Automark January 2011 by Mustafa Hanif

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Editorial

MONTHLY

The Magazine for Pakistan Automotive Sector

January 2011 Vol 4, Issue 01 Editor : M. Hanif Memon Sub Editor : Dr. Raja Irfan Sabir Contribution Writers : Asif Masood Syed Mansoor Ali Ali Hassan Mohammad Owais Khan Sabir Shaikh IHT Farooqui Omar Rashdi Shahzad Tabish Muneeb Jawed Advisor : J. Pereira Abdul Majeed Sheikh Imtiaz Rastgar IHT Farooqui Circulation Manager : Abdul Khaliq Designed By : Mustafa Hanif

Important Announcement The management of monthly Automark magazine is pleased to announce that Engineer IHT Farooqui has joined the Automark advisory panel from January2011. He will now be advising and overlooking Automark magazine's key contents. Mr. Farooqui is involved with the Pakistan auto industry since the last 28+ years with executive m a na g em e nt pr ofe s s i on al i n pr od uct i on fi e l d. He holds a BE Degree in Mechanical Engineering and doing Master of Engineering from NED University. He Prepared localization plans for Changan brand Pickups, FAW brand Vans and Belarus Tractors, negotiated with vendors, placed development orders and completed all formalities of EDB to local manufacturer of these vehicles in Pakistan. Presently working as General Manager Plant in Karakoram Motors (Pvt) Ltd. In the past he worked for Pak Suzuki Motor Co., Millat Tractors, Dewan Farooque Motors, World Korean Motors, Adam Motors, Ro ma Auto mo bil e s, Fect o G ro up o f Indus tr ie s. After his joining at Automark as an advisor (the leading publication of the Pakistan automotive sector), he will contribute to fur ther improve the already established quality of our prestigious publication, bringing at par with the international magazines of the automotive industry.

Postal Address Active Communications D-68, Block-9, Clifton,Karachi Visit us: www.automark.pk E-mail: magazine@automark.pk automarkpk@gmail.com Tel/Fax : 021-32218526 Mobile: 0321-2203815

Pakistan is confronted with multitude of problems Low economic growth and skyrocketing prices Businessmen demanded the government to announce comprehensive action plan to address the key issues that are affecting businesses, economy and lives of masses. Pakistan is confronted with multiple problems such as low economic growth, skyrocketing food and energy prices, high inflation, rising unemployment, continued fiscal indiscipline, growing poverty, alarming increase in government borrowings, compounding circular debt, weak revenue collection coupled with increased spending, and low foreign investments. The recent surge in the petroleum prices has created a new wave of inflation. Prices of many products have increased because of escalation in the transportation cost, leaving a very negative impact on cost of doing business. "Getting credit from banks has been made more expensive for the private sector - as a result no more investment is coming to begin new business ventures that will generate economic activity and employment in the country," The tight monitory policy said that it could not bring positive results and also the growth graph is declining, thus State Bank of Pakistan should review its course of action. That Pakistani rupee is depreciating, while currencies of the regional countries are getting stronger, which gives them a competitive edge in the international market for exports. "Political uncertainty has also slowed businesses in the country and foreign buyers are reluctant to start long-term business with Pakistani companies," the government should immediately sort out these issues to give stability to the country. Government to chalk out an action plan for maintaining stable prices, keeping the interest rate low, generating energy resources and to work o n the key areas for eco nom ic development.

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CONTENTS The Monthly Magazine for Pakist an Automotive Sector

e-magazine Issue at our website

Your trust is our success

EDB devises certain arameters of minimum in-house acilities for 2 & 3 wheelers Exclusive Article on Auto Sector by Ali Hassan

09-10

Would Pakistan be able producer of cheapest in the world? Cover Story - by Syed Mansoor Ali

11-12

Two years Tractor production in Pakistan Fig.

AIDC focuses more on future issues rather than ever rising car prices Exclusive Review by M. Owais Khan

14-15

Use cars import issue - Update news

From Past to Present Automobile Industry in Pakistan Composed by Muneeb Jawed from NED -Karachi

The “Pickup” in the News Toyota Hilux Exclusive Article by Shahzad Tabish from NED-Karachi

Rise & Fall of local motorcycle industry 2001 to 2010 Exclusive Review by Sabir Shaikh - Chairman APMA

21-24

DuPont helps upgrade CDA's fire systems - Event Report 28 Electronic Fuel Injection (EFI) & Carburetor Exclusive Article by Omar Rashdi

visit: www.automark.pk

Environmental Sustainable Transport Sector Development - Pakistan Exclusive by Asif Masood from Islamabad

39-41

Local assembled car price list - Updated Jan-2010 Master Motor - Launched Fuso in Pakistan - Events

43 46-47

Dynasty Electric Car - by IHT Farooqui

48-49

Motorcycle price list - Uptated Jan-2011

50-51

The only ONLINE automotive magazine in Pakistan

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Exclusive Article

by Ali Hassan

EDB devises certain parameters of minimum in-house facilities for two and three wheelers The EDB in its letter circulated to leading bike makers on December 24, 2010 said that it is mandatory for the assemblers of two to three wheelers to install and maintain the machinery/equipment and necessary tools required for the assembly of vehicles as defined in Annexure-A of SRO 656 (I) 2006. The Engineering Development Board (EDB) has devised certain parameters of minimum in-house facilities for the assembly and manufacturing of two and three wheelers besides guidelines to verify these facilities. The main reason of devising parameters is to make detailed evaluation of the facilities to ensure uniformity as well as to calculate time lines involved in different processes of production of vehicles such as treatment area, assembly line, and test bench etc besides assessing plant capacity of the unit. The EDB in its letter circulated to leading bike makers on December 24, 2010 said that it is mandatory for the assemblers of two to three wheelers to ins tall and ma inta in the machinery/equipment and necessary tools required for the assembly of vehicles as defined in Annexure-A of SRO 65 6 ( I) 20 06. T he machinery/equipment prescribed in the SRO does not provide details like make/m odel, sp ecific ation/si ze, operating modes i.e. whether manual or automatic and mode of testing facilities etc. to keep up uniformity in the evaluation of facilities and installed capacity. A leading Japanese bike maker of Honda bikes and Pakista n Au tomotive Manufacturer Association (PAMA) are re ported to have submitted tariff structure for two wheeler industry to the EDB, which is infamous for taking care of the interest of Japanese bike

makers mainly. The existing rate of customs duty on completely built up (CBU) is 65 per cent for 2010-2011 and it is proposed 60 per cent under tariff plan under Auto Industry Development Plan (AIDP) for 2011-2012. PAMA has suggested CBU customs duty rate at 55 per cent from

The main body of bike assemblers (Chinese), Association of Pakistan Motorcycle Assemblers (APMA) is not happy with the PAMA proposals and its allegations on low cost bike producers. APMA chairman Mohammad Sabir Shaikh said he had informed the EDB about his election as new president of the Association asking the Board to invite in the meetings on minimum in house facility and other issues but the Board is not taking it seriously. AUTOMARK | January-2011 09

2012-2013 to 2016-2017. The rate of CKD kit (in percentage) is 15 per cent under existing tariff during 2010-2011 while it is proposed at 10 per cent under AIDP tariff plan for 20112012. PAMA has proposed 10 per cent tariff from 2012-2013 to 2016-2017. The tariff structure on components for making two wheelers as listed in SRO 69 3(I) 2 006 d at ed 01.07 .200 9 (localized) is 47.5 per cent under existing tariff for 2010-2011 while it is proposed 45 per cent under AIDP tariff plan 20112012. PAMA has proposed the rate of duty at 42.50 per cent for 2012-2013, 40 per cent for 2013-2014, 37.50 per cent for 2014-2015, 35 per cent for 20152016 and 32.50 per cent for 2016-2017. Atlas Honda and PAMA have suggested zero per cent duty on tariff structure on localiz ed parts till 2016-2017. The existing tariff on sub components for 2010-2011 is five per cent while it is proposed 2.5 per cent from AIDP tariff plan for 2011-2012 till 2016-2017. There is 10 per cent duty on components under existing tariff 2010-2011 while it is proposed 2.5 per cent from AIDP tariff plan under 2011-2012 till 2016-2017. Existing tariff for 2010-2011 on sub assembly is 20 pe r cent and it is suggested 10 per cent under AIDP tariff plan for 2011-2012 and 7.5 per cent for 2012-2013 and five per cent from 20132014 to 2016-2017. Motorcycle volume (2010-2011 actual others projected) is 900,000, 1.050 million under AIDP tariff plan 2011-

