The din and noise of irrational car craze fuelled by remittances and powered by lease-financing, may have died down, but the appetite of the indigenous auto industry to mint money does not seem to have abated a bit. The industry relishes customers’ helplessness and deny them bookings. Such an abnormal situation runs counter to ‘universal code of corporate governance’. It also reflects adversely on government’s inadvertence to address customers’ concerns, reflected in the media routinely. It was anticipated that import of cars in CBU condition would ease the situation and make availability of cars hassle-free at competitive rates. This has not happened. 

The bane of premium or ‘on’ money, coined in local parlance for premium, still rules the roost. Realizing booking charges on the spot, running into thousands, unheard in business channels, is another unholy stain, besmirching the auto-industry.  Delivery of cars at door-steps, the dates dished out by auto sector by months, are a norm not an exception. With a view to make hay while the sun shines, the gimmick of assemblers to release vehicles in the market to regulate quantum of demand for cars with an ulterior motive of maximizing profit-taking, is another attempt to exploit customers’ helplessness.  In the face of such a contrived scenario, the claims of the companies, promising prompt delivery of vehicles, following hyped investment by billions, looks hollow like boastful politicians, promising moon to voters at the time of elections or making country next Asian Tiger.  To cash in on customers’ choice for a popular hue, some dealers do not demur to demand extra bucks, collecting their share in the pound of flesh from their corpus. The government’s directive, binding assemblers, pay mark-up on deposits, if delivery dates exceed two months, is being obeyed faithfully by most assemblers in stark disavowals.  If the prices of cars escalate in-between booking and delivery dates, buyers are barred to cast a passing glance at their dreamt wheelers, until they shed the differential, despite full payment, made in advance. Trade ethics warrant fair play in business dealings. If one makes full payment, one is entitled to delivery of car on the spot.  If, for reasons unknown, it is not possible to deliver and the prices escalate in-between booking and delivery dates, customers are entitled to receive possession of the products at the old price. The differentials could be due, if bookings are made only on token advances. In the past, handsome sums were squeezed from customers, despite full advance payments at the time of bookings. The pricing of assemblers’ products is also not without concern when compared to cost of corresponding products, prevailing in the neighbouring country. More so, when operating conditions like cheap labour and land, besides knocked off levies, are almost identical in both countries.  My Mauritian host revealed that the sugar sells dirt cheap in his country, because it is manufactured from the sugar cane, grown locally in that country and as such the government does not want to fleece its denizens on the pretext, that the price of the commodity is high in the international market.   

karachi—A new Light duty Chinese Commercial Truck is going to start assembling from November this year at Sind Engineering (Pvt.) Limited under Contractual Assembly Agreement with M/s. Silver Seal International.
Anwar Iqbal, CEO Silver Seal International & Lt. Col (R) Syed Akbar Hussain, MD SEL & Chairman PACO signed the contractual assembly agreement, while Waseem Haqqie, Chairman Engineering Development Board, Ministry of Industries Production and Special Initiatives was the chief guest on the occasion. Association of Manufacturers of Parts for Automotives & Motorcycles (AMPAM) awarded a Gold Medal to Waseem Haqqie.
Wasim Haqqie, addressing the signing ceremony said Automotive industry has shown tremendous achievement in the last six years and Pakistani market is now flooded with locally assembled light and heavy duty vehicles. The automobile companies have confidence on Pakistani market and its positive results could be seen in terms of growth in auto sector share prices in the stock market. The locally manufactured cars have crossed 200,000 marks and the country is targeting 500,000 locally assembled cars annually. He said the country was now manufacturing parts, and 70 percent components of 800cc cars were being manufactured locally same as 65 percent of 1000cc and 55 percent of 1300cc. China always proved itself the closest friend of Pakistan and provided expertise in all fields to fulfill our local demands. The assembling of light duty truck was also a Chinese origin.
Lt. Colonel (Retd) Syed Akbar Hussain, Managing Director, Sindh Engineering Limited said that the government was trying to revive engineering production. The Sindh Engineering had built several projects but in the recent past its productivity was become very thin.
Anwar Iqbal, Chief Executive Officer, Silver Seal International said that his company has been engaged in numerous trading activities with China for the last ten years and now entered into local assembly of one ton light duty commercial trucks.
Liu Bangyin, Managing Director Chongqing Maxwell Hi-Tech Developing Limited, Hautwell Group, Chongqing China, the Chinese partner for Silver Seal International informed that they are also introducing light and heavy-duty commercial truck in CNG version and three-wheeler CNG auto rickshaw in Pakistan very soon. I feel proud to take this opportunity to work with our friend country Pakistan, and wish to work for the betterment of both countries by joining hand together with Pakistani friends.
“You are very well aware that before the last 7 to 8 years apanese products just because of economical prices dominated Pakistani auto industry. We, Peoples Republic of China are willing to provide more economical and reliable products to Pakistan, for which we are here today. You can realize that the Pakistani auto market has grown up around 30% in last 10 years and increasing day by day for which Chinese products contribution is a 40 percent to 50 percent. Mainly into two wheeler segments,” Liu added.

