Automotive Industry
Content
THE EXTERNAL FACTORS AFFECTING THE AUTO-INDUSTRY Politico-Legal: The industry representatives have been repetitively prompting the government to take action against auto dealer’s mafia for their illegal activities causing damage to the local auto industry. On the one hand by importing thousands of used cars illegally and on the other hand by tricking innocent consumers by selling them old vehicles at exorbitant rates . Government’s such acts like releasing the apprehended illegally imported cars for nominal surcharge hurts the domestic industry badly. Chairmen PAAPAM, Usman Malik, has repeatedly requested the government to rescind or at least review fix duty and tax rates fixed in $term in SRO577 back in year 2005 which are very low, thus giving an undue advantage to used cars traders add the expense of local industry which has resulted in significant loss of revenues to government amounting to $ 7337 on import of used cars ending FY13. There is a dire need for the ensuring of consistent policies on the part of Government in the auto industry of Pakistan. Socio-economic: Inflation and resultant increase in fuel cost have adversely affect the social and economic activity of the population of the country along with the deteriorating law and order situation and the apparent apathy of the government. The auto industry growth in Pakistan stands at around 37% on average from 10 years ago, the auto industry domestic production capacity at full is 250000 per year FY13, which is sufficient to
meet the supply of domestic sales which were 180000 FY13-down nearly 1quarter year on year bases the adverse energy crises situation as has impacted the auto industry production of the vehicles as a result of which the common man finds himself being denied the public transport facility as only 12.6 out of a thousand inhabitant own a vehicle themselves. Demographic: The country’s population has quadrupled in the last 5 decades to 180 million, yet car ownership stood at just 12.6 per 1000 inhabitants in 2013, which number is reflective of the small size of the Auto industry in Pakistan. People who usually buy trucks target the coming 5 years for the recovery on their investment but as it is, trends show that that number is also decreasing. Though income-wise FY14 would be good for Hino-Pak Motors Ltd. but its biggest challenge remains the sales which are continuously declining. The overall sales of trucks in FY13 were just 1923 units –lowest in the last 10 years in the country. The sales of buses was even more depressing as just 522 buses were sold in the last Fiscal year – lowest in the last 14 years. This is due, for the most part, to the fact that illegally imported second hand vehicles are eating away at the sales of the locally produced vehicles as they are generally less expensive. In addition, inflation and the consequent increase in fuel prices are another formidable deterring force. Another leading cause is the law and order situation of the country as given the level of intolerance amongst a fair majority of the population, any unrest results in the goods-carrying and transport vehicles becoming easy targets of the protesters’ fury.
Environmental and Technical: The climate change and resultant global warming makes it incumbent on the Auto Industries around the world to opt changes that are more environment friendly where the consumption of fossil fuels and such heat producing fuel is advised to be minim0ized. The alternative being suggested is water and electricity powered Hybrid technology cars. The situation in Pakistan stands such that the domestic industry lags behind technologically in producing such vehicles on big scale because of the cost of production being high. Therefore this vacuum is filled largely by imported vehicles. Source The Nation newspaper articles published between Dec 2013 till March 2014.
meet the supply of domestic sales which were 180000 FY13-down nearly 1quarter year on year bases the adverse energy crises situation as has impacted the auto industry production of the vehicles as a result of which the common man finds himself being denied the public transport facility as only 12.6 out of a thousand inhabitant own a vehicle themselves. Demographic: The country’s population has quadrupled in the last 5 decades to 180 million, yet car ownership stood at just 12.6 per 1000 inhabitants in 2013, which number is reflective of the small size of the Auto industry in Pakistan. People who usually buy trucks target the coming 5 years for the recovery on their investment but as it is, trends show that that number is also decreasing. Though income-wise FY14 would be good for Hino-Pak Motors Ltd. but its biggest challenge remains the sales which are continuously declining. The overall sales of trucks in FY13 were just 1923 units –lowest in the last 10 years in the country. The sales of buses was even more depressing as just 522 buses were sold in the last Fiscal year – lowest in the last 14 years. This is due, for the most part, to the fact that illegally imported second hand vehicles are eating away at the sales of the locally produced vehicles as they are generally less expensive. In addition, inflation and the consequent increase in fuel prices are another formidable deterring force. Another leading cause is the law and order situation of the country as given the level of intolerance amongst a fair majority of the population, any unrest results in the goods-carrying and transport vehicles becoming easy targets of the protesters’ fury.
Environmental and Technical: The climate change and resultant global warming makes it incumbent on the Auto Industries around the world to opt changes that are more environment friendly where the consumption of fossil fuels and such heat producing fuel is advised to be minim0ized. The alternative being suggested is water and electricity powered Hybrid technology cars. The situation in Pakistan stands such that the domestic industry lags behind technologically in producing such vehicles on big scale because of the cost of production being high. Therefore this vacuum is filled largely by imported vehicles. Source The Nation newspaper articles published between Dec 2013 till March 2014.
