Thursday, 25 December 2014

A detail Look at the Automotive Industry of Pakistan.

The automotive industry of Pakistan is considered as one of the thriving industrial sectors of the country. It has full potential to contribute high amount of income and GDP to the reserves of the Government. Auto industry is the second biggest tax payer in the country. According to recent statistics, it has contributed 63 billion rupees as indirect tax in the national exchequer.
At present, auto sector is contributing 16% to the manufacturing sector which is envisaged to increase 25% in the next 7 years. Besides that, automotive industry of Pakistan is providing employment opportunities to thousands of people all across the country. And if we look at the statistical figures, we will come to know that our Auto sector employs 192,000 people directly and around 1.2 million indirectly.
Although, a major percentage of automobiles are manufactured locally, our auto industry is still dependent on importing various precision auto parts and components. However, with the passage of time, industry is gradually moving towards complete localization.  As now, our motorcycle industry has successfully achieved almost 95% localization and other sectors are also booming in this race. At the present time, some of the leading world automakers have established their assembly plants in the country which are helping in the transfer of latest global technology to our local industry. Besides that, various international auto companies, including Toyota, General motors; Honda, Suzuki and Nissan Motors are in joint ventures with local companies. These business ventures bring foreign investment that contributes in the development of indigenous auto sector.
Currently, our automotive industry is largely dominated by three major companies which include, Indus Motors, Honda Atlas Motors and Pak Suzuki. In evaluating the current scenario of our auto sector, there are 3,200 units of automotive industry with the investment of Rs92 billions.
The automobile sector of the country can be classified into 6 major segments:
  1. Cars & light commercial vehicles (LVC’s)
  2. Two and three wheelers
  3. Tractors
  4. Trucks and buses
  5. Accessories and part manufacturers
  6. Vendor Industry
In the context of Pakistan, there are 10 cars in 1,000 persons which is one of the lowest ratios in the rising economies which itself demands high potential of growth in the auto sector especially in the car production. Besides that, the Rising per capita income and changing demographic distributions are also stimulating the auto industry to expand and grow. However, we can not overlook all those challenges that are undermining the growth of our local auto industry.
In the current perspective, the worst economic situation of the country is contributing a large part in the discouragement of auto industry. In addition, the chronic electricity and gas shortages are surely a big challenge for auto sector which are also troubling every other sector in the country. Lack of infrastructure, bad governance and absence of friendly industrial policies are all proving serious setbacks for the development of auto sector.
It can be concluded form the above discussion that auto industry of Pakistan has full capacity to expand its operations and to contribute in the development of the economy of the country. However, for the sustainability and growth of this sector,   Government should devise prudent and friendly policies that can attract foreign investors. Besides that, government should facilitate the local industry to maximum level so it can achieve absolute localization. No doubt, it is a need of time to be self independent in our automotive sector, so we can proudly compete in international markets.

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