AUTOMOBILE INDUSTRY

PRESENTED TO:
MR. AFAQ ALI KHAN
HASSAN ARSHAD
FA06-BB-0035

JIBRAN KHAN LODHI

SP06-BW-0005
 AGENDA
• INTRODUCTION
• OVER VIEW
• PRODUCTION & HISTORY
• INDUSTRY ANALYSIS
• INVESTMENT & LABOUR
• WTO
• TAX STRUCTURE
• SWOT ANALYSIS
• CONCLUSION
 INTRODUCTION
In the world trade, Auto Sector is one of the
largest segments. It is the major driver of
economic growth and business activities. It
puts multiplier impacts on the economy. Day-
in, day-out around 200,000 vehicles roll off
the world’s assembly lines with car as the
dominant segment of the industry.
 OVERVIEW
• Auto market is one of the largest segments in world trade. The
annual size of automotive export trade in the world has grown
to a massive level of over US$ 600 billion, which accounts for
about 10% of the world export. Changing models, improving
fuel efficiency, cutting costs and enhancing user comfort
without compromising quality are the most important
challenges of the auto industry in a fast globalizing world.
• The growth of the automotive sector has resulted in the
increase of the manufacturing units, giving a healthy impetus
to the industrial output and generating over 140,000 direct
employment opportunities and contributing over Rs. 24 billion
to the national exchequer.
CONTINUE
• The automobile industry in Pakistan can be broadly
categorized into following segments:
• - Cars and Light Commercial Vehicles (LCVs)
• - Two and Three Wheelers
• - Tractors
• - Trucks and Buses
• - Vendor Industry
• The industry operates under franchise and technical
cooperation agreements with Japanese, European and
Korean manufacturers.
 PRODUCTION & HISTORY
• The automotive assembling in Pakistan started in 1950 when
National Motors Limited, a public limited company and the
pioneer in the industry, came into existence. Established by
General Motors of USA National Motors assembled passenger
cars as well as commercial vehicles which carried “General
Motors” brands such as Bedford, Vauxhall, Chevrolet and
Holden.
• A regular car industry started in the country in 1983, when
Suzuki commenced production eyeing the small and LCV car
segment of 800cc-1000cc range, andintroduced Suzuki car which
targeted the middle-income group (constituting the largersegment
of the market) by providing an affordable car.
CONTINUE
• Then there was a long gap until the early 90’s when
Indus Motor Company was established to
manufacture Toyota vehicles in Pakistan. Soon after
Honda Atlas came with the Civic and Gandhara
Nissan entered the market with Sunny. Some years
later Dewan Motors set up a plant to manufacture
Hyundai and Kia vehicles in Pakistan. Since then the
market has changed all together.
CONTINUE
• After struggling through nineties, a decade full of
uncertainties and frequent policy the Pakistani Auto
Industry has been able to achieve double digit growth
consistently since the last 4 years. The industry
operates under franchise and technical cooperation
agreements with Japanese, European and Korean
manufacturers. The contribution to economy by
automobile industry in Pakistan is as follows:
 FACTS &FIGURES
• TOTAL NO OF VEHICLES REGISTERED IN 2005 5,479,417
• TOTAL NO OF VEHICLES REGISTERED IN 2006 4,080,125

• TOTAL NO OF VEHICLES ON ROAD IN 2005 6048300

• TOTAL NO OF VEHICLES ON ROAD IN 2006 6845600

• TOTAL CAR PRODUCED IN 2005-06 170,487

• TOTAL CAR PRODUCED IN 2006-07 176,016
• TOTAL CARS PRODUCED IN 2007-08 45,904

• TOTAL CAR IMPORTED IN 2004-05 66,338

• TOTAL CAR IMPORTED IN 2005-06 13,569
 MAIN PRODUCERS IN
PAKISTAN
• SUZUKI MOTORS.
• HONDA.
• TOYOTA.
• DEEWAN FAROOQUE MOTORS.
• DAIHATSU.

And many more as follows:

PRODUCTION CAPACITY
 INDUSTRY ANALYSIS
GROWTH
• The two segments of the industry namely; car and two wheelers have
shown remarkable growth over the last seven years. The growth in
domestic market of cars has risen from 41,556 in 2001-02 to 176,016
in 2006-07 & according to September 2007-08 it is about45,904.
This growth is attributed mainly by car financing schemes, improved
liquidity position of certain class as a result of economic growth
indicators and other monetary measures.
• The motorcycles have also shown marvellous growth due to new
entrants. The new entrants with fair competition have brought about
the availability of cheaper vehicles in the domestic market.
CONTINUE
GDP SHARE:
• Auto Industry is contributing big proportions of
revenue and GDP to the Government. Last year the
industry has contributed a revenue of Rs 7 billion and
if the vendors are also included the amount will be
over Rs 10 billion. Contribution of auto industry to
the GDP is Rs 38 billion and savings in foreign
exchange by import substitution would amount to $
500 million.
 CAR FINANCING
• These banks and financial institutions have
aggressively competed in the consumer finance
market. The vital role leasing companies are playing
to pump the much needed cash flow in the local car
industry is evident from the fact that over 40% of all
new car sales are through leasing. The situation now
is such that banks such as bank Al Falah and Standard
Chartered are offering car financing at 9.5 per cent
and 8.5 percent respectively.
INVESTMENT &LABOUR
EMPLOYED
 WTO IMPACT
• Pakistan inked WTO in 1995 and it will come into operation on 1st
January 2005. No tariff regime of WTO will get a huge influx of
imported cars that will test real mettle of the industry. In April federal
commerce minister has been reported saying that government is
planning to lower tariff protection in automobile industry in response
to objections raised by the EU and IMF over higher protection being
enjoyed by Pakistan automobile assemblers.
In the given situation it may not be wrong to prophase that this
protection will not long last. In the year 2005 when WTO comes into
effect all such tariffs will be scrapped. Really compelling reasons
exist that require our automobile industry to develop and prepare
itself for no tariff future that is just 20 months away.
• In nutshell, our auto industry is performing well but not very well. It
suffers from certain shortcomings like narrow customers base and
huge production cost etc. the challenges for it not only formidable
but also warrants its very survival. The WTO allows only the fittest to
survive in a cutthroat worldwide competition.
TAX STRUCTURE
 LINKEGES
• AUTOPARTS INDUSTRY.
• TYRE INDUSTRY.
• CNG INDUSTRY.
• TRACKER SYSTEM.
SWOT ANALYSIS
CONTINUE
 CONCLUSION
• Auto industry in Pakistan has the great potential to generate investment and opportunities,
and can expand its operation to contribute the development of the economy of the country.
• In future there will be intense competition in the market due to the entrance of new
companies in the market with many new products. As the new assemblers Kia and Hyundai
has started its local production, Dewan Farooque and Daihatsu Coure has really potential to
change the auto scenario in Pakistan . But the imperative is the development and progress of
Auto industry in order to provide consumer with high quality, low priced locally
manufactured products.