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Exclusive - Article

Plan aims to evaluate the facilities to ensure uniformity and to calculate timeline involved in different processes of production of vehicles 2012, 1.250 million in 2012-2013, 1.450 million 2013-2014, 1.6 million in 20142015, 1.8 million in 2015-2016 and two million in 2016-2017. The bike makers in organized sector are at a clear disadvantage as compared to unorganized sector. Under invoicing, mis-declaration, outright smuggling and non payment of sales tax and other government levies by the informal sector have placed the formal sector at a major cost disadvantage. The bike industry is highly cost sensitive. The cost differential between the formal and informal sector is making it more attractive to be in unorganized sector. It is a fact that at present most of the assembly is through commercial import or through imported parts procured through illegal sources. This is forming business out of the country and not only the assemblers are suffering but this situation is a major set back for the vendor industry too. Solution lies in reducing the cost of in dustry. To keep business in the organized sector, the cost has to be brought down for them. Rationalizing tariff rates is the way forward. Reduced tariff rates will make present practices of the unorganized sector unattractive and it will make business sense to pr ocu re locall y. V olum es m ake localization attractive and imports costly. The main body of bike assemblers (Chinese), Association of Pakistan Motorcycle Assemblers (APMA) is not happy with the PAMA proposals and its allegations on low cost bike producers. APMA chairman Mohammad Sabir Shaikh said he had informed the EDB about his election as new president of the Association asking the Board to invite in the meetings on minimum in house facility and other issues but the Board is not taking it seriously. The EDB is reluctant in taking on board the main bike makers which hold 60 per cent share in total country’s production. The EDB has not shared the draft with the APMA and the Board is taking feed back from the producers having 40 per cent share which is not justified.

He said the Association cannot accept certain parameters of

minimum in house facilities which are being made on the dictation of a leading Japanese bike maker in order to create bottlenecks for the cheap bike makers. “There should be only three tariff structure on CBU, CKD and zero per cent on raw material and the tariff structure on rest of the items like components, sub components etc hold no importance,” he said. Sabir said it is strange the EDB, a strong arm of the i nd ustry ministry, has been trying to create hurdles for the cheap bike makers. How ever cons um ers’ risi ng interest towards Chinese bikes has

proved that they are more interested in buying low priced bike in view of prevailing high cost of living. Despite all odds, Chinese bike makers have ex celled in production output as compared to Japanese bike makers. Before the December 24, 2010 letter issued to some leading bike makers from the EDB, the issue of minimum in house facility was discussed in the fifth and sixth meetings of Auto Industr y Development Committee (AIDP) held in first week of November and December 8, 2010. The EDB official had informed the 5th AIDC me eting that the Board had forw arded th e recommend atio ns prepared in consultation with all the stakeholders to the Federal Board of Revenue (FBR) al ong with al l the budgetary proposals for 2010-2011. The amendments as recommended by the technical committee headed by Mr.

AUTOMARK | January-2011 10

Feroz Khan to provide specific minimum in house facilities for specific vehicles w e r e a l s o p a r t o f t h e E DB recom mendati ons. Some of th e participants were of the view that this document needed to be shared with the stake holders so as to see the exact facilities proposed. In the 6th AIDC meeting General Manager informed the house that EDB had already circulated list of facilities to stakeholders to get a feed back with the FBR. PAMA had already submitted its feedback on December 7. The House in principle agreed to requirement of d e fi n i n g m i n i m u m i n - h o u s e assembly/manufacturing facilities for assembly/manufacturing of vehicles. EDB is reviewing the PAMA suggestions and will amend it accordingly if found appropriate and forward the revised document to FBR for subsequent ame ndment in the relevan t SRO. It was decided in the meeting that the existing players will also follow the same assembly rules in case of any shortfall. However, they may be given sufficient time to upgrade facilities according to revised rules and with a level playing field to the new entrants. Under minimum in house facility for two and three wheelers, detailed evaluation will be made of various facilities. For example, assembly of engines shall be done in a well lit and dust free environment to avoid deterioration of finished, machined, delicate and tiny parts and to av oid mixin g of an y unwanted/extra content in the engine. The purpose may be achieved through an air tight/air conditioned room with food-mates and controlled entrance. The assembler will give a timeline to be taken in the assembly of one vehicle or time taken in complete cycle. The EDB’s technical team will check the timeline given by the assembler to assess the paint capacity. In final inspection (in-house), 1: an automated electronic based system to check the effectiveness of front and rear brakes. The assembler will provide the specification of the equipment/machines installed along with its make/model etc…..

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Exclusive Article on Tractor sector

by Syed Mansoor Ali

Would Pakistan be able to take an advantage of being a producer of the world's cheapest tractors (moderate quality) in the world? New entrants are not very successful because they are not able to find any good tractor from Europe which could price match or even come closer to the existing local manufacturers. Even Chinese tractors are higher in prices compared to our production but still lesser than European prices

Pakistan is the only country in the world producing the cheapest (Fiat and MF) moderate quality branded tractors in the range of USD 7000-9000 only. Within the country , rapid increase in the market prices of the farm produce has bettered the purchasing power of the farmer, resulted in the increase in demand of tractors. These two factors have brought the total industry volume to the tune of approximately 70,000 tractors per year. The development in the industry could be noticed from the fact that in 1998-99 industry sold 30,166 tr actors(local & imported ) only.

The analysis of the demand supply situation reveals that only local market needs at least 10,000 more tractors than the current total Industry Volume (TIV) per year . While the export market wh ose pote ntial has not yet been ascertained would be needing similar quantity. In the export market, countries who have not yet imposed EPA standards (Tier 1,2 or 3) are more than willing to buy Pakistani tractors. It is estimated that at present average 34000 tractors are exported out of the country every year. Tractor dealers or traders in the open market are exporting them without the knowledge of Principle companies. The numbers could not be c o n fi r m ed f r o m t h e t r a c t o r manufacturers as they are contractually not allowed to export tractors out of the country.

The major factors contributing in the rapid growth of the local tractor demand are as AUTOMARK | January-2011 11

such: • Low prices of Tractors Vs International Market. • Easy loan facility (private banks started offering agri. machinery loans). • Increase in cultivable area. • Interest of Investors. • Export due to low prices. (Afghanistan etc) • Increase in crop prices. (e.g. Wheat price went up to 850Rs /40kg from 450Rs/40kg). • Overseas: Attractions

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Exclusive Article on Tractor sector

Euro-F

from relatives outside Pakistan to invest in Tractors. (sold higher than market prices). â&#x20AC;˘ Government Initiated several Subsidy Schemes. On the other hand, demand for export market is increasing due to extremely affordable prices , acceptable quality and popular brand name. Concisely, we have a short fall of tractors; local production capacity and imports are not meeting the demand.

The question is that could we be able to get into a win- win situation by adopting the strategy to meet local demand and tap the export market . This will become a substantial source of foreign exchange earnings needed badly by our country. This deficiency was noticed by the government of Pakistan and private entrepreneurs. Federal board of revenue (FBR) amended its SRO 575(1)/2006 through a notification issued on June 11,2008 wherein agriculture machinery are exempted from custom duty and sales tax provided that the same are not m anu fa c tu r ed in t h e co u ntr y . In the private sector several new entrants are struggling to arrest the opportunity. In this regard , John Deere (Agro tractors Ltd.), Foton (Dewan group) ,Euro-F (PM autos), Belarus like tractor (Hero Motors, Hyderabad) , Changfa ( Ali Corporation )and Ursus (Farmall Technology , Lahore ) are am ong th e p rom inent nam es . Already Foton-Dewan project was closed last year and it is said that a new party in Lahore is trying to get into a joint venture with Foton. John Deere is a big name but they were importing

Chinese John Dere and met the same fate like other Chinese tractors in the country. Hero Motors tried to produce an amalgamation of Belarus, Fiat and MF which was stopped by government. Changfa is 100% imported and the company is trying to set up a plant in Lahore. Ursus's plant is in Lahore, making a slow progr ess in th e production of tractors. After John Deere they have an edge on technology as these tractors have the same technology like MF tractors in Pakistan. G.M. Motors are manufacturing Universal ractors but their production is very limited (average 400 units per year). M/S Shehzad Traders, for the last two years, are importing Belarus tractors from Minsk Tractor Works to the tune of approximately 4000 tractors per year.

