Automobile_Industry - Eop

8/7/2019 Automobile_Industry - Eop

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Contents

Automobile Industry .................................................................................. .............................................. 2

History ................................................................................................................................................. 2

Some brief facts about Automobile Industry ........................................................................................ 3

By year production of Motor vehicles .................................................................................................. 3

Top 10 motor vehicle producing countries ........................................................................................... 4

Country................................................................................................................................................ 4

Units Produced .................................................................................................................................... 4

Automobile Industry Crisis 2008-2010.................................................................................................. 5

Automobile Industry in Pakistan ...................................................................... ........................................ 6

Honda Atlas Cars Pakistan Ltd ........................................................................................................ 9

Indus Motor Company.................................................................................................................... 10

Pak Suzuki Motor Company........................................................................................................... 10

Nexus Automotive ............................................................................................................................. 11

Al-Ghazi Tractors ............................................................................................................................... 11

Dewan Motors ................................................................................................................................. 12

Ghandhara Industries..................................................................................................................... 13

Hino-Pak Motors Ltd...................................................................................................................... 13

Adam Motor Company................................................................................................................... 13

Imports .............................................................................................................................................. 14

Exports .............................................................................................................................................. 14

Analysis of the Industry Narrative Form ................................................................................................ 15

ANNUAL PLANT CAPACITY.................................................................................................................. 18

Automobile Industry of Japan (Benchmark)........................................................................................ 20

Automobile Industry of China ............................................................................................................ 20

Automobile Industry of India ............................................................................................................. 21

Comparison of Pakistani Automobile Industry with Indian Automobile Industry ................................. 22

Conclusion ............................................................................................................................................. 24


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Automobile Industry

The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one

of the world's most important economic sectors by revenue. The term automotive industry usually does

not include industries dedicated to automobiles after delivery to the customer, such as repairshops and motor fuel filling stations. The Automotive industry has had a large outcome in production

over the past 20 years.

About 250 million vehicles are in use in the United States. Around the world, there were about 806

million cars and light trucks on the road in 2007, consuming over 260 billion gallons of gasoline and

diesel fuel yearly. In the opinion of some, urban transport systems based around the car have proved

unsustainable, consuming excessive energy, affecting the health of populations, and delivering a

declining level of service despite increasing investments. Many of these negative impacts fall

disproportionately on those social groups who are also least likely to own and drive cars. The sustainable

transport movement focuses on solutions to these problems.

History

The first practical automobile with a petrol engine was built by Karl Benz in 1885 in Mannheim,

Germany. Benz was granted a patent for his automobile on 29 January 1886, and began the first

production of Chevy automobiles in 1888, after Bertha Benz, his wife, had proved with the first long-

distance trip in August 1888 - from Mannheim to Pforzheim and back - that the horseless coach was

absolutely suitable for daily use. Since 2008 a Bertha Benz Memorial Route commemorates this event.

Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed a vehicle from scratch

to be an automobile, rather than a horse-drawn carriage fitted with an engine. They also are usually

credited as inventors of the first motorcycle, the Daimler Reitwagen, in 1885, but Italy's Enrico Bernardi,

of the University of Padua, in 1882, patented a 0.024 horsepower(17.9 W) 122 cc (7.4 cu in) one-cylinder

petrol motor, fitting it into his son's tricycle, making it at least a candidate for the first automobile, and

first motorcycle; Bernardi enlarged the tricycle in 1892 to carry two adults.

Designing Development Manufacturing MarketingSelling WorldAutomobiles

Automobile Industry


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Some brief facts aboutAutomobile Industry

One of the most important industries of the world.

Affects both economy and culture.

Provides Jobs to millions of people. Generates billions of dollars in worldwide revenues. Supports other Industries. Revolutionized the mode of transportation. Automobiles enabled people and goods to travel farther and faster. Provides an opportunity to produce a large number of goods and services. So, Mother Of All Industries is the most appropriate description to define its importance.

By year production of Motor vehicles


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Top 10 motor vehicle producing countries

Country Units Produced

1.

