Imagine the sprawling city of Karachi without motorcycles and rickshaws. Would it still feel like Karachi? The news is abuzz on the arrival of handful of new car and commercial vehicle ventures that are sure to shake up the auto industry while tractors are witnessing their fair share of growth.
The real boom, however, is being seen in the two and three wheeler market. Sales have shot up from 1.4 to 1.6 million between FY16 and FY17 with as many as 12 players manufacturing locally. Meanwhile, imported Chinese motorcycles are also oft seen on the congested roads indicating that the actual annual ownership of motorcycles may have gone up further.
In fact, reportedly, Pakistan and Philippines are the two countries in Asia seeing this surge as sales in other countries like China and Indonesia drop with slower growth in India and Thailand. In Pakistan, this trend is likely to continue. Poor traffic conditions in big cities and greater demand for cheaper transportation are two primary reasons for this growth.
As ride sharing apps like Uber and Careem establish a foothold across major cities, and car ownership goes up due to higher disposal incomes and affordable financing; it is easy to see why motorcycles are witnessing even greater growth. Those who could only afford travelling in the mini buses are now buying motorcycles on lease.
Clearly, youth employment and the population coming of working age are strong contributors to motorcycle sales. Following the success of ride sharing apps, two bike sharing apps were also launched called Bykea and Cargar which used similar models to connect bike owners and commuters at significantly cheap rates. Both Uber and Careem also toyed with the idea of offering rickshaws to city dwellers which cost significantly less than the car options.
Foreseeing these demand indicators, some of existing players are expanding capacity and introducing better options and upgrades to their fleets.
Atlas Honda being the market leader has already expanded capacity and intends to reach 1.35 million units annually. Sagar Engineering, the rickshaw manufacturer is currently even exporting its rickshaws to markets in Japan to diversify its sales mix and remain competitive.
Much of the attention and hype is what cars Nishat and Lucky will bring to the market and whether Renault will be a hit or a miss. Some were contending that more car ownership may deter motorcycle sales but clearly, there is space for everyone to play.
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