The existing producers of tractors have their focus on producing same tractors that are in production for years now. However, they have the potential, capacity and capability to grab this market as they have very established infrastructure both in marketing and vendors. In consultation with their principals they can set up separate assembly line for the export.

AUTOMARK | January-2011 12

Furthermore, they could start producing new models of modern tractors to step into the next generation of tractors . This will secure their future in the market. Briefly, the overall challenge lies in finding the sustainable solution to seize this opportunity. In the previous year's government ran several subsidy schemes but these schemes helped more to investors and black marketers than the actual farmer. New entrants are not very successful because they are not able to find any good tractor from Europe which could price match or even come closer to the existing local manufacturers. Even Chinese tractors are higher in prices compared to our production but still lesser than European prices. As a result majority of the new entrants have no other choice but to go for Chinese tractors. Unlike other Chinese items in the country, agricultural tractors are not acceptable in the Pakistani market. The reason is that since the start of tractor marketing in Pakistan our farmers are operating European tractors like MF, FIAT and Ford. In a nutshell, the current situation viza-viz tractor sales in local as well as i export market are extremely favorable for Pakistan. There is a dire need to make a significant headway in this field by formulating a strategy to seize this opportunity immediately. This will be a tremendou s help towards th e deteriorating economic situation of the country .

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Automotive Sector - 6th AIDC meeting

Review by Owais Khan

AIDC focuses more on future issues rather than ever rising car prices Electric car maker tries to satisfy EDB, local assemblers While putting aside the issue of ever rising car prices, the government, car makers and vendors are more concerned on future issues. They have been discussing (one and a half year earlier) on the future of Tariff Based System (TBS), alternative system to re place TBS and Auto Industry Development Plan (AIDP) in the last two meetings of the Auto Industry Development Committee (AIDC). However, the Chinese bike makers say they are being sidelined on this future issue. The TBS is going to expire in 2011-2012 but stakeholders have put their heads down to provide requisite information to the government and the Engineering Development Board (EDB). Chairman Association of Pakistan M ot or cycle Assem blers (AP MA) Mohammad Sabir Shaikh has informed the EDB that he has been elected for 2 011 ter m. A s p er app rova l of Government of Pakistan Chairman APMA is a Member of AIDC. He asked the EDB to allow him to attend the AIDC meeting on behalf of the Association. The EDB is in the process of formulating AIDP for next five years for 2/3 wheelers and Pakistan Automotive Manufacturers Association (PAMA) had submitted a proposal in this regard. He said he has come to know that in such meetings that proposal was tabled it was decided that this proposal should not be discussed with Pakistani Brand Assemblers the Members of APMA. Sabir said APMA is a representative association of local two wheelers and Auto CNG Rickshaw assemblers which are producing more than 60 per cent of bikes and auto CNG rickshaws but due to DTO rules/influences DG Trade Organization are not recognizing our position for which we are in appeal with them.

On the other hand PAMA is not giving memberships to OEMs of Pakistani Brand. Some local assemblers members of APMA filed complain against PAMA with DG Trade Organization. He said any policy formulated by the EDB without taking view of the 60 per cent stakeholders will not be accepted while PAMA is not representative of 2/3 wheelers assemblers. The fifth AIDC meeting deliberated mainly on depression and the revival process in the auto sector besides developing a strategy on the issues like fu tu r e of T BS , rev iew and i m p lem en ta t io n of A ID P, low productio n levels an d ever risin g increase in prices. However, the car price issue was not discussed in the 6th AICC meeting held on December 8, 2010. On the life of TBS and AIDP, it was informed that TBS was implemented through finance bill and it has no time limit while AIDP is consisted of five year tariff plan which is up to 2011-2012. As

AUTOMARK | December-2010 14

such AIDP is a time bar document and TBS has no time binding. However, it can further be reviewed /refined in light of present operational environment of the local industry. In the 6th AIDC meeting, it was informed that PAMA and PAAPAM had held meeting on November 12, 2010 but more meeting were needed to reach a consensus. In this regard, they are going to have next meeting on February 15, 2011 after which they will provide a working plan and time line to the EDB/AIDC. On Revie w of min imum in-house assembly/manufacturing facilities for manufacturing/assembly of vehicles, the EDB official had informed the 5th AIDC meeting that the Board had forwarded the recommendations prepared in consultation with all the stakeholders to the Federal Board of Revenue (FBR) along with all the budgetary proposals for 2010-2011. The amendments as recommended by the technical committee headed by Mr. Feroz Khan to provide specific minimum in house facilities for specific vehicles w e r e a l so p a r t o f t h e E D B r ecommend ations. Some of t he participants were of the view that this document needed to be shared with the stake holders so as to see the exact facilities proposed. In the 6th AIDC meeting General Manager informed the house that EDB had already circulated list of facilities to stakeholders to get a feed back with the FBR. PAMA had already submitted its feedback on December 7. The House in principle agreed to requirement of defining minimum in-house assembly/manufacturing facilities for assembly/manufacturing of vehicles. EDB is reviewing the PAMA suggestions and will amend it accordingly if found appropriate and forward the revised

continued on next page

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Automotive Sector - 6th AIDC meeting

The car price issue was not discussed in the 6th AICC meeting held on December 8, 2010. On the life of TBS and AIDP, it was informed that TBS was implemented through finance bill and it has no time limit while AIDP is consisted of five year tariff plan which is up to 2011-201 document to FBR for subsequent ame ndment in the relevan t SRO. It was decided in the meeting that the existing players will also follow the same assembly rules in case of any shortfall. However, they may be given sufficient time to upgrade facilities according to revised rules and with a level playing field to the new entrants. On draft standards for trailers and semi trailers, Mr. Sohail P. Ahmed, convener of the sub-committee of the Safety, Quality and Environment Standards of AIDC had informed the November AIDC meeting that the draft standards for trailers and semi trailers had already been forwarded to PSQCA. He further informed that Mr. Ah me d Sae ed member of the sub-committee had again raised few observations which were currently under review by the EDB and the industry. In this regard issue of marking fee being charged by the PSQSA and enforcement of standards was also discussed in detail. The participants stressed upon the need for revamping of the Motor Vehicle Examination System in the country. They were of the view that consumers view point also needs to be considered while making any standards. It was decided that the Sub Committee of the Safety, Quality and Environment Standards of the AIDC would take up the matter with the Ministry of Science and Technology for early settlement of marking fee issue. Sub Committee may also develop close linkages with other organizatio ns involved in refinement of Motor Vehicle Examination System both in terms of infrastructure and amendment in Motor Vehicle Ordinance. In December 8 AIDC meeting Sohail P. Ahmed informed the meeting that sub committee had not been able to meet the Ministry of Science and Technology for early settlement of marking fee issue. Like in the past meeting PAAPAM in the December 8 meeting again expressed serious concern over non acceptance of budgetary proposals by the FBR and Ministry of Finance and

requested EDB to pursue the matter with the FBR to ensure implementation of proposals in totality, as all the proposals made earlier are still valid. EDB would follow up with FBR on this issue. On local assembly and manufacturing of electric car, General Manager Tariff informed the 5th meeting that M/s. Karakoram Motors had approached the E D B to allo w imp or t o f items/components of Dynasty Electric Car at zero rate of customs duty. In this regard the EDB before taking any decision has requested AIDC to give conceptual approval of the project. Majority of the members have showed reservations on seriousness of the company based on their past experience. AIDC approved the concept of electric car project subject to reviewing the complete technical details of the project.

