Auto firms in Pakistan have been operating for decades now. Yet they haven’t been able to outsmart the imported cars. Whatever may be the reason – inefficiency on the manufacturers’ front or policy inconsistency, the outcome remains unfavourable for the local industry as customers prefer imported variants over local alternatives.
In the first half of 2012, Punjab government Taxi scheme provided the industry a breather by significantly buttressing its sales volume. However, the termination of the scheme in the latter half of the year coupled with a ban on the production of non Euro-II compliant cars – Alto and Cuore – mired the industry in gloom yet again.
To recoup the industry’s lost appeal, Indus Motors and Atlas Honda introduced new variants of their respective flagship brands – Toyota Corolla and Honda City in 2HFY13.
While the new variant of Honda City was highly lauded by the market, giving a phenomenal boom of 103 percent to the company’s sales volume in 1HFY13, the collective sales of the new models of City and Corolla couldn’t mask the slide in industry sales as it bade Alto and Cuore farewell.
Market experts pointed out that international steel prices took a significant dip of 10.9 percent in 1HFY13. Moreover, Pak Rupee appreciated by 17 percent against Japanese Yen since November 2012. Despite this, local automakers couldn’t trim their margins, giving imported cars a golden opportunity to grab customers’ attention by offering attractive prices.
Over the years, local auto industry has demonstrated strong aversion to competition by blaming the imported cars for grabbing their market share. To gratify them, the government reduced the age-limit of imported cars from 5 years to 3 years in December 2012. Still, industry fortunes have not ramped up for three months now.
Besides constant upward price revisions by local manufacturers, which dejected the customers, the amnesty scheme presented by FBR to release the smuggled cars by paying 1 percent duty, took its toll on local sales volume by allowing customers to smuggle the cars and discharge it on easy terms.
Although car sales numbers for March witnessed a step up of 6 percent on month-on-month basis, year-on-year analysis shows a massive dip of 20 percent. This casts shadows on monthly improvements, which could be the result of pre-election buying of vehicles.
Amid these difficult times, there is some positive news.
Indus Motors took a bold step of tapping a niche market by launching “Fortuner”, the only locally manufactured SUV at a price 35 percent less than its imported equivalents. Fortuner received an encouraging response with sales having reached 228 units in March 2013. In addition, according to Topline Research, Pak Suzuki is considering to re-launch its old Alto with new features (shaped like the Indian Alto) within 3-6 months.
Innovations like this coupled with rational pricing and sliding Yen could attract the customers. However, the auto sales largely hinges on to the introduction of Auto Industrial Development Plan (2013-18).
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