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Automotive & Spare Parts

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The Automotive industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries. Despite significant production volumes, transfer of technology and localization of vehicle components remains low. Most cars in the country have dual fuel options and run on CNG which is more affordable and cheaper than petrol in the country.

The industry was highly regulated until the early 1990’s. After deregulation major Japanese manufacturers entered in the market thereby creating some competition in this sector. Assemblers of HINO Trucks, Suzuki Cars (1984), Mazda Trucks, Toyota (1993) and Honda (1994) in particular, entered once deregulation was introduced. Assembly of Daihatsu and Hyundai cars (1999) and various brands of LCVs and range of mini-trucks commenced recently.

From 1953 to 2011 the journey of auto industry has been rough, tough and sometime very smooth. Car industry saw boom in 2006-2007 when sales touched record peak of 180,834 thanks to rising car financing up to 70-80 per cent by banks due to low interest rates and rising rural buying. Since then the industry has been surviving hard to reach the same sales level amid high interest rates and Yen appreciation against the rupee but high farm income is giving much support to car sales.

The car industry has invested over Rs 20 billion in the last four to five years to meet growing demand. The direct employment in car industry hovers between 5,500-6,000 persons. Motorcycle production hit the country’s record level of over 1.5 million units in 2010-2011. Auto sector now employs 192,000 people directly and around 1.2 million indirectly and has Rs 98 billion of investments and contributes Rs 63 billion as indirect tax in the national exchequer.

Pakistan’s automotive industry is growing leaps and bounds each year.

 

Fazal Mahmood and Company Chartered Accountants

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