[🇵🇰] Automobile industries in Pakistan

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Source : https://www.brecorder.com/news/40281519/auto-sector-in-2023-advent-of-evs-and-hybrids-in-pakistan

Auto sector in 2023: advent of EVs and hybrids in Pakistan​

Bilal Hussain

The year 2023 signaled a downward spiral for the auto sector. For about half the year, there were restrictions from the State Bank of Pakistan (SBP) regarding Letters of Credit to import parts that kept the supply side under pressure which then led to higher prices. Amid high interest rates, and inflation, demand remained on the lower side as well.

The industry faced LC issues from July 2022 till February 2023. It again faced government action – this time, the reasons were different.

In October and November, auto companies weren’t getting custom clearance for importing Completely Knocked Down units or auto parts because they failed to achieve the 2% export target, which they initially agreed with the government but were unable to achieve.

Sales in fiscal year 2023 dropped to around 120,000 units (for all passenger categories and imported used cars) – lowest since 2009.

Looking at the data on hand, sales were possibly the lowest ever over the course of two-decades in just the first 11 months of calendar year 2023 – sitting at just 76,401 units.

For perspective, volume of sales was 210,395 units for the same period in 2022.

Silver lining

Industry experts such as Sunny Kumar, Deputy Head of Research at Topline Securities, expect car sales to improve in 2024.

One of the reasons is the expectation that interest rates may go down substantially next year. Car financing may also pick up again.

Since car buying is a feel-good event, the income generated from the Pakistan Stock Exchange rally may also be attracted by the auto sector.

EVs’ manufacturing licenses: two, three wheelers take front seat in Pakistan

Auto sector pivots?

Fuel prices have gone up and inflation has caused the contraction of real income. Mobility cost is biting common people.

They are looking for cheap options and, in a sense, electric vehicles, especially in the two-wheel segment, have emerged as an option in the year 2023.

There has been tangible work done in the two- and three-wheel sector during the year, as 32 companies that have received manufacturing licenses under the Electric Vehicles (EVs) Policy 2020–2025 are all two and three-wheel manufacturers.

Amid the bleak outlook of the auto sector, a major auto sector player launched a 4th generation hybrid vehicle (HEV) Toyota Corolla Cross.

Meanwhile, another major player, Atlas Honda unveiled its electric scooter ‘BENLEY e’ during a ‘soft’ launch this year, showing a direction for the two-wheel segment.

Adopting fuel-efficient cars has been the need of the hour in the absence of a wide-scale network of public transport. Maybe, Pakistan is now more ready to adopt climate-friendly solutions and, in this endeavour, kills two birds with one stone.

Auto sector in 2023: advent of EVs and hybrids in Pakistan​

The year 2023 signaled a downward spiral for the auto sector. For about half the year, there were restrictions from...
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1960's Buses in Karachi

 

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According to the Pakistan Bureau of Statistics (PBS) Pakistan’s Large Scale Manufacturing Industries (LSMI) production was decreased by 3.56 per cent MoM in September 2023 to stand at 112.85 as compared to 117.02 in August 2023.

Conversely, on a yearly basis, the LSMI output witnessed an increase of 1.01 per cent YoY against 111.73 recorded in September 2022. Cumulatively in 3MFY24, LSMI has shown a growth of 0.68 per cent when compared with the corresponding period of previous year.

Pakistan: Import Payments By Transport Group (Thousand US Dollar)
Details	Jul-Jun	Dec FY23	Nov (R) FY24	Dec (P) FY24	Jul-Dec
FY22	FY23	FY23	FY24 P
Transport Group	3,628,596	1,266,210	99,811	109,313	144,303	747,440	772,025
1. Road Motor Vehicles	3,009,873	1,073,575	68,159	106,397	117,357	661,743	672,233
1.1 Completely Built Unit (CBU)	476,676	79,122	8,724	8,814	11,606	53,365	42,425
a. Buses,Trucks & Oth. Heavy Vehicle	190,795	61,504	8,510	6,004	7,239	37,065	29,005
b. Motor Cars (CBU)	282,639	15,623	4	2,798	4,049	14,534	12,837
1.2 Completely Knock Down (CKD)	2,254,012	863,992	48,496	83,996	98,478	508,113	567,105
a. Buses,Trucks & Oth. Heavy Vehicle	429,429	249,047	20,403	9,287	15,325	135,917	99,695
b. Motor Cars (CKD)	1,747,959	577,396	23,539	69,679	79,384	346,653	440,219

According to the government officials in Pakistan, manufacturing with a share of 12.4 per cent in GDP has a dominant presence within the industrial sector.