In the 6th AIDC meeting, the management again made presentation on the Electric car project. The participants after presentation raised enquiries on price of the car, duty on components, how electric car would help in energy conservation as such the project is good for the countries where alternate source of energy is freely available, support required from the government, life of the battery, competency of AIDC to deal with such project, local

manufacturing of parts etc. Representatives of Karakoram Motors replied that price of the electric car would be around Rs800,000. Duty on parts and components would be around five to 15 per cent or few parts would be 30 per cent. Overall duty element in car price would be around Rs 150,000200,000. Electric car would almost have zero per cent emission. In other countries support is available at the sale stage in the form of subsidies. In India, British Pound discount is available to electric car which is exported to the UK. Charging of Electric car would be through front plug-in system initially at home and subsequently government might establish public charging stations at different parts of the city. Normally electric car would have 10km reserve indication to alert the owner for a recharge. Life of the battery would be 800 days and up to five years in case of lithium battery. Initial localization level would be around 50 per cent. The House formal ly approved the concept of the project. It was decided that the company will identify exact i nc en t iv es r e q u ir e d f r om t h e government. The House decided to further review the project in the next meting of the AIDC. On holding of AIDC meeting, on the request of PAAPAM members, the next AIDC meeting will be held on or after January 18, 2011. EDB along with some other participants were of the view that the AIDC meetings can only be meaningful after PAMA and PAAPAM submit their progress reports in this resp ect which both jointly have promised to finalize by February 15, 2011. However, PAAPAM stressed to have monthly meeting or at least one more meeting after one month……..

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Automotive Sector - Update

Car Assemblers decry relaxation Car prices in the country have not increased more than five to six per cent over the past year, whereas the cost of production has increased manifold and been absorbed by car manufacturers, says Director Marketing Indus Motor Company Raza Ansari. “One should also look at the problems faced by local manufacturers, who are in losses due to an unprecedented increase in production costs,” asserted Ansari. He was talking to Press in reference to the government notification issued which increased the age limit of imported used cars from three to five years. The move is expected to hit local assemblers hard as the import of used vehicles is likely to go up. Purchasers, on the other hand, will benefit in the form of lower price tags and more options to choose from. “This will c erta inly h it all lo ca l c ar manufacturers, but most importantly it will badly affect local vendors who supply parts to as semblers,” said Ansari. Manufacturers have been repeatedly

asking the government not to increase the age limit for import of used vehicles but the government has been under pressure from the public as prices of locally manufactured cars have been increasing sharply for the last few months. De al er s v e rsu s m an uf ac tu re rs Ansari said that all thr ee big car manufacturers are fa cing tough conditions owing to a difficult business environment. The Pakistani rupee has been depreciated 17 per cent against the Japanese yen over the last one year, bumping up the cost of production. “Should we support car manufacturers who provide employment and taxes to the government or automobile dealers who do not pay taxes,” he questioned. Meanwhile, car dealers assert that the sharp increas e in pr ices of loc ally manufactured cars was mainly due to the high margins of manufacturers. “We do not have any objections over pr o po s a ls t o br in g m o r e ca r manufacturers to the country,” countered Ansari, in reference to the government’s

Age relaxation Govt considering including all vehicles The government is considering opening up the country’s automobile industry, particularly for investors from China, by increasing the age limit for import of all used vehicl es, incl uding buses, coaches, wagons, trucks and tractors. It has been learnt that after the age limit for the import of used cars was relaxed to five years, Minister for Industries and Commerce Mir Hazar Khan Bijarani directed his ministry to prepare a proposal for increasing the age limit for import of other vehicles, except motorcycles and th ree-wheelers. According to officials from the ministry for industries and production, the summary of the proposal has been sent for approval to the Cabinet’s Economic

Coord ina tion Committee (ECC). For initiating the immediate production of cars, the ministry has also offered to provide bases in state owned enterprises (SOEs). Chinese and other investors can partner with these SOEs under a mutually agreed equity basis. The proposal also allows reduced customs duties on the import of cars and parts for new entrants. The government claims that it is keen to break the monopoly of local car manufacturers and to rationalise the prices of cars. Therefore, the government says that it is willing to open its auto ind ustry for oth er international competitors and for China in particular.

visit: www.automark.pk AUTOMARK | January-2011 16

proposa ls to s often inves tm ent conditions, for example by reducing annual production criterion from 500,000 to 100,000 units. What analysts say “Based on our preliminary estimates, we expect that an additional 5,000 cars could be imported during this fiscal year if the decision is implemented within a few weeks,” commented Furqan Punjani from Topline Securities. According to Punjani, of the total 150,000 cars sold during the previous fiscal year, only 5,500 were imported vehicles. “Going forward, the import of cars can go up to between 10,000 and 13,000 units.” He contrasted the current move with the similar situation three years back when the import of cars up to five years of age was allowed. Given the prevalence of low consumer confidence, higher imports can be ex pected in the 1,000cc- 1,300c c segment where Pak Suzuki and Indus Motor are likely to be affected.

PAAPAM hails withdrawal of SRO for used cars’ import Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) hailed the Commerce Ministry decision to withdraw December 8 SRO regarding used cars import under personal baggage, gift and transfer of residence schemes. A former executive committee ember of PAAPAM, Tahir Javaid Malik said the decision would go a long way and local vending industry would get a new lease of life. He said the permission to allow five-year old cars was bound to damage local vendor industry. He said the vendors were deeply concerned that new entrants could be allowed to import 100 percent CKD parts at 5 percent, 10 percent and 20 percent rates of duties in the first, second and third years respectively. staff report

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From Past to Present

Automobile Industry in Pakistan

Mr. Javaid Iqbal Ahmed, Director of Honda Atlas Cars (Pakistan), said in a recent interview that an increase of three per cent in sales tax, 2 to 15 per cent additional CVT and eight per cent customs duty will result in lowering the government revenues by Rs.5 billion. Nine plants were in operation when the industry was nationalized in 1972 and Pak is tan Automobile Corporation (PACO) set up. It was only after 1979 that PACO was finally able to implement its programs to develop the automobile industry. To meet local requirements, PACO launched the Suzuki Project, which started production in 1984. In 1991, Suzuki was manufacturing 40,846 cars per annum and the deletion rate achieved was above 50 per cent. For transportation of smaller loads, PACO units started the assembly of Suzuki, Isuzu and Mazda pickups, coasters, jeeps and vans. To meet the demand for heavier trucks and buses, Isuzu and Hino production was undertaken at National Motors and Republic Motors. Later Hinopak Motors was incorporated in the private sector. In 1987, Ghandara Nissan Diesel Ltd., a joint venture company of Ghandara Nissan (Pvt) Limited, Nissan of Japan and Toyo Menka Kaisha of Japan started commercial production. The company manufactures Nissan trucks and buses in Pakistan and is about to introduce passenger cars soon. In 1990, Indus Motor Company (IMC) began operations with a 20,000 unit capacity plant to manufacture Toyota cars in Pakistan. In 1992, under the privatization program, many PACO units were privatized. Since then, the gover nment poli cies in respec t to the automobile manufacturing industry remain inconsistent; its efforts to control the budget deficit have also slowed down development activities resulting in a reduction of economic

activities. The economic slump still prevails; sales tax and other budgetary measures over the last years have proved to be unfavorable for the local auto industry. Not with standing various attempts by the Automobile industry to recommend a long term industry friendly policy to enc ou rage local pr od uction a nd ind igeniza tion, t he gover nm ent continues to burden this industry by increasing tariffs, sales tax from 15 to 18 per cent and additional Commercial Vehicle Tax (CVT). Mr. Javaid Iqbal Ahmed, Director of Honda Atlas Cars (Pakistan), said in a recent interview that an increase of three per cent in sales tax, 2 to 15 per cent additional CVT and eight per cent customs duty will result in lowering the government revenues by Rs.5 bil lion. Besides that, the production cost of the units would go up, resulting in a further price increase. The compound effect of these taxes is so high on the price of the products that either it will result in a drop in the volume of sales or will soak up the profit margins of these units. As compared to international Scenario the Japanese, Europeans and Americans are pouring billions into Asian assembly plants and parts factories. They are counting on politically connected local partners, settin g up d ealersh ip s, conducting market research and creating promotional campaigns. During 2008, Pakistani rupee showed a severe depreciation against major currencies, especially US dollar and Yen that appreciated by 28% and 58% respectively, adversely affecting the auto