China

18,264,6672. Japan 9,625,9403. United States 7,761,4334. Germany 5,905,9855. South Korea 4,271,9416. Brazil 3,648,3587. India 3,536,7838. Spain 2,387,9009. Mexico 2,345,12410.France 2,227,742


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Automobile Industry Crisis 2008-2010

The automotive industry crisis of 20082010 was a part of a global financial downturn. The crisis

affected European and Asian automobile manufacturers, but it was primarily felt in the

American automobile manufacturing industry. The downturn also affected Canada by virtue of theAutomotive.

The automotive industry was weakened by a substantial increase in the prices of automotive fuels

linked to the 2003-2008 energy crisis which discouraged purchases of sport utility vehicles (SUVs)

and pickup trucks which have low fuel economy. The popularity and relatively high profit margins of

these vehicles had encouraged the American "Big Three" automakers, General Motors, Ford,

and Chrysler to make them their primary focus. With fewer fuel-efficient models to offer to consumers,

sales began to slide. By 2008, the situation had turned critical as the credit crunch placed pressure on

the prices of raw materials.

Car companies from Asia, Europe, North America, and elsewhere have implemented creative marketing

strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales.

Major manufacturers, including the Big Three and Toyota offered substantial discounts across their

lineups. The Big Three faced criticism for their lineups, which were seen to be irresponsible in light of

rising fuel prices. North American consumers turned to smaller, cheaper, more fuel-efficient imported

from Japan and Europe. However, many of the vehicles perceived to be foreign were actually

"transplants," foreign cars manufactured or assembled in the United States, at lower cost than true

imports.


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Automobile Industry in Pakistan

Pakistan is an emerging market for automobiles and automotive parts offers immense business and

investment opportunities. The totalcontribution of Auto industry to GDP in 2007 is 2.8% which is likely to increase up to 5.6% in thenext 5 years. Total gross sales of automobiles in Pakistan were Rs.214 billion in 2006-07 or $2.67

billion. The industry paid Rs.63 billion cumulative taxes in 2007-08 that the government has leviedon automobiles.There are 500 auto-parts manufacturers in the country that supply parts to originalequipment manufacturers (PAMA members). Auto sector presently, contributes 16% to themanufacturing sector which also is expected to increase 25% in the next 7 years, as compared to 6.7percent during 2001-02.Vehicles manufacturers directly employ over 192,000 people with a totalinvestment of over $ 1.5 billion. Currently, there are around 82 vehicles assemblers in the industryproducing passengers cars, light commercial vehicles, trucks, buses, tractors and 2/3 wheelers. Theauto policy is geared up to make an investment of $ 4.09 billion in the next five years thus, making atarget of half a million cars per annum achievable.

Government of Pakistan had undertaken two major initiatives in the form of National Trade CorridorImprovement Program (NTCIP) and Auto Industry Development Program (AIDP) for thedevelopment of the automotive industry in Pakistan.

Engineering Development Board (EDB) is actively implementing the AIDP to increase the GDPcontribution of the automotive sector to 5.6%, boost car production capacity to half a million units as

well as attract an investment of US$ 3 billion and reach an auto export target of US$ 650 million.

Automotive engineering is a driving force of large scale manufacturing, contributing US$ 3.6 billionto the national economy and engaging over 192,000 people in direct employment.

The Auto parts manufacturing is $ 0.96 billion per annum. The demand for auto parts is highest inthe motor cycle industry which is 60%, then is for cars which constitutes to 22% and the rest 18% isconsumed by trucks, buses & tractors. This demand is met by Imports which caters 22% while theremaining 78% is supplied by the local manufacturers.

Due to the increase in demand for sophisticated machinery, the government has allowed duty freeimport of raw


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Honda Civic

material, sub components, components assemblies for manufacturers & assemblers. Total import billof machinery stands at $2.195 billion in the current fiscal year of 2007-08 which is 12.77% higher

than that of the preceding year.

The impressive growth in the machine tools and automation sector is directly proportional to thegrowth of the automotive industry which has become the fastest growing industry of Pakistan andcontributes $3.6 billion annually to the countrys GDP.

The aftermarket for spares has also witnessed immense expansion over the same period, withimported parts playing an important role in meeting local demand. The spare parts market is givenfurther impetus by a total vehicle population of approximately 5.4 million

Pakistan has the second highest number of CNG-powered vehicles in the world with more than 1.55million cars and passenger buses, constituting 24% of total vehicles in Pakistan with improved fuel

efficiency and conforming to the latest environment regulations.

