[🇵🇰] Automobile industries in Pakistan

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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..

 

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1960's Karachi
Double Decker