, according to data from the Society of Indian Automobile Manufacturers (SIAM).

Pakistani local auto industry sold only 124,807 locally assembled cars (including light commercial vehicles, commercial vehicles, vans and jeeps) in the first 11 months of the FY14, depicting only 2.3 percent increase from last year, despite enormous reduction in imported used vehicles due to age restriction. Pakistan exported worth of $18.677 million of auto parts and accessories till the end of April 2014 in FY14 while transport group imports in Pakistan stood at $1.833 billion during the period.

Similarly, on two wheelers' front, Indian two-wheelers' exports rose 6.52 percent to 20,83,938 units in IFY 14 from 19,56,378 units in IFY 13 while domestic sales of motorcycles stood at 14.81 million.

In Pakistan, motorcycles' sales stood at 1.44 million units in first 10 months of FY14 according to Pakistan Bureau of Statistics (PBS) data.

As far as Foreign Direct Investment (FDI) is concerned for the automobile sector, India fetched $1.517 billion inflows during the IFY14 for the development and growth for the automotive sector from foreign countries.

With the presence of three world renowned Japanese automakers in the Pakistan, FDI received during the first 11 months for the automobile sector was not compatible as it stood at $27.3 million of which $24.9 million was invested in cars assembling while $3.1million was coming for two wheeler industry. Buses, trucks, vans and trails' assembling industry of Pakistan was remained failing to attract FDI as it stood at negative growth of $0.7 million during first 11 months of this fiscal.

In India, 80 percent of the local auto market dominates with 800cc to 1000cc segment cars while remaining 18 percent covers 1000cc to 1300cc along with only 2 percent people in India buy above 1300cc vehicles.

In Pakistan the situation leads totally different as unavailability of locally assembled small cars' segment to market share of 1000cc to 1300cc cars to 30 percent, while only 21 percent of the local market is covered by an 800cc to 1000cc cars.

Interestingly, the country of lowest economic growth in the region and having awful energy crisis has 49 percent share of the local auto market of above 1300cc luxurious vehicles. With the alleged gloves in hands of policymakers with local assemblers, Pakistani auto industry saw only partiality nothing else during the last decade.

Also in this year's budget speech brought same apathetic posture of government for consumers besides some more support announced for the already privileged local auto assemblers by reducing 10 percent Federal Excise Duty (FED) on locally made 1800cc or above vehicles. This incentive announced by the government in budget 2014-5 was supporting one assembler in Pakistan, as Toyota Fortuner would enjoy this decrease.

Toyota sold 847 units of Fortuner in last FY while the sale of Fortuner stood at only 386 units ahead of the closing of this fiscal.

Toyota aimed to sell around 2,500 units in the first launching year of the locally assembled Fortuner based on studies conducted by the Company, but unfortunately the local distributors of the Toyota still have not managed to sell the set target after two years of launching of Sports Utility Vehicle.


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