According to Government Board of Investment,

AutomotiveIndustry

No ofUnits

Number2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2007-08

Cars 5 164,000 40,601 62,893 99,263 126,817 160,642 176,016 164,710 84,308

Jeeps 2 - - - - - - 3,298 1,590 932

Light Vehicles 4 32,500 8,491 12,174 14,089 23,613 29,581 19,672 21,354

Trucks 5 17,500 1,141 1,954 2,022 3,204 4,518 4,410 4,993 3,135

Buses 5 3,900 1099 1,340 1,380 1,762 825 993 1,146 662

Tractors 3 50,000 24,331 26,501 36,103 43,746 49,439 54,610 53,607 59,968Motor Cycles 55 733,000 133,334 176,591 327,446 571,145 744,875 839,224 1,057,751493,592


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Chevrolet Assembly Port Qasim

per cent excise duty, the revenues from automobile sector would decline by over 25 per cent thisyear due to declining demand.

The Pakistan Association of Auto Parts and Accessories Manufacturers (PAAPAM) and PakistanAutomobile Manufacturers Association (PAMA) in a joint presentation have suggested various stepsthat should be taken by the government to arrest the slowdown in sales. The two associationsappealed to the government to withdraw the 5 per cent excise duty on cars and impose a ban onimport of used parts instead of allowing their import after imposing 30 per cent redemption duty.

They asked the government to place stringent checks on auto-parts imported commercially or assemi knock out kits. They proposed the introduction of non-tariff measures to curb the import ofparts that are being manufactured in Pakistan. They pointed out that the 50 per cent duty has failedto stop the import of these parts as the import prices are easily manipulated by the importers.Moreover, import under SRO 63 attracting 50 per cent duty should not be allowed under FBRsCARE system. They have also appealed for special incentives for the auto sector including lower

mark-up on loans and a waiver of 35 per cent L/C margin.

The two associations pointed out that investment in the automobile sector has frozen at Rs98 billionand is expected to remain at the same level by 2011-12.

Honda Atlas Cars Pakistan Ltd

Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited

Japan, and the Atlas Group of Companies,Pakistan. The company was incorporated on November 1992 and joint venture agreement was signed


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on August 1993. The ground breaking ceremony was held on April 17, 1993 and within a record timeof 11 months, construction and erection of machinery was completed. The first car rolled off theassembly line on May 26, 1994. Official inauguration was done by President of Pakistan, SardarFarooq Ahmad Khan Leghari. Mr Kawamoto, President of Honda Motor Company Limited Japan

was also present to grace the occasion. The company is listed on Karachi, Lahore and IslamabadStock Exchanges. In July 1994, car bookings started at six dealerships in Karachi, Lahore, and

Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S(Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all majorcities of Pakistan. Since the commencement of production in 1994, the company has produced andsold more than 150,000 cars till Oct, 2008. All dealerships are constructed in accordance with thestandards defined by Honda World over.

Indus Motor Company

Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota MotorCorporation Japan (TMC), Daihatsu Motor Company Ltd vehicles in Pakistan through its dealershipnetwork. The company was incorporated in Pakistan as a public limited company in December 1989and started commercial production in May 1993. The shares of company are quoted on the stockexchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25 % stake in

the company equity. IMCs production facilities are located at Port Bin Qasim Industrial Zone nearKarachi in an area measuring over 105 acres. Indus Motor companys plant is the onlymanufacturing site in the world where both Toyota and Daihatsu brands are being manufactured.IMCs Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux SingleCabin 42 and 4 versions of Daihatsu Cuore.

Altis

Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketingof Toyota vehicles in Pakistan since July 01, 1990. IMC is engaged in sole distributorship of Toyota.