During FY2022, LSM with 9.2 per cent of GDP dominates the overall manufacturing sector, accounting for 74.3 per cent of the sectoral share followed by Small Scale Manufacturing, which accounts for 2.0 per cent of total GDP and 15.9 per cent sectoral share.

The government officials recorded that except sluggishness in some areas in case of buses and two/three wheelers there has been robust growth in all-automobile sectors during July-March FY2022.

 

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Blue and white Ford Consul Classic.

This 4 door Consul Classic has covered an epic 280k miles since being built in 1962.

Victoria Road (Now Abdullah Haroon Road) Karachi in 1970s :

 

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Millat Tractors Ltd celebrates 60 years of excellence​

Press Release
March 2, 2024

LAHORE: Millat Tractor Ltd, the leading manufacturer of agricultural tractors, farm machinery & power generators in Pakistan, celebrated its 60 years of excellence and success as the country’s largest tractor selling company since 1964.

At this auspicious occasion the Chairman Millat Group, Sikandar Mustafa Khan paid rich tributes to its founding father Rana Khuda Dad, its Board of Directors, past & present employees, management and workers who had the vision of accelerating MTL towards the path of localization and tapping global markets with its wide range of products.

The CEO MTL Raheel Asghar congratulated all its stakeholders, partners and employees for their invaluable contributions and prayed that MTL continues to strengthen and serve the economy of Pakistan.

On the occasion, the company released its “Millat Anthem Song” expressing its enthusiasm and association with the farmers, their struggle to provide and the dedication of its workforce.

 

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Atlas Honda tests the waters with electric scooter called ‘BENLY e’ in Pakistan​

• Displays new line during soft launch in Sheikhupura

Bilal Hussain
November 28, 2023

Atlas Honda unveiled its electric scooter ‘BENLEY e’ during a ‘soft’ launch at its Sheikhupura factory on Tuesday, as the company makes it move towards the two-wheel EV segment in Pakistan.

Chief Officer of Motorcycle and Power Products at Atlas Honda Noriaki Abe said at the event that ‘BENLY e’ will be offered for test marketing while new products will be offered based on feedback.

Another industry source privy to the matter said Atlas Honda will not be selling its electric scooters to the general public initially.

“However, bikes will be commercially sold to organisations having large fleets of two wheelers like food delivery services and courier services etc. where the company has close interaction with customers and has an opportunity to understand their needs better,” the source said.

“It’s a new product and the company needs to develop a close understanding of the customer’s needs and challenges that may stem up while entering the electric bike market,” it added.

The source further said that unveiling the electric scooter shows the company’s intention to enter the electric bike market.

How does the market see Atlas Honda’s intent to enter the EV market?

A Honda dealer at Karachi’s busy Akbar Road said dealers are expecting that the company will take a year to make electric bikes available in the market.

“There are a lot of people inquiring about Honda’s electric bike,” said the dealer.

He added that the market was seeing an increase in the sale of electric bikes in recent times.

Two-wheel industry expert Sabir Sheikh says Atlas Honda entering the electric bikes business is a big push for the nascent industry.

“Atlas Honda presently commands over 80% of the two-wheel market in the country. They are undisputedly the biggest two-wheel player in the country. Therefore, their entry in the electric bikes arena gives the nascent industry a big push,” he said.

In 2022-23, Atlas Honda sold over 1 million motorcycles out of the total 1.18 million total two- and three-wheel unit sales – commanding 85% market share, according Pakistan Automotive Manufacturers Association (PAMA) data.

At the event, Saquib H. Shirazi, President and CEO of Atlas Honda, said the company has expanded its product line up and achieved localisation of up to 95%.

“The company developed the largest network of local auto parts manufacturers and dealers. With more than 10,000 touchpoints, the company has created direct employment opportunities for more than 150,000 people,” Shirazi was quoted as saying in a press release issued after the event.

Meanwhile, Sheikh said Chinese electric bikes are getting popular but Honda will be offering Japanese technology, which the market expects to be superior.

Sheikh, who is also Chairman Association of Pakistan Motorcycle Assemblers (APMA), expects Honda bikes may be priced more than double of its comparable competitor Chinese brand of electric bikes.

“A good Chinese electric bike is presently priced over Rs300,000. I am expecting Honda’s electric bike to be priced around Rs900,000, especially the one that has been displayed in Sheikhupura,” he said.