Source:-[pakobserver]

The annual demand for vehicles in Pakistan is estimated at 300,000 units, which is being met from local sources and imports. The local production of after market vehicle parts and accessories is estimated at US$850 million while total imports are valued at US$300 million. At present, there are about four hundred companies manufacturing vehicle parts and accessories and supporting around 25 vehicle manufacturing and assembly facilities. In terms of bus and truck manufacturing and assembly, there are about five vehicle manufacturers active in the area.
Within the automobiles industry, the cars and jeeps sub-sector recorded a 45.1 percent growth during the first seven months of 2006 as compared to s 12.5 percent growth the previous year. Though the production of light commercial vehicles was still very impressive, the imports of road motor vehicles rose by 66.7 percent during in the fist quarter of 2006 as apposed to 28.6 percent during the corresponding period of the previous year.
Deducing this increased domestic demand, increased availability of credit and rising per capita income are possibly the main contributing factors behind this extraordinary performance.

Source:- Links

Criticals and other interest groups have long criticized the auto industry on various fronts, most of which have been external and controllable factors, including unprecedented surge in demand through auto financing schemes from banks and achievement of deletion levels according to the programme implemented under the WTO pressure. The industry is alleged for charging premium and making late delivery of automobiles.
 But the need of the hour is to evaluate the auto sector impartially from the national perspective, keeping in mind the overall role the industry is playing for Pakistan on the technological HR development, employment, investmen and industrialization.Source:- Link

London’s black cabs may soon be seen on the streets of major Pakistani cities, including the capital, Islamabad.

The government is allowing the duty-free import of 300 black cabs from the United Kingdom.

The company importing them also plans to manufacture 18,000 of them a year, the government says. Half of those built in Pakistan will be for export.

The government says it has approved the project to meet an acute shortage of private taxis in the country.

‘Done deal’

“We have allowed a private company to import 300 black cabs free of import duty,” investment minister Omar Ahmed Ghumman told the BBC’s Urdu service.

“The company plans to set up a manufacturing plant in Pakistan that will produce 18,000 [black cabs] every year,” the minister said.

He brushed aside allegations of lack of transparency over the deal by the opposition.

“This is a deal done with a private company that is willing to invest £850m ($1,570m) in Pakistan,” he said.

The cabs will face competition for road space

According to the minister, the main entrepreneur is a California-based Pakistani by the name of Daud Khan who has extensive business interests across the United States.

He says Mr Khan’s venture will create 50,000 jobs in Pakistan at the relatively high income level of about $300 per month.

“All procedures laid down by the law were followed while awarding him the contract,” he said.

Not so, argues the opposition.

It says the deal was neither properly advertised nor was the bidding held in a transparent manner.

The opposition says that invitations for bidding should have been advertised in at least two major English and Urdu newspapers.

The adverts should also have been placed on the relevant ministry or department’s website.

These requirements have not been met.

Tariff exemptions

“We read about it in the newspapers,” says Noor Hashmi, a private car dealer in Karachi.

“But by the time we got to know of it, it was a done deal.”

Mr Hashmi says car dealers are at a loss to understand why the government felt the need to import duty-free vehicles when similar ones were already being built in Pakistan.

“Where have the existing taxis come from? They are all being built by major manufacturers such as Toyota and Suzuki in Pakistan,” he says.

The opposition has asked why similar tariff exemptions have not been granted to other public-oriented ventures in the transport sector.

Lack of transparency allegations have been brushed aside

No duty exemptions were granted to the import of buses running the environment-friendly compressed natural gas, the opposition says.

