Has the Auto Policy in Pakistan facilitated the Common Man?
  Sep 04, 2023     talha seo  

Has the Auto Policy in Pakistan facilitated the Common Man?

In 2016, Pakistan unveiled its first-ever dedicated Auto Policy, luring several new firms to investigate the Pakistani industry. Customers noticed the availability of a number of new brands in a market that had previously only been controlled by Suzuki, Toyota, and Honda.

The main goals of implementing this policy were to 1) end the market monopoly of three Japanese companies (known as the "Big 3"), 2) foster healthy competition among players, 3) accelerate delivery times, 4) get rid of on-money/premium, 5) boost localization, 6) lower car prices, and 7) raise the caliber of goods provided to consumers. Interestingly, none of the aforementioned 7 criteria have been accomplished even after the policy has been in place for more than 6 years.

Without wanting to sound overly political, the possibilities for the general public to purchase cars were considerably more varied during the Musharraf administration than they are now. In the name of competition, new entrants who benefited from Greenfield incentives have mainly introduced extremely expensive crossovers that are primarily targeted at the elite class. This ensures thick profits in the fewest number of vehicles sold without the need to generate volumes and no intention of improved localization.

Back then, automobiles from Chevrolet, Hyundai, Kia, Adam, Fiat, Mitsubishi, Proton, Nissan, Chery, Geely, and Gonow were all priced well within the reach of the average person and would immediately compete with the alternatives that were already available. Some of the names that experienced a brief time of prominence were Chevrolet Joy, Hyundai Santro, Kia Spectra, Fiat Uno, Mitsubishi Lancer, Nissan Sunny, and Chery QQ. However, as the beloved democracy returned in 2008, all of these brands slipped into obscurity.

Even while responsible people have made a number of audacious statements about the ability of the local car sector to exceed the currently stagnating volumes. But it is now unable to sell more than 250,000 units annually. This is mostly because assemblers are more concerned with profit margins than they are with obtaining quantities. Because of this, pricey items are being introduced that target a small group of consumers with significant purchasing power, while the general public is left to rely only on the available alternatives with little to no competition.

Smaller and more fuel-efficient automobiles are required today as the nation struggles with growing import expenses and rising fuel prices. Instead, pricier crossovers with larger engines that pay little or no emphasis on fuel efficiency are introduced here. And it's not only newbies that prefer to provide pricey extras over broadening their mass-market products; even established automakers do the same.

For instance, Indus Motor Company declared that starting the next year, it will sell locally built Toyota hybrid vehicles in Pakistan. The Corolla Cross hybrid, which presently costs more than Rs 10.2 million and, according to business executives, would be available for roughly Rs 8 million once produced locally, will be the car they start with. Launching something that won't even sell a dozen units a month is not the greatest of ideas, even if the objective is to lower the strain on fuel import bills or to demonstrate environmental concern, which sounds lovely from a marketing point of view.

Instead of the overpriced Corolla Cross, why not introduce the more inexpensive Raize, which has smaller 1.0L turbocharged as well as hybrid powertrain options and will sell in far bigger numbers. And may make a far more effective contribution to building a greener environment.

Similar to this, Honda Atlas is about to release the new HR-V, which is anticipated to cost more than Rs 6.0 million. WR-V crossover, which performs well in right-hand drive regions, or even some of the company's successful kei vehicles, which may fight against the Suzuki Alto 660cc, were never considered for the smaller section of the market.

Despite having a population of around 217 million, Pakistan is the sixth most populous country in the world. However, the country produces just about 0.2 million cars yearly (before the epidemic) and ranks 31st among nations that make cars, with almost no exports of the vehicles. In order to provide a point of reference, Thailand, which has a population of 69 million, or nearly three times that of Pakistan, produces 2 million vehicles yearly, exports a respectable 1 million, and is the 11th-largest producer of vehicles worldwide.

Low sales volumes are a result of the existing lineup of locally made automobiles failing to satisfy consumer desires. Products are not supplied according to purchasing power, and local businesses, even newcomers, are pleased to introduce extremely pricey automobiles even during the worst economic conditions.

Sazgar began with the extremely pricey BJ40 Plus SUV, which is valued at Rs 92.95 lac, before moving on to exhibit the mass-market D20 and X25 vehicles. Additionally, it collaborated with GWM Haval and introduced the H6 CUV, which costs Rs 74.25 lakh for the 1.5T model and Rs 84.99 lac for the 2.0T model, instead of the more cost-effective and fuel-efficient H1 & H2 versions as in South Africa. The same is true for other entrants who compete in markets in third world countries where economic resources are running out and people's purchasing power is declining by releasing absurdly priced autos.

Only when rules are created for the advantage of the business, not just those in charge, will Pakistan's car sector grow. Achieving real and optimal localization, effective plant capacity utilization, and on-time delivery will provide volumes that will help the local car sector reach respectable figures.

Since the sector has been in its infancy for more than 35 years, it appears that it will continue to be so for some time to come, depending entirely on imports while occasionally needing government assistance in the form of incentives.

talha seo