Automobiles revolutionised transportation in the 20th century, changing forever the way people lives, travels, and do business. The automobile has enabled people to travel and transport goods farther and faster, and has opened wider market areas for business and commerce. The auto industry has also reduced the overall cost of transportation by using methods such as mass production (making several products at once, rather than one at a time), mass marketing (selling products nationally rather than locally), and globalisation of production (assembling products with parts made world-wide).
===================================================================
Company
===================================================================
01-02 02-03 03-04 04-05 05-06
===================================================================
Indus Motor 10,305 20,486 29,222 34,926 41,552
Pak Suzuki 24,277 38,662 57,957 75,923 99,734
Honda Atlas 8,001 8,396 13,415 24,130 30,464
Dewan F. Motors 6,992 7,846 13,235 15,003 17,972
Nissan 323 738 1,020 1,426 1700
===================================================================
Total 49,898 76,128 114,849 151,408 191,422
===================================================================
The automobile has also brought related problems, such as air pollution, congested traffic, and highway fatalities. Nevertheless, the automobile industry continues to be an important source of employment and transportation for millions of people world-wide.
Automobile manufacturers are among the largest companies in the world. These corporations are often multinational, meaning they are partially owned by several foreign companies. These companies often share parts, or use parts made in foreign factories.
Automotive parts manufacturers are another large section of the auto industry, comprising which supply the original equipment market (for manufacture) and the replacement parts market (for maintenance and repair). Numerous other industries support the automobile industry. These include the insurance, security, petroleum, and roadway design and construction industries. Still other industries, such as motels, drive-in theaters, and fast-food restaurants, owe their existence to the mobility provided by the automobile. Automobile production consumes large amounts of iron, steel, aluminium, and natural rubber. The automobile industry also consumes more copper, glass, zinc, and leather, plastic, lead, and platinum than any other industry. In nutshell the automobile industry is termed as "Mother of all industries".
History of the Automobile Industry of Pakistan.
The roots of Pakistan's automobile industry date backs to the early years of independence when in 1949 General Motors of USA first exported 500 cars and 600 trucks to Pakistan later on setting-up an assembly plant in 1953 at Karachi, for assembly of Bedford Trucks followed by assembly of Vauxhall Cars.
Consequently other manufacturers from USA and Europe started to make inroads in the small Pakistan automobile market; Ford, Mack, British Leyland Trucks; Cortina, Dodge, Fiat Polski Cars and AMC Jeeps entered in quick succession and left without much impression.
Only M/s Kandawala Automobiles (renamed as Naya Daur Motors after nationalisation and now known as Korakuram Motors) embarked seriously on progressive manufacture of AMC Jeep CJ-series, the Kandawala were the pioneers in Automobiles and auto component manufacturing. They set up Tool, Dies and Press Shops, a foundry near to the manufacturing facilities in SITE area. But their efforts suffered severe set back when the unit was nationalised and put under the government control.
In the first two decades the auto industry concentrated on CKD / SKD assembly In 70's the industrial scenario changed with the government assuming centralised control to ensure the continued growth of industrial sector in general and automotive sector in particular.
The period saw some development in auto vending industry for trucks, tractors and motorcycles. However, no significant progress was achieved in the field of passenger cars and commercial vehicles. It was in early 80's when Pak Suzuki Motor Company established, the auto industry started to take off and the nascent vending industry moved towards maturity.
ROLE OF PAKISTAN AUTOMOBILE CORPORATION (PACO):
The idea of progressive manufacturing through phased localisation programme was first mooted by Pakistan Automobile Corporation (PACO) in 1979, when PACO was asked by the Ministry of Production (MOP) to invite international proposals for assembly and progressive manufacturing of a small car (preferably below 1000cc engine capacity) with the derivatives in the shape of pick-up, and four wheel drive. Out of 18 leading automobile assemblers contacted, only five responded. Suzuki Motor Company (SMC now Corporation) offered the most comprehensive package for local integration, on the basis of capital and operating costs, the Suzuki proposal was adjudged as the most economic and was further studied, analysed and reshaped as per Pakistan's requirements.
