Auto industry growing as govt policies promote competion

ISLAMABAD – At a time when economic activities have slowdown in the country, the motor industry has grown and evolved with an influx of new vehicles. 

The government had granted functioning licenses to six new entrants in order to create competition in the automobile sector under the Automotive Development Policy (ADP 2016-21). Market sources informed The Nation that volume of the auto industry is expected to increase in ongoing fiscal year, which would be mainly led by the new entrants, car companies that have come under ADP 2016-21. They said that production as well as sale of the cars is showing increase from last several months.

Sale and production declined in last year mainly due to the spread of Covid-19. However, auto industry is now on a path of recovery as it will launch the largest number of new cars in a year in 2021. With low interest rates and revival in economic activities, sales of locally assembled cars in first seven months (July to January) of the ongoing financial year rose to 81,569 from 69,189 units in the same period a year ago. “We expect further demand for cars to grow stronger owing to low interest rates environment and pickup in economic activity,” said a new entrant, who asked not to be named.

M/s Kia Lucky Motors Pvt Ltd, M/s United Motors (Pvt) Ltd, M/s Regal Automobile Industries Ltd, M/s Foton JW Auto Park (PVT) Ltd, M/s Master Motors Ltd and M/s Hyundai Nishat Motor (Pvt) Ltd were the new entrants under the Auto Policy. The new entrants as well as old auto companies will launch the largest number of new cars in a year in 2021, which showed that auto industry is recovering in the current year. United Motors unveiled Alpha, Toyota introduced Corolla X, Changan started taking orders for Alsvin and Proton presented X70. In addition, new models were launched in February as well which included ZS by Morris Garages (MG), Sorento by Kia Lucky and Saga by Proton.

Demand for cars to grow stronger owing to low interest rates environment, pickup in economic activity

The industry, which is normally dominated by three Japanese brands, is now facing competition from some new entrants mainly from Korea and China. New entrants have introduced their brands in the Pakistani market under the new entrant’s policy given in Auto Industry Development Policy (program) 2016-21. One of the new entrants— M/s Kia Lucky Motors Pvt Ltd—had recently claimed to sell more cars than Honda in consecutive months: December 2020 and January 2021. “For two consecutive months, we have sold more cars than Honda. In December and January, our estimates were higher,” said Muhammad Faisal, COO of Kia Lucky Motors. According to the reports, Suzuki sold the largest number of vehicles. Honda sold 1,764 vehicles, including the Civic, Area, and BR-V, in December 2020 and 1,916 in January 2021. This means that KIA’s Sportage and hatchback Picanto crossover SUV numbers are more than that, as according to the KIA’s claim.

Meanwhile, officials in Ministry of Industries and Production informed The Nation that government had recently announced new Electric Vehicle (EV) Policy, which would create competition among auto sector players besides pollution-free environment. They said that government would be introducing a public-friendly transport system under the EV policy. A memorandum of understanding (MoU) was signed among Daewoo Express Pakistan, Skywell from China and Hitachi ABB Power Grids from Sweden for introducing electric buses in Pakistan. The MoU was signed for setting up a value chain for electric vehicles and charging infrastructure in Pakistan. Under this MoU, Skywell Automobiles China and Daewoo Express Pakistan will collaborate to introduce electric buses and other electric vehicles in Pakistan and create a technical support base in the country with robust charging infrastructure through ABB Hitachi Power Grids. Skywell Automobiles will provide its state of the art electric buses for the Pakistan market in Phase-1, and in Phase-2, shall set up a manufacturing plant for producing electric vehicles in Pakistan.