Taxis cater primarily to high income groups in Pakistan while a vast majority of the workforce relies on buses.

The bidding documents lay down an exact description of the vehicles that are to be imported.

The 2.4-litre, diesel-powered vehicles approved for import should have passenger seats facing each other and a separate lockable cabin for the driver.

Critics say the description is so tightly drawn up that it only qualifies vehicles produced by the UK-based company London Taxis International (LTI), the main manufacturers of the black cab.

[Source:bbcnews.com]

LAHORE - Blaming the international changes which he described unkind, Prime Minister Shaukat Aziz said that oil and commodity prices have put Pakistani economy under inflationary pressures, “but this is a global change rather than a Pakistan specific one.”
Speaking on the 40th anniversary of Honda Atlas operations in Pakistan, marked by groundbreaking ceremony of 100 million dollars new Honda Motorcycle plant here Monday, the prime minister admitted that agriculture sector indicated a slower growth rate as compared to last year.
The Prime Minister acknowledged that 2.6 percent decline in agriculture sector from 4.1 as compared with the previous year saying, “but that it was due to pest attack on cotton crop.” Shaukat Aziz said that lower than expected wheat crops yield also contributed to slowing-down of agriculture sector growth.
However, Prime Minister said the present government had been taking several measures for the economic fundamentals of Pakistan, which he said had steadily been improving over the last couple of years in the wake of prudent economic policies adoption. He said present policies were acting as catalyst in bringing about economic stability and predictability.
With low interest rates and steady exchange rate, he said, economy had shown signs of growth and resilience in the face of ever increasing geo-political challenges, as both trade and investment figures reflected growth, he remarked.
He said government’s decision to focus public sector investment towards infrastructure development would give a positive boost to growth and investment, which, ultimately, he said would address the problems of unemployment and poverty.
As per PM, the present government is bringing down the cost of Pakistani products to compete globally. “Our goal is to adopt a new strategy to encourage rapid industrialisation for creating more job opportunities in the country,” he observed.
He said the engineering industry was in the forefront to make economy stronger, whereas 100 billion auto-industry, under the head of motorcycles, was taking the lead marking itself a hi-tech value-added sector, providing high skilled job opportunities to the people.
Prime Minister said that WTO framework allowed a country enough flexibility for its industry to grow and develop. “Irrespective of the WTO requirements, there is enough space to provide good working environment to automobile industry,” he assured the assemblers and vendors.
He said that excess capacity had largely been consumed in various sectors, adding that capacity enhancements were currently being carried out in several sectors including textiles, engineering, electronics, cement and packaging.
He said that the low interest rates had enabled the financial sector to become more dynamic. Rather than just lending to the government, the focus of innovation had been the private sector and the consumer, he added. This step unleashed unforeseen consumer purchasing power across the economy with over 50 per cent growth rate in consumer durables like TVs, refrigerators and motorcycles. Shaukat Aziz said that a tight fiscal stance helped stabilize the economy. “The budget deficit is at around 4 per cent and inflation has largely been kept in single digit range”, he added.
Talking about the performance of Pakistan’s economy in the year 2003-04, he said that a real GDP growth rate of 6.4% was achieved during this year.
He said that all the sectors contributed to the growth but automobile, electronics, textiles and cement sectors clearly stood out.
Shaukat Aziz said that large scale manufacturing had grown by 16 per cent - a trend that augers well for high growth during current fiscal year.
Shaukat Aziz said that the indigenous auto industry with 80% to 90% deletion level in tractors and 50% to 70% in cars, has performed well over the last few years under auspices of Engineering Development Board (EDB).
He said that it was government’s policy to localize as localization led to self-reliance. He urged the auto industry to export automobiles and improve competitiveness adding that wages in many competitor countries were on the rise, providing an ample opportunity to Pakistani auto industry to take advantage.
Prime Minister said that Pakistan could prove a regional manufacturing hub for South Asia, Middle East, Africa and Central Asia. He said that Pakistan must have more and more industries, enabling environment provided by the government to help increase motorcycle production from 100,000 in 2002 to the projected level of over 500,000 during the current fiscal year.
Highlighting some of the measures taken so far, he said that launching of industrial parks all over the country operated as public-private partnership was providing a hassle free investment environment. He said stable macro economic situation had also provided a high growth environment for investors.
Talking about the tariffs for raw material, he said that the tariffs had been reduced to ensure competitiveness of local manufactures, which would, he said, continue in future budgets. He said that continuity and consistency of economic policies would ensure a predictable environment for investors.
Prime minister said that the present government was promoting healthy labour-management relations to improve productivity and competitiveness. He said that his government was focusing on SME sector promotion through skill enhancement, easier availability of credit and technology transfer.
Speaking on the occasion, Vice President Honda Japan, M. Hamane commended government for providing healthy environment to auto industry adding that Honda Atlas would produce 300,000 motorcycles this year. He urged the government to take notice of the companies that were marketing foreign-made motorcycles in the name of locals.
Earlier, in his welcome address, President and Chief Executive Officer of Atlas Honda Limited, Saquib H.Shirazi said that they had successfully met the three challenges of volume, consumer benefit and investment before them. Talking about volume he said that Atlas Honda was going to produce 300,000 motorcycles this year out of half million of country production. Despite some undesirable practices adopted by some players in the sector, the consumers were made able to discerning between value added and one time-buy phenomena.
Talking about the passing on the volume benefit to the consumer, Saquib Shirazi said Atlas Honda had increased its localisation and volume continuously and could able it to achieve over 90 percent of the result. He said that Atlas Honda had reduced prices by 25 percent by reaching to the lower middle class users.
About investment he said that Honda had invested about 25 million dollars to expand the existing facilities and over 2,000 new jobs had been provided besides contributing around Rs. 9 billion to national exchequer.
Referring to the new Motorcycle Plant, Shirazi said that the plant would be set up at a cost of US $ 100 million.