Pak Suzuki Motor Company

Pak Suzuki Motor Company Ltd (PSMCL), established as a joint venture between Suzuki Motor

Corporation of Japan (SMC) and Pakistan Automobile Corporation (PACO) Govt. of Pakistan in1983. Started commercial operations with production (S.O.P.) of Suzuki FX in 1984. In 1992, startedproduction of MARGALLA at new Plant. In 1997, started production of 1300cc BALENO replacingMargalla. In 2001, launched the CNG version of MEHRAN, RAVI and BOLAN. By 2005 capacityexpansion up to 80,000 vehicles per year were completed. In 2006, capacity expansion up to120,000 vehicles per year was completed and production of 1300cc/1600cc car LIANA and BALENO


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commenced. In 2007, the third phases of capacityexpansion up to 150,000 vehicles per year were completed. Amalgamation of Suzuki MotorcyclePakistan Ltd into Pak Suzuki Motor Company Ltd took place and new land of 120 acres was acquiredfor further expansion adjacent to current plant. In 2008, the company started exporting SuzukiLIANA to Bangladesh. Pak Suzuki acquired a land of 25.22 acres at Lahore for setting up PDI centre,Spare Parts Ware-house, Regional Office and other related facilities.

Nexus Automotive

Chevrolets were sold in Pakistan well into the 1970s, after which the automotive regime was changed

and Chevrolet gradually withdrew to its homemarket in the United States. In 2004, after an absence of three decades, Chevrolet was re-introducedin Pakistan. Once again, a global brand with a product line-up suited to developing markets such asPakistan, Chevrolet has made a successful return to the country. Working with Nexus Automotive,General Motors partner in Pakistan , Chevrolet can once again be seen on roads all over the country.Today, Nexus Automotive assembles the 1000cc Chevrolet Joy at Port Qasim (Sindh), and imports a

broader line-up of cars, including Aveo, Optra, and Colorado (coming soon) from the General Motorsglobal network.

Al-Ghazi Tractors

Al-Ghazi Tractors Limited (AGTL) was incorporated in 1983. In 1991 the project was offered forprivatization, and


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Al Ghazi Tractors

acquired by Al-Futtaim Group of Dubai who took over the management control of AGTL inDecember 1991. Ever since AGTL is a case study of rollicking corporate success. 50.02% shares ofthe company are held by Al-Futtaim Industries Co. LLC and 43.17% shares are held by CNH GlobalNV, with whom Al-Ghazi Tractors Limited has signed an Industrial Collaboration Agreement formanufacture of New Holland brand tractors. The Agreement is valid till April 2016. With expansionscarried out in 2005, the plant is now capable of producing 30,000+ tractors per year in a single shift the most enduring competitive edge being the quality of our tractors, which are robustand sturdy and carry a local content as high as 92%. AGTL was the first automobile company inPakistan to earn the ISO-9002 Certificate.

Dewan Motors

Dewan Farooque Motors Limited has one of the most advanced automobile assembly plants of SouthAsia. Located at

Dewan Motors

Dewan City, Sujawal, Thatta, with a total project cost of Rs. 1.8 billion, the plant is built on an area of42,000 square meters. Selection of the site reflects the commitment of Dewan Group towards

building of a prosperous Pakistan and its contribution to national wealth. The project has provideddirect employment to over 700 personnel. The plant is the first automobile manufacturing unit inPakistan to be independently invested by 100% Pakistani investors. The annual capacity of the plantis 10,000 units on a single shift basis. The groundbreaking ceremony for the plant was held in June1999, and the first Kia Classic rolled-out in a record time of six months. Today the modern state-of-


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the-art plant is rolling-out cars every day. This is the first and only automobile assembly plant inPakistan with state of art robotic equipment. Dewan Farooque Motors Limited has technicalcollaboration and license agreements with the following Korean companies:Hyundai Motor Company December 25th 1998Kia Motors Corporation July 27th 1999

Ghandhara Industries

The Ghandhara Industries Limited is a public limited company quoted on the Stock Exchanges andregistered under the Companies Act, 1913 (now companies Ordinance, 1984). It was established inKarachi by General Motors Overseas Distribution Corporation U.S.A. in 1963 Lt. Gen. M. HabibullahKhan Khattak acquired these facilities from General Motors and renamed it Ghandhara IndustriesLimited. The Government of Pakistan nationalized Ghandhara Industries Limited in 1972 andrenamed it National Motors Limited. In 1992 M/s. Bibojee Services (Pvt) ltd. acquired it underPrivatization Policy of the Government, and adopted its original name Ghandhara Industries Limited

w.e.f. 27-11-1999. The major business activities of the company comprise of progressivemanufacture, assembly and marketing Isuzu truck and bus chassis and fabrication of Bus and Load

bodies. Ghandhara industries Ltd have a product range of ISUZU medium-duty vehicles (F-Series)& light-duty Vehicles (N-Seies) in Pakistan.