“There are now around 1,000 electric bikes being assembled in Pakistan a month. The dynamics are changing very fast. The number will go up to 4,000-5,000 by June 2024. I know people who have bought electric bikes. They are very happy because it is saving them up to Rs15,000 monthly on account of fuel,” Sheikh added.

After-market

Sheikh said buyers should buy motorcycles only from those companies that have a production facility to ensure after-sales support.

Meanwhile, he added that the second-hand market for electric bikes will be slower because the price of a battery has a huge pie – somewhere around 50% of the overall price.

‘Good news’

“It’s good news that a major Atlas Honda is testing waters with its electric scooter test run. Their experience will be very beneficial for the EV market,” said Dr Aazir Anwar Khan, founder and Director Integrated Engineering Centre of Excellence (IECE), University of Lahore.

He added that Atlas Honda has the muscle and brand recognition to convince people and adapt to EVs.

He said that going forward, if Honda manufactures some 50,000-100,000 electric scooters in the country, it will be a major step towards achieving the target of 30% electrification of motorcycles by 2030.

Khan said the price point will be the biggest challenge for the company.

“If the price is very high, the market for its electric scooter will be very small. Two-wheel is a very price sensitive segment.”

 

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Daewoo Express plans to introduce 200 inter-city electric buses in Pakistan​

• Another 1,000 EV rickshaws plan for Karachi and Lahore on cards

Bilal Hussain

Daewoo Express, one of Pakistan’s leading inter-city transport service providers, is planning to introduce 200 Electric Vehicle (EV) buses gradually in the next two years along with 1000 EV rickshaws for Karachi and Lahore in collaboration with Sazgar Engineering, Business Recorder has learnt.

If it goes as planned, it will be the first EV-based inter-city bus service in Pakistan.

Daewoo Express is hopeful that multi-million dollar financing for these two projects will be finalised by January-February 2024 with an Asia-based development funding agency.

The electric buses are expected to start operations during summer next year, and all 200 buses will be in operation by mid-2026.

The EV buses will operate on short routes having a maximum distance of 225 kilometres so that they don’t have to stop during journey for charging as it would be inconvenient for passengers.

These 200 electric buses will run on 17 short routes such as Karachi to Hyderabad; Peshawar to Rawalpindi; Lahore to Faisalabad; Lahore to Sialkot etc.

“We will have charging facilities on all of our terminals where these electric buses will operate,” Hassan said.

Hassan said it is difficult to predict how introduction of these electric buses will affect inter-city fares as no one knows what will be the price of diesel and electricity by the time these buses are introduced.

“However, it should be remembered that upfront cost of electric buses is significantly higher than that of diesel buses,” he added.

The company says it’s working with three to four Chinese bus manufacturers, but yet to finalise the one manufacturer it would eventually be purchasing the buses from.

“If this pilot project of 200 buses is successful, we may consider entering into the electric bus manufacturing business,” Hassan said.

The company already has a manufacturing facility in Sundar near Lahore, which the company acquired from Swedish auto manufacturer Volvo that wrapped up their business from Pakistan in early 2000s.

So far, it has signed a Memorandum of Understanding (MoU) with Sazgar Engineering for manufacturing of 1,000 EV rickshaws, which Daewoo Express will operate in Karachi and Lahore as a ride-hailing service.

“Introduction of EV rickshaws will also go a long way in improving air quality and reducing noise pollution in the two biggest cities in Pakistan,” Hassan said.

Separately, a source in the government told the scribe that the company is in talks with the Asian Infrastructure Investment Bank (AIIB) for around $24 million for the project.

Another source informed that the AIIB would also engage other financing agencies since the financing amount required for these green projects is higher than $24 million.

However, the company didn’t share or confirm this detail.

What do experts say?

An official of the Ministry of Climate Change (MoCC), on condition of anonymity, said the Ministry of Finance shared details of the project with them for its ministry’s expert opinion.

“It has been agreed that initially the company will use conventional sources and later they will convert electricity sources to renewables to charge their buses.”

Hassan confirmed this, saying Daewoo Express already has plans to introduce solar farms in Karachi and Lahore as a part of this project.

Dr Aazir Anwar Khan, Founder and Director, Integrated Engineering Centre of Excellence (IeCE), University of Lahore, says bringing 1,000 electric rickshaws would be helpful in reducing carbon emissions.

“It’s a small number as compared to 500,000 rickshaws on roads (and 100,000 being sold every year since 2019) in the country. But it’s a good start,” he said.

Mentioning a study, he shared that on average a petrol CNG/LPG rickshaw emits 8 tons of carbon dioxide, and by introducing 1000 rickshaws, 8000 tons of carbon emissions could be reduced.

