As 2014 draws to a close, Pakistan’s automobile industry appears to have little to rejoice about. New car launches by the major industry players have generally disappointed customers in terms of value for money. This has been further exacerbated by their failure to cater to the fuel-efficient economical 1000cc or under category of vehicles, myopically choosing of focus on the high-end 1300cc and above segment. Consequently, 79% of all imported cars in 2014 belonged to the 1000cc or under category, an increase of 59% from 2013.
The industry took a further beating with a scathing report from the Competition Commission of Pakistan that called for a liberal car import policy from the government, including lifting of restrictions on the entry of new players from Europe and South East Asia. The State Bank of Pakistan also advocated the import of foregin vehicles in its report 2013-14. These reports are likely to result in the government facilitating an increase in the number of imported vehicles, posing a bigger challenge for the industry in 2015.
Furthermore, the Auto Industry Development Programme (AIDP) failed to materialise, such a programme would have have regulated imports, exports and taxation within the industry and eventually led to incresed customer-focused local production and decreased exports.
Although 2014 has passed without open trade with India, this is a distinct possibility in 2015 and one that may then open up the market to cheaper competition, especially in terms of spare parts.
The further doesn’t appear to bode well for the industry until it understand to the customer equation better and is willing to pitch to the government a long-term policy framework to give is sustained direction in 2015 and beyond.
By Mazhar M. Chinoy