Hino-Pak Motors Ltd

Hino Motors Japan and Toyota Tsusho Corporation in collaboration with Al-Futtaim Group of UAEand PACO Pakistan formed Hinopak Motors Limited in 1986. In 1998, Hino Motors Ltd., and ToyotaTsusho Corporation obtained majority shareholding in the company after disinvestments by theother two founding sponsors.

Adam Motor Company

We would do great injustice if we fail to mention, the only large scale effort made by a Pakistani to

achieve what others failed to implement or evenenvision. Mr.Feroz Khan, founder of the Adam Motor Company, Ltd. was an automobile assembler

based in Karachi, Pakistan. They were notable for producing the Revo, which was Pakistans first

homegrown company to assemble a decent car. Together with styler Mehmood Hussain, ChiefEngineer N. A. Salmi and two fresh graduates from NED, Khan designed and manufacturedPakistans first car. In fact, Khan invested in the latest software programs to train his team usingComputer Aided Design (CAD) and Computer Aided Manufacturing (CAM). Khan is also Chairmanand CEO of Omar Jibran Engineering Industries and has twice been Chairman of Pakistan

Association of Automotive Parts and Accessories Manufacturers. All their vehicles used Made inChina components due to lack of a modern manufacturing industry in Pakistan. Initially AdamMotor was involved in assembling cheap Made in China light trucks, followed by a Made in Chinafour-wheel drive off-road vehicle. Later they started manufacturing the Revo. The 800CC version of


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the Revo costs Rs. 269,000 (about $4,500) and the 1050 model is Rs. 369,000 (about $6,200). TheRevo has also been built in accordance with EU safety regulations. Mr. Feroz Khan blames thepoliticians for the companys failure

Imports

To discourage imports of auto mobiles and to promote localization of automobiles, high taxes are

applied on imported automobiles through Tariff based system (TBS). Sometimes, Imports of automobiles

are made when the demands are greater than total produced vehicles. Imports from India are relatively

cheap.

Exports

Export of auto products is necessary to expand auto industrys markets and gross profits. To promote

export, the government is providing 25% subsidy to new products. The AIDP has laid a target of export

of US$ 650 million by the year 2011-2012.


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Analysis of the Industry

Narrative Form

The automobile sector has been registering high growth for the last four or five years due to the

country's business friendly policies along with lower tariff rates, persistent growth in GDP, and

per capita income.

Globally considered as the mother of all industries, the auto industry in Pakistan is fast evolving

as a robust industry. Some sub-sectors of this fast growing industry, like motorcycle production,

have already achieved economies of scale.

The tremendous rise in automobile production has resulted from increased domestic demand,

giving a healthy impetus to the industrial output and generating over 150,000 direct employment

opportunities besides contributing substantially in duties and tax revenues to the nationalexchequer.

Since 2001-02, the automobile market has grown by over 40 per cent per annum and if an

average growth of 30 per cent is maintained during the coming years, the country's auto market

will cross the milestone of 500,000 units by the year 2010.

During the financial year 2005-06, the sale of locally assembly cars posted an impressive growth

of 22 per cent, rising to 155,514 units as against 127,309 units during the previous year.

To ease the pressure on rising demand and to curb the evolving culture of premium on the

factory price, some 40,000 vehicles were also imported during the said period.

Pakistan has made its debut in the vehicle export market by exporting its first batch of Land

Rover Defenders to Sri Lanka. M/s Sigma Motors - the sole distributor and assembler of Land

Rovers in the country - holds the distinction of being the first exporter of these diesel engine

vehicles.

Since starting assembly operations in May 2002, Sigma motors have assembled over 3,000 Land

Rover Defenders, which are in use all over the country. Now, the company is geared to assemble

2,000 vehicles per annum. In addition to looking after the needs of fleet customers, the company

is also pursuing export opportunities in the regional countries.

Being an icon of automobile industry, the Land Rover Defender is presently being used in over

150 countries around the world because of its simplicity of design and sturdiness.