“However, there will be a need for swappable battery stations for these rickshaws. Because it will be difficult for these rickshaws to get battery charged from a charger,” he said.

Battery swapping or battery switching is an electric vehicle technology that allows battery electric vehicles to quickly exchange a discharged battery pack for a fully charged one.

“Electric vehicles are also easier to maintain because the number of parts are very much lesser than an ICE vehicle,” he added.

An auto sector expert Mashood Khan said electric buses in the country have been imported separately by different provincial governments.

“Sindh, Punjab and KP are all importing buses separately. If there was a joint plan, a plant for making buses could have been established,” he said, adding that there is a huge potential in two-three wheels as well as buses for public transport on the back of a huge gap presently.

“If work is sincerely done, we can see quite progress. But there is a need for sincerity. There should be investment in the industry. There shouldn’t be just trading that you import and not work on manufacturing in Pakistan,” Mashood Khan emphasised

 

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Indus Motor Company, the assembler of Toyota-brand vehicles in Pakistan, said on Tuesday that it has become the first company in the four-wheeler segment to start exports after it signed an agreement with Toyota Egypt.

“We have already sent our first shipment this month,” Chief Executive Ali Asghar Jamali told Business Recorder.

A press release issued by the company also stated that the first consignment of semi-processed raw material to be shipped to Toyota Egypt will mark the “beginning of era from the export point of view by any original equipment manufacturer (OEM) in Pakistan and plans are in place to continue in this direction”.

Jamali said that while significant, it is “too early” to deem it a turning point for the struggling industry.

His remarks come as Pakistan’s auto sector, highly dependent on imports to meet its assembling needs, remains under pressure due to constraints on issuance of Letters of Credit (LCs). The hindrance comes on the back of Pakistan’s low foreign exchange reserves that triggered import restrictions.

While the State Bank of Pakistan (SBP) has lifted restrictions, it will take some time before normalcy returns.

At the same time, a fast-depreciating rupee pushed up prices of automobiles while runaway inflation also took Pakistan’s key interest rate to a record high, discouraging buyers from financing. In response, almost all auto sector’s players have been announcing plant shutdowns with regular monotony.

“This is a baby step at the moment,” said Jamali. “Currently, we have raw material constraints in the country. It would stop us from exporting huge quantities. But I am hopeful.”

The CEO said the company will only be exporting a certain part to Egypt.

“If their confidence is built, we may be asked to export more parts.

“Even if we manage to export one part to many markets, it would increase our export numbers.

“We hope that other manufacturers would also get confidence and find avenues to export as well,” he added.

A statement from the company, meanwhile, said the partnership with Toyota Egypt “is the first step to meet requirements set under the Auto Industry Development and Export Policy (AIDEP) 2021-2026”.

 

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Al-Ghazi Tractors Limited​

BR Research
August 22, 2023

Al-Ghazi Tractors Limited (PSX: AGTL) was incorporated in Pakistan as a public limited company in June, 1983. AGTL is a subsidiary of Al-Futtaim Group of Dubai. The company is engaged in the business of providing agricultural solutions by manufacturing and selling tractors, generators, implements and spare parts. Its operational hub is located in Dera Ghazi Khan which has technical collaboration with Case New Holland (CNH), the largest manufacturer of agricultural tractors in the world. AGTL’s plant has the capacity of producing 30,000 tractors per annum in a single shift. AGTL also has a generator assembly line which can produce 2000 generators per annum in a single shift.

 

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Auto industry turns the corner after sales slump​

INP
Sep 27, 2023

The Pakistani auto industry has been through a roller coaster ride in recent years. However, the easing of ban on imports has led to a resurgence in auto sales, signalling a positive shift for the industry, reports WealthPK. The automobile sales surged to 7,579 units in August 2023, posting a staggering 49% month-on-month (MoM) increase. However, on a year-on-year (YoY) basis, sales decreased by 36%.

The Pakistan Auto Manufacturers Association (PAMA) data shows that compared to the same period last year, car sales in the first two months (July-August) of the current financial year declined by 47% to 12,671 units. “Auto sales have recently resurged in Pakistan as a result of the government's decision to lift import restrictions on cars,” said Abdul Waheed Khan, a senior representative of the PAMA. “Prior to this positive development, the industry had been grappling with a decline in vehicle sales, primarily driven by a confluence of challenges,” he said. “First and foremost, the ever-increasing prices of cars have placed a significant strain on consumers' budgets.

