Auto industry is optimistic about economic growth

The auto industry is optimistic about the country's economic growth in general and automobile sector in particular due to the confidence shown by all credible global institutions in the backdrop of China-Pakistan Economic Corridor (CPEC) project.
"Auto development policy is beacon of light and massive growth is expected if implemented in its spirit. It will support manufacturing in Pakistan," these were the views of representatives of major stakeholders in auto sector Indus Motor Chief Executive Officer Ali Asghar Jamali and former chairman PAAPAM Amir Allahwala, who enlightened the newsmen about the way forward and new investments.
The sector has seen capacity enhancement by existing OEMs (original equipment manufacturers) which have increased shifts and work even on gazetted holidays to meet the unprecedented demand. Calling Pakistan a hidden treasure they pointed out that 50 percent of its 200 million populations is below the age of 30. They also revealed that two countries with about the same population are Indonesia and Brazil where the yearly car production is 1.3 million and 3.2 million respectively. The annual car demand in Pakistan they added is 283000 only (including domestic and imported cars).
In 2000, Indonesia with Pakistan like law & order and political situation was producing around the same number of cars as Pakistan is producing currently. Just in 15 years, car production in Indonesia crossed one million units. Pakistan is also attaining similar stability and better law and order, they said. The Auto Industry Development Plan (AIDP) envisages that car production in Pakistan would reach 500,000 units by 2025. However they said that the way things are moving the half million vehicle production target would be achieved by 2020, they added.
They pointed out that the young population helped shoot the motorcycle production from 100000 units in 2000 to 2.1 million units now. This aspiring young generation they added is now fully prepared to graduate to the use of small cars. This will increase the demand for small cars substantially.
The OEMs are continuously investing in capacity enhancement amid unprecedented growth. Now it is up to the government to attract more auto makers by showing its resolve in making Pakistan's auto industry the backbone of the economy by pursuing continuity in policies. The industry suffered heavily when government deviated from policy in 2008 when it allowed undue relaxation in import of used cars and resulting in closure of at least 4 OEM plants and their vendors while losing many job opportunities.
The industry is coping well with the AIDP including provision for import of three years old used cars. In fact, the import of 1300 cc used cars is declining rapidly and after introduction of high end Fortuner the demand for luxury cars would also taper. They said as soon as a new version of small segment car is introduced the consumers would lose interest in import of small segment used cars as well.
They said new investments are on the horizon in automobiles. Most of the vendors are not only increasing capacities but are also upgrading technologies. Some new entrants have also announced investment plans. The addition of a European and two Korean brands would add variety in the car section and create healthy competition, they added.