LAHORE - The old and used auto parts dealers based in Lahore have requested the federal government to allow limited import of the old and used auto parts on the premise that the inventory is still being used by a considerable number of road users besides the fact that the same is already being brought into the local market by the smuggling chains.
In a budget proposal document prepared by the Lahore Chamber of Commerce & Industry Research Department and being sent to the Ministry of Finance and the Central Board of Revenue (CBR) for inclusion in the Finance Bill of 2006-07, the dealers have requested that old model vehicles between the years 1972-75, which includes old brands of Toyota, Mazda, Volkswagen etc are still being used by the considerable number of road users and the market demand invariably creates a strong case for the smuggling networks to operate in an elaborate manner, creating supply chains in all the major markets of Pakistan’s major cities, in the process depriving the government of much needed revenue.
The used auto parts dealers in their deliberations submitted to the LCCI for onward transmission to the CBR have requested that the import may be allowed under the clear head of old and used auto parts and not under the general head of scarp, as it currently practiced. They have also proposed that each item and component being imported should be clearly mentioned like any other imported item to enable the customs authorities to evaluate the item as they want to. They also propose that the imports may be but in the medium to high tariff wall, on one hand enabling the government to accrue revenue and at the same time allowing a level of protection to the local industry.
They have also proposed a join committee may be formed with the representatives of Custom Department, Relevant trade, PAPPAM and the concern Chamber of Commerce & Industry. Here the dealers are very much clear on the count that if despite a high tariff proposed by them, the local industry still faces injury, the restricted import regime may still be done away with.

Here, it is pertinent to note that that the new auto parts importers are also faced with a similar situation, on the count that they are already allowed import as a last tariff slot of 35 per cent. They are demanding a 25 per cent tariff regime on the premise that if they are allowed the opportunity, that can strike a blow to the incidence of smuggling of these parts into Pakistan especially those imported by the Afghan traders under the Afghan Transit Trade Agreement and then smuggled back into Pakistan.

ISLAMABAD (APP) – Sale of cars went up about 27 per cent in the country as compared to the same month last year.
As many as 15994 car units were sold whereas the production of cars also increased to 15804 last month showing increase of 24 percent, Pakistan Automotive Manufacturers Association told a TV channel. Despite ongoing import of car units from other countries and increase in the production of cars in the country, the demand of cars in market is increasing day by day.
The sale and production of cars was 13610 and 12692 units during February 2006, respectively. Increase in sale and production of car units in March, as compared to February 2006, was 27 percent and 16 percent respectively.
Production of truck units also increased to 437 by 16 percent in March. However, Only 395 Trucks could be sold showing decrease by 16 percent as compared to the month of February.
Production and sale of motorcycles went high 11 percent and 10 percent respectively. Around 42707 motorcycles were produced during March 2006.