The escalating production costs, coupled with inflationary pressures, pushed car prices to levels that were simply beyond the reach of many potential buyers. This, in turn, led to a shrinking customer base and dampened overall demand in the market,” the representative explained.

“Furthermore, the cost of auto financing became prohibitively expensive for a substantial portion of the population. High interest rates and stringent lending criteria deterred many prospective buyers from pursuing car loans, thus further stifling sales.

The limited purchasing power of consumers in the face of these financial barriers only exacerbated the situation,” he added. “However, a ray of hope emerged during July and August of 2023 when import restrictions on vehicles were lifted. As a result, vehicle sales reached their highest level since March 2023,” he said. “Although the auto industry still faces production shutdowns and operational issues, these sales figures are a positive sign for the industry.

 

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GWM's Pakistan KD Factory Rolls Out 3000th Haval H6 HEV​

By Lu Han
Dec 11, 2023

LAHORE,-In a recent development, the Great Wall Motors (GWM) Pakistan KD factory marked the production of its 3000th unit of the Haval H6 HEV, a significant achievement just one year after the commencement of operations. This milestone signifies GWM's position as the leader in the local new energy vehicle market within a remarkably short timeframe.

Launched in November 2022, the GWM Pakistan KD factory stands as a crucial overseas KD facility for GWM, following others in Ecuador, Malaysia, Tunisia, among other locations. With a planned annual production capacity of 20,000 units, the factory has successfully entered its first phase, assembling two SUV models, the Haval H6/H6 HEV, and the Haval JOLION.

The Haval H6 HEV, being the first locally assembled new energy vehicle in Pakistan, has quickly become a benchmark product in the local automotive market. It has played a pivotal role in boosting the penetration rate of new energy vehicles in the Pakistani passenger car market, rising from 0% last year to the current 2.3%.

According to data from the Pakistan Automotive Manufacturers Association (PAMA), it is anticipated that the total annual sales in the Pakistani passenger car market will be less than 100,000 units this year, reaching the lowest level in the past two decades.

 

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Auto sector in 2023: advent of EVs and hybrids in Pakistan​

Bilal Hussain

The year 2023 signaled a downward spiral for the auto sector. For about half the year, there were restrictions from the State Bank of Pakistan (SBP) regarding Letters of Credit to import parts that kept the supply side under pressure which then led to higher prices. Amid high interest rates, and inflation, demand remained on the lower side as well.

The industry faced LC issues from July 2022 till February 2023. It again faced government action – this time, the reasons were different.

In October and November, auto companies weren’t getting custom clearance for importing Completely Knocked Down units or auto parts because they failed to achieve the 2% export target, which they initially agreed with the government but were unable to achieve.

Sales in fiscal year 2023 dropped to around 120,000 units (for all passenger categories and imported used cars) – lowest since 2009.

Looking at the data on hand, sales were possibly the lowest ever over the course of two-decades in just the first 11 months of calendar year 2023 – sitting at just 76,401 units.

For perspective, volume of sales was 210,395 units for the same period in 2022.

Silver lining

Industry experts such as Sunny Kumar, Deputy Head of Research at Topline Securities, expect car sales to improve in 2024.

One of the reasons is the expectation that interest rates may go down substantially next year. Car financing may also pick up again.

Since car buying is a feel-good event, the income generated from the Pakistan Stock Exchange rally may also be attracted by the auto sector.

EVs’ manufacturing licenses: two, three wheelers take front seat in Pakistan

Auto sector pivots?

Fuel prices have gone up and inflation has caused the contraction of real income. Mobility cost is biting common people.

They are looking for cheap options and, in a sense, electric vehicles, especially in the two-wheel segment, have emerged as an option in the year 2023.

There has been tangible work done in the two- and three-wheel sector during the year, as 32 companies that have received manufacturing licenses under the Electric Vehicles (EVs) Policy 2020–2025 are all two and three-wheel manufacturers.

Amid the bleak outlook of the auto sector, a major auto sector player launched a 4th generation hybrid vehicle (HEV) Toyota Corolla Cross.

Meanwhile, another major player, Atlas Honda unveiled its electric scooter ‘BENLEY e’ during a ‘soft’ launch this year, showing a direction for the two-wheel segment.

Adopting fuel-efficient cars has been the need of the hour in the absence of a wide-scale network of public transport. Maybe, Pakistan is now more ready to adopt climate-friendly solutions and, in this endeavour, kills two birds with one stone.

 

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1950, Karachi ...

 

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1914, Karachi... First Car..