AUTOMARK | January-2011 17

sector. The unexpected appreciation of yen resulted into r ising cost of production for the auto assemblers in the country and stock pileup. However, Increase in selling prices was not sufficient to cover the hiked cost of production. The overall trucks & buses market showed a decline of 42% during 2008-2009, with total of 2626 units sold from Ju ly 08 to March 09. The economic situation may well be seeing a turnaround in the country and expect some big orders in the public and private sector including UTS Lahore, WASA, and Rescue tenders. Recently an order of 50 units of CNG buses from City District Government Karachi and 50 units of Hino Dutro trucks from City District Government Lahore have been awarded to us. But still the overall auto industry slump recovery seems to be a long process due to various macro economic factors, including tight liquidity, and lower credit availability, slower GDP growth rates and the current depressed consumer consumption. Though the challenge is serious, we are hopeful that this phase will be reduced with the passage of time. It is the responsibility of the economic masters to show professionalism and maturity during these hard times. The uplift of auto sector will also depend on the ability to develop and produce a wide range of superior quality vehicles for our markets, strong bond with major suppliers, reduction in p rodu ction costs, and fi nanci al developments for capital investments.

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Automotive Sector - Review

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from NED University

The “Pickup” in the News Toyota Hilux This vehicle does not need any advertisement campaign that we see now days on television; it just reminds everyone about the legacy of the vehicle that exists & is to remain.

Toyota is a brand name recognized globally. The company itself evolved in the year 1936 & since then it has looked ahead & “Moved forward” as its own slogan defines its progress well. As far as sales are concerned Toyota finds itself at the very top. From North America to Europe & from Middle East to Asia, Toyota has invaded each & every terrain & has been successful, keeping the prime objectives of providing quality along with affordability. A vast & diverse range of vehicles area available in the lineup of vehicles that roll out with Toyota’s badge upon them. Amongst the vast variety of brands that have a rich history of Toyota’s supreme reliability & workability in any condition, Hilux finds itself amongst the top brands, if not right at th e top. Hilux is a compact utility pickup truck produced since 1968. Just like other Toyota brands, since its introduction four decades ago, its evolution has not stopped. It is justified if said that Hilux has mastered & God fathered the pickup truck category with implementation of continuous research. The Hilux is renowned for its supreme & sturdy r eli ab il it y c h ar a ct eri st ic s. T h e engineering that makes up the Hilux is simple & easy to understand yet it

incorporates the research of very latest technology & this fact takes the Hilux ahead of any other counterpart. Many components of the vehicle are easily modified of replaced if necessary to suit the terrain it is desired to be used on, without changing th e drive ch ara cter istic s of th e vehi cle. Globally the Hilux is available in multiple engine configurations, in accordance to the respective regions customer & market needs. Engines of the Hilux are fitted with a turbo charger or a combination of intercooler & turbo charger to enhance the performance & encounter the lack of air in higher altitudes. Very recently advert movie has been launched on local television by Indus Motor Company, previewing the Hilux. The local Hilux has a 2KD-FTV engine, displacing 2.5L, producing 100bhp & 260Nm torque. The engine features direct fuel injection technology for all four 4 cylinders, that is why it is named D-4D. The drive train of the vehicle has a 4x4 option that makes it a perfect offroader. Tests by several authorities & television motor shows have proved the off roading capability of the Hilux, making it a “go anywhere” utility vehicle. The vehicle is available locally in 2 options. The standard 4x4 & the up spec 4x4. The standard version has a starting price of around 2,350,000 pkr & the upspec is available for 2,750,000 pkr. Safety features incl ude ABS & two frontal SRS Airbags, both of these features are available as an option in the up-spec version; however the 15” frontal disc brakes ensure very efficient braking effect even without ABS. The overall safety performance in case of collision (frontal & side impact) or roll-over of

AUTOMARK | January-2011 20

the vehicle gets 4 star safety ratings from Automobile safety authorities. The interior of the vehicle is very basic yet it is a nice place to be. T he front passenger cabin is very spacious & comfortable & has utility spaces for bottles, cup holders & storing different stuff. The rear seats however do not fit the comfort standards that well & are not ideal at all for long drives; however the seats can be utilized for storing stuff beneath them. Another feature includes the touch screen DVD audio system which is available only in the up-spec version as an option. All in all if an individual is ready to invest over 2 million pkr for an automobile, he must go for the up-spec version of the vehicle, as it provides every option all the way from safety to luxury. The overall characteristics of the vehicle are ideal for northern mountainous r eg i ons of Pa ki st a n; h ow ev er enthusiast’s nationwide find will find it as an option for a means of touring any terrains across Pakistan. Hilux has been a famous brand for over two decades in Pakistan & it continues to be a dominator in its class. No rival can even come close to the standards the vehicle has offered for almost half a century. This vehicle does not need any advertisement campaign that we see now days on television; it just reminds everyone about the legacy of the vehicle that exists & is to remain. Hilux is a must buy for the people who seek a vehicle in this particular category. Cheers!

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by Sabir Shaikh - Chairman APMA

Rise and Fall of local motorcycle industry from 2001 to 2010 The real boost in bike sales came in the Musharraf era owing to liberal policies of allowing Chinese bike makers aimed at providing cheap bikes to the consumers besides breaking the monopoly of a leading bike maker in 70cc category.

Irrespective of the business environment p revailing in the Army and the democratic set ups in the country from 2001 to 2010, the two wheeler industry has performed exceptionally well as compared to other engineering sectors. Pakistan had witnessed several political changes. General Pervaiz Musharraf took over country’s control in 1998 by ousting Nawaz Sharif government. Musharraf stayed till 2007. A democratic government of Pakistan Peoples Party (PPP) came into power in 2008. Benazir Bhutto lost her life in a suicide attack in Raw alp indi in December 20 07. From 2001 to 2010, consumers continued to buy two wheelers especially in rural areas where the share is over 60 per cent in total bike sales depending on good yield in var ious crop s. Because of unsatisfactory public and private transport system in the cities, consumers were more interested in

purchasing two wheelers in order to reach the place of work more quickly rather than wasting time in traffic congestion. Japanese bikes are more popular in rural areas because of their durability while Chinese bikes hold good population in urban areas especially in the mega city Karachi. The real boost in bike sales came in the Musharraf era owing to liberal policies of allowing Chinese bike makers aimed at p roviding cheap bikes to the consumers besid es br eaking the monopoly of a leading bike maker in 70cc category. Because of the fact that Japanese bikes were highly priced – consumers received a sigh of relief with the introduction of Chinese bikes owing to a difference of Rs 15,000-20,000 as compared to Japanese bikes. However, the Engineering Development

AUTOMARK | January-2011 21

Board (EDB) had created a lot of hurdles on the dictation of a Japanese bike maker but Chinese bike makers sailed smoothly. A tough time had come in the Zardari government when overall motorcycle production had plunged to 917,628 units in 2008-2009 as compared to 1,054,102 in 2007-2008 owing to looming political and economic uncertain ty, rupee devaluation against the dollar, some low production of various crops, increase in bike prices etc. The year 2009-2010 proved highly beneficial for both Chinese and Japanese bike makers of achieving the production of 1,387,000 units thanks to good crop of wheat, cotton, rice and some minor crops besides some political and economic stability in the country. The prices of bikes especially Japanese of makes had been raised sharply owing to rising Yen against Pak rupee, increase

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in sales tax and other levies, raw material prices etc in the last three years but it did not make any big impact on sales. The current fiscal year 2010-2011 has not been so impressive in terms of sales and production as compared to 20092010 owing to floods from July to October in 2010 in Khyber Pak htunkhawa, Punjab and Sindh mainly, destroying land and crops etc. Sales of bikes remained under pressure from July to October 2010 but started recovering from November 2010. The year 2010 also see frequent price hike mad e by J apanese bike m ak ers. If the industry is compared with India bike industry, Pakistani industry lack far from the Indian industry where 70cc

two wheelers had been suspended several years ago. In Pakistan 70cc had been dominating for decades and no efforts were made to do away from its production. Consumers are still using 1993 made 70cc bike design introduced by Atlas Honda which was followed by the Chinese bike makers. Those companies having volume are not ready to take the risk of changing the designs as it will c ost more and may lose h eavy investments in case the end users do not like it. Some Chinese bike makers having low volumes are venturing to bring new design CD-70cc in order to test the taste of consumers. Even in 100cc and 125 cc, a leading

Year 2001 - CBU Rate of Duty on Motorcy cles 105% This rate is applicable since last 20 years (from 1981) CKD Rate of Duty on Motorcycle Parts 25% - Government Policy for motorcycle industry Deletion Program - Checking Department on Motorcycle Industry by EDB/CBR - Number of Assemblers: 3 Japanese and 3 Chinese: Total=6 - Association: PAMA with only 3 Japanese were members.

