Local cars sales including jeeps and pickups reached 184,099 units up till April 2016; a 29 percent growth year-on-year, as per Pakistan Automotive Manufacturers Association (PAMA) - the highest since peak sales of 2006 and 2007; the year hasn't ended and we will soon be reporting numbers for May. As we reach the tail end of this year, it is prudent to talk about what the future holds and what the local automakers should have their eyes set on.

To review: the 10-month impressive numbers have been associated to ease of car financing with record low interest rates and the Apna Rozgar Scheme of the Punjab government that translated to marching sales for Pakistan Suzuki's Bolan and Ravi. The scheme ended in February with Bolan's sales doubling year-on-year for July-Feb FY16, slowing down in March and April. The company introduced a limited edition Cultus that hit the stores in January, with a small bump in price-selling the highest number for two years at 1,630 cars in March FY16. It would be remiss not to mention Suzuki WagonR-comparatively low in volume but a consumer favourite-that stirred the pot, registering an unprecedented 93 percent growth between 10MFY16 and 10MFY15.

The biggest contender for luxury cars, Indus Motor Company with its flagship variant Corolla saw a 16 percent year-on-year growth in 10MFY16, selling an average of 4,800 cars a month this year compared to 4,100 cars last year. In only the first quarter, Corolla sales rose by 58 percent year-on-year. Toyota Fortuners demand that had ebbed and flowed from last year, recovered in March and April. Comparatively, Honda's numbers have been tepid with a combined growth of 13 percent year-on-year for Civic and City in 10MFY16, driven primarily by the slowdown of demand for Civic.

This column talked about the rise of imported used cars more so recently than before, which explains where the demand is: smaller, fuel efficient cars. Imported used cars sales for 1000cc&below grew by 57 percent year-on-year for the eight months ending February 2016. Historically too, local sales for smaller cars like Cultus and Mehran have been much higher.

As the economy stabilizes, and the sweet promises of CPEC-led growth roll in, potential for 1000cc&below cars will substantially increase. The shift is evident already: market share for 1000cc& below cars has moved up from 35 percent in 10MFY15 to 38 percent in 10MFY16 while luxury car share (1300cc&above) has gone down from 52 percent to 48 percent. In sales growth too, 1000cc&below cars grew by 39 percent year-on-year for 10MFY16. More so, as purchasing power increases, the natural progression for motorbike owners is to buy smaller cars.

On the policy front, the government's 5-year pro-competition auto policy wasn't well-received by automakers where Suzuki Motors even threatened to shift its investment plant worth of $500 million to Iran if the auto policy remained. For now, the policy caters to European investors who will likely target high-end cars leaving place for local carmakers to delve in the growing market for smaller cars - an opportunity, not a threat!

Earlier this year, Toyota Global too announced that it would buy out the rest of its mini vehicle unit, Daihatsu Motor Company, keeping in view the increase in demand of small cars in emerging markets. Daihatsu specialises in 660 cc vehicles and Indus Motors could be bringing these cars home.

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Now is the time for automakers to sprint into action; they know the market and have considerable localisation. They should engage the government instead of lamenting competition and asking for continued protection. To start with, any demands for similar incentives as new players should come with a firm commitment (as opposed to pledges) on local investment. Otherwise, with the way demand is moving and the policy is placed, they will lose market share to new players very fast as time waits for no one!

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