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As far as the production of cars in the country is concerned, against 30,131 cars in 1995-96,

production stood at 160,642 units in 2005-06, showing an increase of 430 per cent during the last

10 years. The local carmakers are expected to roll out 200,000 cars during the current year, while

the country has an annual production target of 500,000 to achieve by the year 2010.

As a result of this demand driven growth in the production of cars in the country, all automobile

units are now either running on double shift basis or intend to go into double shifts.

The level of motorization has also been gradually rising over the years. In 1998-99, it was three

cars per 1000 persons, which has significantly increased to 11 cars per 1000 persons in 2005-06.

For a developing country like Pakistan, such rapid motorization is a sure indicator of accelerated

growth in the industrial sector in general and the auto sector in particular.

Notwithstanding a manifold increase in car production during the last few years, the country stillstands relatively low in terms of motorization when compared globally and even to its neighbors

like Iran, which has a ratio of 23 cars per 1000 persons. Naturally, the demand for cars in the

country is still a lot greater than their supply.

Similarly, the indigenous production of motorcycles increased by 25 per cent during 2005-06,

reaching to an all-time high of 520,124 as compared to 106,797 units in 1996-97, which accounts

for around 380 per cent increase in motorcycle production during the last nine years.

Pakistan aims at producing 700,000 units of motorcycles during the year 2006-07. Since it has

achieved autarky in the production of motorcycles, the country has started exporting the unitsover and above its national requirements to overseas markets.

The production of trucks as well as that of buses has also posted sufficient increase during the

last 10 years. Some 2,994 units of trucks were being produced in the country in 1995-96 which,

over the years, have increased to 4,518 units, showing a rise of 51 per cent. In the case of buses,

the rise in production is more pronounced as compared to that of trucks as their production

augmented by around 74 per cent during the last decade or so.

The increase in demand for automobiles can be traced to rising income levels, creation of new

job opportunities and liberal auto financing by financial institutions. As a result, on an average,

some 13,000 vehicles are assembled and marketed every month. The country has also started

importing vehicles. The result is a quantum jump in car registrations, primarily due to bank

leases. In the capital city of Islamabad alone, some 2000 vehicles are registered every month.

While all this is leading the motorization of the country, it can't be ignored that this influx of new


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vehicles has made the existing road infrastructure insufficient, giving rise to the need to improve

and widen the national roads network. And yet, this will lead to the creation of more jobs thereby

accelerating the pace of economic activities in the country.

Presently, over five million registered vehicles are plying on the country's roads, measuring 0.8

million kilometers. Some 457 motorways have already been constructed in the country, while

more highways are planned to be built in different parts of the country with Rs527 billion (US$

878.3 million) in the next eight years.

The road construction spree would further bolster economic activities, creating new jobs and

more opportunities for gainful employment all over the country.

Meanwhile, auto financing and other such schemes have given rise to lucrative consumer

banking. Though the main objective of consumer financing is to solve some of the immediate or

short-term problems of the customers, it is resulting, at the macro level, in giving a push to large-scale manufacturing, creating new jobs and positively impacting the GDP growth.

When the government undertook restructuring of the economy, it was expected that bulk of

excess liquidity available in the market post 9/11 would go towards the development of the

corporate sector. However, this did not happen, while the banks faced a dilemma of excess

liquidity. Therefore, they started diverting their funds towards the more lucrative consumer

financing.

Now, as a matter of policy, most commercial banks are aggressively focusing on consumer

financing, through attractive packages, because it offers them a better rate of return as comparedto the corporate sector. The average lending rate on consumer financing is around 16 per cent as

compared to 9 - 11 per cent on corporate lending.

As a result of this spurt in auto, real estate and IT sectors, almost all banks have registered

windfall profits. For example, the National Bank of Pakistan has declared a net profit of Rs12.7

billion (US$ 212 million) and Muslim Commercial Bank Rs8.9 billion (US$ 148 million) for the

year 2005, showing an increase of 104 per cent and 251 per cent respectively over their previous

year's profits. The performance of other banks is equally impressive. United Bank Limited has

declared a net profit of 62 per cent, Faysal Bank 75 per cent, The Bank of Punjab 72 per cent,

Union Bank 110 per cent, Metropolitan Bank 80 per cent, BankAl-Habib 171 per cent and so on

and so forth.