Year 2002 Finance Minister Shaukat Aziz reduced CBU rate of duty in the budget 2001-2002 from 105% to 75% after two weeks on the request of Atlas Group and PAMA. Finance Minister increased CBU r ate of Du ty fr om 75 % to 90%. - CKD Rate of Duty on Motorcycle Parts 25% - Government Policy for motorcycle industry Deletion Program - Checking Department on Motorcycle Industry EDB/CBR - Number of Assemblers: 3 Japanese, Honda, Yamaha and Suzuki. 3 Chinese, Sohrab, Qingqi, and Hero Many Motorcycle Dealers including Babar Autos, Sitara Auto Impex, Moon Traders from Karachi and Lahore started Importing CBU Motorcycles from China due to duty reduction by the Government from 105% to 90%. - Government introduced PSQCA laws for motorcycle industry. Many motorcycle dealers who also became importer of CBU motorcycles started local assembling of motorcycles such as:-

1. 2. 3. 4. 5.

Rocket Motorcycle Guangta Motorcycle Star Motorcycle Jinan Motorcycle Super Star Motorcycle

These five companies started local assembling of motorcycles but the EDB stopped them for manufacturing because they told them before starting assembling you must have to approve Deletion Program from EDB.

Japanese player is producing same old design. Only stickers of petrol tank and side covers have been changed rather than making a complete change in design. Chinese bike assemblers said that the government should reduce the import d uty on CBU bikes so th at the assemblers could bring the new design models from their parent companies abroad in order to test the market. However, Atlas Honda had introduced Euro II models in 100cc segment. Here is a journey of motorcycle industry from 2001 to 2010 that faced ups and downs during the decade.

Local Assemblers established their own association namely Sindh Motorcycle Assemblers Association â&#x20AC;&#x201C; SMAA and Muhammad Sabir Shaikh was the First President of local motorcycle assemblers.

Year 2003 - CBU Rate of Duty on Motorcycles reduced from 90% to 75% -CKD rate of duty reduced from 25% to 20% - Govt. approved 4 motorcycle assemblers to start local assembling in the same year government again approved 3 motorcycle assembler to start production. - Number of vendors / parts manufacturer increased from less than 100 to 125 units. - Motorcycle sales increased in Pakistan. - Japanese assemblers reduced Rs. 10,000/- on their motorcycles -The 70cc Motorcycle price comes down to Rs. 70,000/- Rs. 49,900/- Local assemblers became eight after approval of EDB.

Year 2004 - CBU Rate of Duty on Motorcycles only 75% - CKD Rate of Duty on Motorcycles incre as ed 30% - Govt again approved 10 motorcycle assemblers in this year - Number of vendors/parts manufacturer increased from 125 to 200 units. - Near about sixteen motorcycle assemblers started production of 70cc bikes.

Year 2005 - CBU Rate of Duty on Motorcycles only 75% - CKD Rate of Duty on Motorcycles increased to 30% Number of approved Assembl ers closed to about 60 - Very tough completion started and near about 20 motorcycle assembling units came on verge of collapse - Total motorcycle production increased to 375,000 units - Govt started making draft to close chapter of deletion program

AUTOMARK | January-2011 22

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Year 2006 - CBU Rate of Duty on Motorcycles 75% - CKD Rate of Duty on Mo to rcy cl es increased 30% - Govt closed the policy of auto sector of deletion program - Govt introduced Tariff based system (TBS) to auto sector through SRO655/2006 and SRO 656/2006 and an other SRO693/2006 - Due to new policy assemblers were very happy and black mailing of EDB/CBR was closed. - As many as more than twenty small and medium-sized units across the country were nearing closure and the manufacturers feared that their small-sized units would be in jeopardy by July this year 2006. Vice Chairman Muhammad Sabir Shaikh of Association of Pakistan Motorcycle Assemblers (APMA) said that some 22 out of 38 units had been compelled to shrink their business volumes in the wake of rising competition, nonimplementation of TBS and largely provided credit facility by the big manufacturers to the dealers. At that time most of the companies had cut down the size of their employees and have fired 50 percent of the staff members as these units are small in size and could not spend too much on employees salaries. “Giant – sized companies manufactured their motor bikes in bulk quality and engaged in offloading their stocks aggressively into the markets besides offering special and attractive packages to their dealers, which small assemblers could not afford. Some financially sound companies were throwing their units into the market and conveyed to their dealers to sell their products either on full cash or through leasing. The smallsized motorcycle manufacturers were perplexed over the situation in which big companies were launching new models and designs, while, they (small-sized assemblers) were fighting for their survival. On the one hand, Chinese bike makers were competing with big companies by improving our product’s quality and design, while on the other hand, the prices of our products have also declined significantly from Rs. 36,000/to Rs. 32,500/- per unit during the past four to five months due to stiff completion. In these circumstances TBS was coming thus creating fear that the big companies would slash their products prices more significantly this time resulting in losing the market share. The aggregate investment in the motorcycle industry had reached to Rs. 5 billion, while the units which were near to closure at this point in time, got the license and had invested approximately Rs 50 million each some three years back. US AID and independent agency through CSF made a progress report on Motorcycle Industry of Pakistan.

companies started big fraud with the government through officially tax evasion by using different import formula for localized parts also and importing parts instead of 47.5% by paying only 5%, 10% and 20% using sub-component, component and sub-assembly term it was a big joke in motorcycle parts history because up to 150cc motorcycle it was not a very big technology it was same as engine less cycle or toy.

Year 2008 In Pakistan due to many motorcycle assemblers and price reduction the import of CBU motorcycles were stopped because 65% duty was very high and if any importer imported motorcycle paying 65% custom duty cannot survive in the market. The very important point is that if we import small car in Pakistan the CBU rate of duty is 50% and if we import motorcycle the CBU rate of duty is 65% why? In this year due to government’s change in Pakistan the dollar price was increased from Rs. 62.00 to Rs. 83.00. It was a big shock to all industry including motorcycle sector of Pakistan.

Year 2009 Due to very high rate of US$ the motorcycle industry was in trouble because more than sixty players were in the market and all of them were making 70cc motorcycle and the whole sale price was Rs. 36000/- and the retail price was Rs36500/and no profit to motorcycle assemblers, electricity problem, gas problem, law & order problem etc. Due to very tough competition this year assemblers were in trouble but the good news was that many assemblers started export to Bangladesh, Afghanistan and some other countries of the world.

Year 2010 In the year 2009-10 all motorcycle assemblers produced record around 1.4 million motorcycles out of this 3 Japanese assemblers produced 622,000 units and all other Pakistani Assemblers affiliated with Chinese companies produced 778,000 units which was more than 60% of total production. Japanese assemblers were producing 40% of the market. Local Chinese bike assemblers were producing 60% of the market. EDB is still same attitude and not inviting local assemblers in the policy matters and Japanese assemblers have influence in the EDB directly and through PAMA and all the policy matters discussed with PAMA members and not local assemblers through their association APMA.