A joint feasibility prepared by PACO and SMC was submitted to MOP in 1980.Afterthorough scrutiny by P&D Division the project was granted approval by Chairman ECNEC in late 1981. Consequently a Joint Venture Agreement was signed between PACO and SMC in June 1982 to set up Pak Suzuki Motor Company (PSMC).
The company was registered in August 1983 and entered into an Industrial Collaboration Agreement with SMC in December 1983 This was a major step towards Industrialisation of Pakistan; this revitalisation induced other world class multinational automobile corporations to bring in their capital and state-of- the-art technology to Pakistan.
Despite avenues for growth the automobile industry could not take off due to various reasons. The prominent are abnormal policies changes by the government and average economic performance of the country during the decade of 1990s. About thirty policy changes were made which seriously affected the growth in production and localisation.
CURRENT STATUS OF THE AUTOMOBILE INDUSTRY OF PAKISTAN:
The growth in GDP, low interest rates, increase in the Foreign Exchange reserves and gradual capacity enhancement by the automobile manufacturers have led to substantial increase in the demand of Cars.
To catch up the growing demand the industry production has grown four times in the last four years ie form 49,000 to around 200,000. It does not include new CBUs cars & LCVs imported by OEMs to plug the demand-supply gap which is around 8000 units in the year 2005-06.
ISSUES OF AUTOMOBILE INDUSTRY:
1. LIBERAL IMPORTS USED CARS:
In the recent years, the regime of liberalisation of used car imports was carried out by the Government primarily to facilitate overseas Pakistanis and as a temporary measure to ease the demand-supply gap. However, this facility is being misused grossly by commercial importers who have made used car imports an active business. These importers purchase documents and further sell the used vehicles without paying any sales tax on margins while operating outside the tax ambit.
In addition to this, over the past three years, there have been continuous and drastic reductions in the rate of custom duties on new CBU imported vehicles, which will effects the local industry.
2. LONG TERM AUTO POLICY:
The Survival and growth of any industry lies in the existence of long-term, consistent polices of the government. This provides the basis for the industry to make their clear vision for the future.
Automobile industry in Pakistan has enormous potential to grow mainly because of growing economy, resulting in improved standard of living, and motorization level which is 7 vehicles per thousand person, far below than the world norms of around 100 vehicles per thousand person.
In this contest, it is imperative rather indispensable that the Government declares the automobiles industry a "Key" industry, which is known as mother of all industries and provides a "Long term Vision for the Auto Industry".
3. TARIFF BASED SYSTEM (TBS):
From July this year the industry moved from Industry Specific Deletion Program (ISDP) to a new WTO compliant system, called Tariff based System (TBS), for the imports of their Complete Knock-down (CKD) parts. TBS on the one side safeguards the already made localisation in the industry and on the other side makes the imports operations self-regulated. This system has been effective form 1st Jul'06.
This basic mechanics of this system is that any OEM has localised any part in a particular product category other OEMs are attracted to localise the same part by tariff differential.
4. POLICY FOR NEW ENTRANT:
"Discrimination" of any type is condemned in all facet of life and the industry is not an exception. "One policy for the one industry" provides the level playing field for all the players. Any special dispensation given to anyone will distort the free market mechanism.
VISION OF 500,000 BY 2010:
Considering the market potential, and the projected sustained growth of economy, the OEMs have plans to enhance their production capacity, to meet the future needs of the customers in line with the vision of the government to be a half a million vehicle producing country.
This growth in the automobile industry will enhance the motorization level, creating additional jobs, bring in new technologies, creation of automobile clusters, contribute substantially in the government revenues, saves foreign exchange through import substitution and in large will make Pakistan an active global supply chain member through exports of components and vehicles. This will lead to economic and societal development of the country.