Swelling bank profits have enabled them to offer attractive salary packages to their functionaries.

A better salary structure would naturally enable the employees to spend more on items like

vehicles, which would further push up the domestic demand for automobiles and, in turn, impact


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their local production as well.

One hopes that the cycle of rise in demand and supply in the auto sector would have a healthy

effect on the national economy as a whole, ensuring continuity in its growth. It has already led to

the growth of a fairly strong auto-parts manufacturing/ vending industry, which is not only

meeting the demand of the local assemblers in a sizeable number of auto-parts, but also

competing in the international market for a share in the global auto-parts market.

Pakistan Association ofAutomotive Parts Accessories Manufacturers (PAAPAM) was formed in

1988 to represent and to provide technical and management cooperation to its members.

PAAPAM, with its almost a decade old history, has attained a level of an indispensable and

extremely effective link between the policy-making echelons at government and the whole entity

of its member firms.

TheA

ssociation achieved recognition from the Government of the Pakistan in 1999 and today isrepresented in many Government and semi government as well as Private Institutions by its

members. PAAPAM is the member of the Federal of Pakistan Chamber of Commerce &

Industry (FPCCI).

With a registered membership base of over top line tier one 278 members and general

manufacturers base of over 1200 companies, PAAPAM has under its wings manufacturing

companies making parts for Pakistans Cars, Motorcycle, Tractors, Trucks and Buses

assemblers. Investments in place now exceed US$ 1.5 billion.

ANNUAL PLANT CAPACITY

y CAR Pak Suzuki Motor Co. Ltd. 68,000 Indus Motor Co. Ltd. 34,000 * Honda Atlas Cars (Pakistan) Ltd. 30,000 Dewan Farooque Motors Ltd. 15,000 Ghandhara Nissan Ltd. 6,000y LCV & 4X4 Pak Suzuki Motor Co. Ltd. 12,000 (LCV 11,000, 4x4 1,000) Indus Motor Co. Ltd. 8,000 Dewam Farooque Motors Ltd. 10,000 Sigma Motors (Pvt.) Ltd. 4x4 Land Rover Manufactured at Ghandhara Nissan Plant.


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y SUV Dewan Farooque Motors Ltd. Not declaredy TRUCK Hinopak Motors Ltd. 10,000 Ghandhara Industries Ltd. 3,000 Sind Engineering Ltd. 3,000 VPL Limited 500 **** Master Motor Corporation Ltd. 8,050y BUS Hinopak Motors Ltd. 2,000 Sind Engineering Ltd. 1,000 Ghandhara Industries Ltd. 1,800 *** Ghandhara Nissan Ltd. -y TRACTOR Al-Ghazi Tractors Ltd. 25,000 Millat Tractors Ltd. 25,000

y MOTORCYCLE Atlas Honda Ltd. 400,000 Dawood Yamaha Ltd. 200,000 Suzuki Motorcycles Pakistan Ltd. 65,000 Saigols Qingqi Motors Ltd. 100,000 Pakistan Cycle Industrial Cooperative 42,000 ** Society Ltd. (Sohrab)

y Contribution of Cars and LCVs to Pakistans Economy Description Cars LCVs Contribution to GDP Rs. 30 billion Rs. 6 billion

Revenue to GO

P Rs. 10 billion Rs. 1.5 billion Direct Employment 3000 jobs 1500 jobs Investment Rs. 10 billion Rs. 2 billion Import Substitution $ 500 million $ 100 million Foreign Exchange Savings $ 200 million $ 70 million


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Automobile Industry of Japan (Benchmark)

The Japanese automotive industry is one of the most prominent industries in the world. Japan was theworld's largest vehicle manufacturer in 2008 but lost one rank in 2009 to current leader China (although

the automotive industry in Japan still remains unrivalled by quality standards).[1]

. It is home to a number

of companies that produces cars, construction vehicles, motorcycles, ATVs, engines, etc.

Japanese automotive manufacturers include:

Toyota, Honda, Daihatsu, Nissan, Suzuki, Mazda, Mitsubishi, Subaru, Isuzu, Kawasaki, Yamaha,

and Mitsuoka .