Decision by APMA Managing Committee for the year 2011

Year 2007 CBU rate of custom duty on motorcycles 65% CKD rate of duty on non localized parts 15% CKD rate of duty on localized parts 47.5% Raw material rate of duty 0% Sub Component (%) 5% Components 10% Sub assembly 20% Through new formula / structure of custom duty in TBS big

- If PAMA and PAAPAM including EDB interested to make some consensus on new policy for auto sector including motorcycle industry and they want to discuss all these issues with Mr. Muhammad Imtiaz Ahmed Ex-Chairman APMA but they must have to call newly elected Chairman APMA for the year 2011 Mr. Muhammad Sabir Shaikh for all the discussions otherwise 60% producing industry will not happy with new policy.....

AUTOMARK | January-2011 23

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Exclusive Review Due to very high rate of CBU duty on motorcycles the imported motorcycl e business is closed in Pakistan. The small cars CBU duty in Pakistan is 50% but on motorcycles CBU duty is 65%. If Govt. reduced CBU rate of duty on Motorcycles from 65% to 45% it is guaranteed that not more than 2% of total Pakistan production will be import in Pakistan. The government must reduce CBU rate of duty on Motorcycles from 65% to 45% because this is in the favor of Pakistani motorcycle industry t o i ntr od uc e m ore mod el s/d esi gns aft er c hecking / test ing th rou gh CBU im port s. All over the world including China, India, Japan, Thailand and many countries have more than 100 models / designs in motorcycle industry but we have only 3 models / designs in Pakistan motorcycle industry.

Sourc: PAMA AUTOMARK | January-2011 24

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Agriculture Sector - Milestone

Al Ghazi Tractors win prestigious Quality Crown Award Al Ghazi Tractors Ltd, an Al-Futtaim group company and Pakistan's leading agricultural tractor manufacturers, was named winners of the 2010 B.I.D. International Quality Crown Award during the awards ceremony held in London recently. A GT L w a s ho nou red for th eir noteworthy commitment to quality, excellence and innovation at the International Quality Crown Convention in front of an august gathering of leading companies from 43 countries. The B.I.D. International Quality trophy is presented to those companies from around the world that best adhere to excellence and innovation in their practices, putting quality first. Parvez Ali, Chief Executive Officer, AGTL received the award from Jose E. Prieto, President of Business Initiative Directions, who applauded Al Ghazi Tractors strict adherence to quality practices and innovation. Robert Willett, Group CEO, Al-Futtaim, said the prestigious award is a true reflection of the company's sustained benchmarking qualities for excellence and innovation, and congratulated Mr. Ali for keeping the Al-Futtaim group standards high. "The award is a rare distinction and speaks well of Pervez's leadership and how the global business community views AGTL. Pervez has put strong valu es of qu ality and cu stom er satisfaction which has helped reap him rich rewards. This award is truly deserved and will serve as a role model for other companies in the Al-Futtaim enterprise. On behalf of everyone in the Group, I congratulate Pervez and his team for this great achievement and wish him more successes," Mr Willett said. B.I.D.'s International Quality Crown Hall of Fame has Fortune 500 list companies including India's Reliance Industries & Reliance Energy (ranked 206); Indian Oil Corporation Limited (116); Korea Electric Power (245) and Beijing COFCO Plaza Development (398). Other firms worthy of mention include Turner Construction (USA);

Plamex-Plantronics (USA); and giant from USA-Mexico, Franklin Electric, Viking Line (Finland); Alcoa Howmet (France); Haki (Sweden); Ansaldo Energy (Italy); Zepter (Austria); RAOUnified Energy Systems (Russia); Als & Cachou-TBWA (France) and Tata Group (India). Len Hunt, President, Al-Futtaim Automotiv e an d Chairman AGTL, commented: "AGTL led by Pervez serves as an example for other companies that wish to progress in the constantly changing and challenging economic and business environment. His leadership inspires the rest of Al-Futtaim's automotive division to abide by the same high standards of quality. Kudos to Pervez and his team!" The Quality Crown award is among a slew of top notch awards won by AGTL this year (2010) including the Top Companies Award of the Karachi Stock Exchange, Corporate Excellence Award of the Management Association of Pakistan, Best Annual Reports Award of t h e I nst it u te o f Ch a rt er ed Accountants, Best Presented Accounts Award of SAFA-South Asian Federation of Accountants and the Best Calendar Award of the Natio nal Council Of Culture and Arts. Mr Ali said: "I'm indeed excited that AGTL to day stands among global stalwarts in the business world. I wish to thank our business partners and AlFuttaim for giving us the support and commitment. Our attitude - striving for constant change instead of just accepting the status quo - continues to win us global accolades and this major feather in our cap will spur us to greater glory."

About Al-Ghazi Tractors Ltd Incorporated in June 1983, privatised in December 1991 and listed on the Karachi Stock Exchan ge, Al-Ghaz i Tractors Limited is part of the AlFuttaim group with over 94% foreign shareholding. With its head office in Karachi, the AGTL plant at Dera Ghazi Khan manufactures New Holland (Fiat) tractors in technical collaboration with

AUTOMARK | January-2011 25

CNH - Case New Holland, the Number One man ufacturer of agricultural tractors in the world. AGTL was the first automobile company in Pakistan to earn the ISO-9000 certification. With yearly audits the company is now registered for ISO-9001:2008 up to December 30, 20 12. A GT L w as also th e fir st automobile company in Pakistan to introduce a high profile ERP solution to put the IT process in full circle. Commissioned in January 2002, this complete ERP thus inter-links al l processes and supports company's wider strategic objectives. With mechanisation of farming and water conservation high on the Pakistan government agenda, AGTL now offers smart irrigation solutions in technical collaboration with world renowned companies.

About Al-Futtaim Established in the 1930s as a trading business, Al-Futtaim is one of the most progressive regional business houses headquartered in Dubai, United Arab Emirates. Al-Futtaim operates through more than 65 companies across sectors as diverse as commerce, industry and services, employing in excess of 20,000 people across the UAE, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, Egypt, Pakistan, Sri Lanka, Syria, Singapore, Malaysia and Europe. Entrepreneurship and rigorous customer focus has enabled Al-Futtaim to grow its business by responding to the changing needs of the customers and societies in which it operates. Al-Futtaim is committed to offering customers an unrivalled choice of th e world's best brands with exceptional standards of customer ser vice and after sales su pport. Stru ctured into five oper ational divisions; automotive, retail, electronics, engineering and technologies, real estate and construction, and financial services, Al-Futtaim maintains a decentralised approach, giving individual businesses flexibility and versatility to maintain a competitiv e stance . This benefits employees, providing a clearly defined work culture where individuals are emp ow ered w it h a uth or ity and responsibility for th eir work.....

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Autmotive Sector - Update

Car manufacturing China invited to establish plant The Ministry of Industries & Production (MoI&P) offers the Government of China for establishment of the plant of electric cars manufacturing in its Export Processing Zones (EPZs). Pakistan invites Chinese investors to set u p such a facility in the Export Processing Zones (EPZs) with a view to target the Middle East market which in addition to having close proximity to Pakistan is a Trans-shipment hub for re-export to other countries of Middle East, Far East, Africa, Europe, America and Central Asia. Best locations for establ ishment of such a plant are Karach i and Gwa dar. Attractive incentives for manufacturing in Export

Processing Zones are that an import of all the inputs for manufacturing in the EPZs are exempt from all duties and taxes for the purpose of exports and from this zone is on 0% duties. More incentives over and above available to Petrol or Diesel cars for such a project are al so under consideration. It is pertinent to mention here that the Chinese government is determined to become a w orld leader in green technology and it plans to invest billions of dollars over the next few years to develop electric and hybrid vehicles. According to av ailable information China has plans to have 5 million electric cars on the roads by 2020 which

accounts for 35% of the global electric vehicle market. Presentl y a local entrepreneur has set up a facility for manufacturing of Electric car with the name of Karakoram Motors Company at Karachi. The plant has been relocated from Canada. This facility is basically intended for export and local market. T h e c omp a ny h as su c cess ful ly manufactured a prototype of electric car. Government of China as a joint venture with this (Karakoram Motors) Company or with 100% equity may explore possibility of making Pakistan h u b of a ctivi ty in t he field of manufacturing and marketing electric cars in this region and beyond.....