With Japanese manufacturers producing very affordable, reliable, and popular cars throughout the

1990s, Japan became the largest car producing nation in the world in 2000. However, its market sharehas decreased slightly in recent years, particularly due to old and new competition from South

Korea, China and India. Nevertheless, Japan's car industry continues to flourish, its market share has

risen again, and in the first quarter of 2008 Toyota surpassed American General Motors to become the

world's largest car manufacturer.[2]

. Today, Japan is the third largest automobile market and, until China

recently overtook them as the largest car producer in the world. Still, automobile export remains one of

the country's most profitable exports and is a cornerstone of recovery plan for the latest economic

crisis.

Automobile Industry of China

Since November 2009, the People's Republic of China is the largest auto market in the world. China'sautomobile industry has been in rapid development since the early 1990s. In 2009, China produced

13.79 million units of automobile, of which 8 million units were passenger cars (sedans, sport utility

vehicles (SUV), multi-purpose vehicles (MPV) and crossovers), and 3.41 million units were commercial

vehicles (buses, trucks, and tractors). Of the automobiles produced, 44.3% are local brands

(BYD,Lifan, Chang'an (Chana), Geely, Chery, Hafei, Jianghuai (JAC), Great Wall, Roewe, etc.), the rest

being produced by joint ventures with foreign car makers such as Volkswagen,Mitsubishi, General

Motors, Hyundai, Nissan, Honda, Toyota etc. Most of the cars manufactured in China are sold within

China, with only 369,600 cars being exported in 2009.

China's annual automobile production capacity first exceeded one million in 1992. By 2000, China was

producing over two million vehicles. After China's entry into the World Trade Organization (WTO) in

2001, the development of the automobile market further accelerated. Between 2002 and 2007, China's

national automobile market grew by an average 21 percent, or one million vehicles year-on-year. In

2006, Chinas vehicle production capacity successively exceeded six, then seven million, and in 2007,

China produced over eight million automobiles. In 2009, 13.759 million motor vehicles were

manufactured in China, surpassing Japan as the largest automobile maker in the world. In 2010, both

sales and production topped 18 million units, with 13.76 million passenger cars delivered.


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Automobile Industry of India

India holds the best potential to become a hub for manufacturing cars and will be the largest

manufacturer of cars as stated by visionaries like Jeremy Clarkson. Some statistical data revealed that

this could show a growth in Indian economy by 46.5%. An embryonic automotive industry started inIndia in the 1940s. However, for the next 50 years, the growth of the industry was hobbled by

the Socialist policies and the bureaucratic hurdles of the license raj. Following economic liberalisation in

India from 1991, and the gradual easing of restrictions on industry, India has seen a dynamic 17% annual

growth in automobile production and 30% annual growth in exports of automotive components and

automobiles. India produces around 2 million automobiles currently. The Largest automotive companies

in India are Maruti Suzuki, Hyundai Motor India, Tata Motors and Mahindra & Mahindra . Total turnover

of the Indian automobile industry is expected to grow from USD 34 Billion in 2006 to USD 122 Billion in

2016.[3]

Tata Motors has just launched Tata Nano, the cheapest car in the world at USD 2200.[4]

Foreign

auto companies with assembly plants in India include, General Motors, Ford,

Hyundai, Honda, Suzuki, Nissan Motors, Toyota, Volkswagen, Audi, Skoda, BMW, Fiat and MercedesBenz. Recently India has overtaken China in global auto exports of compact car this year . Suzuki Motor

Corp, Hyundai Motor Co, and Nissan Motor Co are making India their manufacturing hub for small cars.

in this year 2009 45% of growth at automobile industry in India.


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Comparison of Pakistani Automobile Industry with Indian Automobile

Industry

0

10

20

30

4050

Active Companies

20

46

Pakistan

India

0

500000

1000000

1500000

2000000

2500000

Capacity

248800

2293000

Pakistan

India


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130,857 169861 157514 130797 163706 144541

2,314,662 2,306,768

2,016,511

2,326,589

2,065,205

1,700,383

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Pakistan

India


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Conclusion

Local auto industry stands behind the auto industries of neighboring countries.

Import of automobiles is affecting local auto industry.

The auto industry has experienced decline in its production and sales values. Car prices are relatively high. Low production capacity. Insufficient export of automobiles. Unorganized industry.

Documents

Automobile_Industry - Eop