Pama flays new entrant policy The Pakistan Automotive Manufacturers Association (Pama) has strongly objected to the proposed 'unprecedented preferential treatment' to the newcomers at the cost of the investment already made by the existing original equipment manufacturers (OMEs). At the same time, it has suggested that if the government wants to facilitate new entrant, it can provide facilities like soft loans, land, infrastructure, etc, to the new entrants, which may not hurt the existing players. In a letter sent to Finance Minister Dr Abdul Hafeez Sheikh on Dec 31, PAMA referred to reports that the government is planning to further relax the New E ntr ant P oli cy (A u to Ind u str y Investment Policy), contained in Auto Industry Development Program (AIDP). PAMA members welcomed the addition of new OMEs to Pakistan's auto industry as "healthy competition always results in increase in the market size and benefits the consumer and the local vendor industry." However, giving an undue and unfair edge to the new entrant will damage the investment already made by existing OEMs. The AIDP provided facility to a new entrant

to import 100 percent CKD kit at a concessionary rate of 32.5 percent for three years without using any locally made component. Again, PAMA, referring to reports, said that the government has further relaxed this new entrant policy by allowing import of 100 percent CKD at 5 percent customs duty in the first year, 10 percent duty in the second year and 20 percent duty in the third year, "which is worrisome for our members as it provides unequal opportunity for new and existing players." To support this policy change, it is cited that the existing OMEs, wh en they star ted th ei r o per a ti ons, als o enj oye d su ch concessions, which is inaccurate and could be confirmed from the ministries' records, PAMA said. It further emphasised that no existing OME enjoys the privilege of importing 100 percent CKD. There was a Product Specific Deletion Program (SPDP) which h ad to be follow ed with initial localisation. Later, the system was replaced with Industry-Specific Deletion Program (ISDP) which was followed before the current Tariff Based System (TBS). New entrant or introduction of

AUTOMARK | January-2011 26

new mode by existing OEM enjoyed same treatment. To update, initially in the ISDP (first edition from 1996 up to June 2001), the new entrant was supposed to start at the industry level of localisation achieved in the previous year, which used to be 2 percent less for 800cc, 3 percent less for 800 to 1000cc and 4 percent less for above 1200cc. This was followed by the current Tariff Based System (TBS). Later in the second edition of ISDP i.e., from July 2001 to 2005, deletion level for new entrants was further relaxed to 6 percent less than the existing deletion target but had to catch up with the industry level in two years, and half of which was to be done within the first year. Thus, in no case duty concession was allowed to the existing OEM when t h ey sta r ted th ei r op er a ti ons. In the light of above, PAMA submitted that the new entrant po licy in its proposed form is discriminatory and the same may, therefore, be modified so as to give level playing field to all players, the existing and any new entrant in the automobile sector....

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Automotive Sector - Update

Press Conference

Consistent policies to stimulate investment in auto industry CEO Indus Motor Corporation (IMC), Pervaiz Ghais, said that the government wants to lure new car manufacturers but at the same time it is encouraging car imports. Director Marketing IMC, Raza Ansari, said that local automobile manufacturers have been working aggressively on AIDP to bridge the supply and demand gap which has been reduced to zero and cars of IMC are available with its dealers. Consistent and longter m policie s are necessary to ensure further investment in th e au tomobile se ct o r, Di r ec to r G en er a l P a ki st a n A u t om o t i ve Manufacturers Association, Abdul Waheed, said on Jan uary 7, 2011. In a media briefing, Waheed said that automakers would welcome new car manufacturers or original equipment manufactu rers (OEMs) as it w il l strengthen the auto industry with handsome investments and a healthy competition. The government should facilitate new entrants with soft loans, land provision and infrastructure development instead of deviating from the Auto Industry Development Plan (AIDP), he added. He explained that OEMs are importing components, which are not produced in the country, at 32.5 per cent duty. However, if they import any components that are produced in the country they would have to pay a duty of 50 per cent. “It is an agreed arrangeme nt that protects rights of local vendors,” he said. However, if new entrants are allowed to import 100 per cent components at 32.5 per cent duty for some years, it will severely affect the business of local autopart vendors and will also give an edge

to the new entrants over exis ting manufacturers. He said that a proposed policy has relaxed customs duties for new entrants allowing them to import completely knocked down (CKD) kits at five per cent duty in the first year, 10 per cent in the second year and 20 per cent in the third year, which will deny a levelplaying field to existing manufacturers, besides pushing auto venders out of business. CEO Indus Motor Corporation (IMC), Pervaiz Ghais, said that the government wants to lure new car manufacturers but at the same time it is encouraging car imports. Director Marketing IMC, Raza Ansari, s ai d th at lo ca l a ut o m o bi le manufacturers hav e been working aggressively on AIDP to bridge the supply and demand gap which has been reduced to zero and cars of IMC are available with its dealers.

AUTOMARK | January-2011 00 27

Ansari said that pr ices of some important inputs such as steel have increased 26 per cent over the last two yea rs, w h ile Ja pa nese yen h as appreciated by 22 per cent and the US dollar by six per cent. However, IMC has increased its vehicle prices by only seven per cent during the perio d. He claimed that many IMC variants being produced in Pakistan are cheaper than those in India and Thailand. Ansari said that implementation of AIDP will help the government support the ailing economy as the local industry will not only save foreign exchange but will al so provide more revenues th an imported vehicles. Meanwhile, car importers met President Federation of Pakistan Chambers of Comme rce an d Industry (FPC CI), Senator Haji Ghulam Ali, on Friday to raise their concerns. Ali assured the delegation of All Pakistan Motor Dealers Association (APMDA) that he will discuss the issues in the Senate and at government level. After allowing imports of five-year-old cars, the government abruptly scrapped its decision in less than a month, sparking worries among car importers who have already purchased used cars worth Rs5-6 billion......

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Social Community Responsibility Servicesâ&#x20AC;&#x201C;- Event Event

DuPont helps upgrade CDA's fire systems I would like to thank Mr. Ahsan Ali Mangi, Mansoor Ahmed Khan - Directorate Emergency & Disaster Management and the entire CDA team and our special thanks to our distributor Escorts International for their generous support and financial contribution to this program," said Kamran Khan, Business Manager, DuPont Protection Technologies.

DuPont Pakistan Operations (Pvt.) Ltd., under a community fund programme, h as r ec ently up g ra ded Ca pi ta l Development Authority (CDA) FHQ's control room in Islamabad. Under this programme, DuPont renovated CDA fire house and contributed Nomex(r) heat and flame-resistant suits, fireman gloves and hoods, fireman Tychem(r) C & F chemical protection suits. In this connection, a formal ceremony took place at the CDA Emergency & Disaster Management headquarters "I am really thankful to DuPont for taking this initiative. They have helped us by upgrading the CDA fire station. Our firefighters wil l now be better equipped with DuPont suits, an excellent material when faced with acute fire situations. With recent incidences of air craft crash and ot her crisis, contributions by DuPont will enhance efficiency. The current system needs help and I am grateful to DuPont. We hope to see continued support from them in the future too. I would also like to thank and congratulate al l our

firefighters for their hard work and dedication," said Mr. Shaukat Ali Mohmand - Member (Administration), Capital Development Authority. "Safety and protection, as well as our other core v al u es of re sp ec t f or p eop l e, environmental stewardship, and high ethical standards, are at the heart of everything we do at DuPont. These firefighters are our real heroes of the country that serve our community and provide saf ety and protectio n to thousands of people. We hope this contribution wil l help support the important work of these br av e fi gh t ers, w h o pro vid e critical emer genc y resp onse services. Contributing to safer communities is just one m or e w ay th a t DuPont is working to be a good corporate citizen in Pakistan," said Tauqir Ahmed, Chief Executive Officer, DuPont Pakistan Operations (Pvt.) Ltd. "The CDA Emergency &

AUTOMARK | January-2011 28

Disaster Management has played a key role in managing major crises, including 2005 earth quake crisis and recent floods. Centrally located, CDA firestation facilitates major business centers prone to substantial fire incidences. Numerous industr ial accidents and natu ral calamities have led to several losses of precious lives and property due to lack of resources available to our fire stations and fire fighters. They have no access to strong protective gears to face these extreme conditions. Hence, DuPont Pakistan is extending its contributions t o th e E me rg en cy & Dis ast er Management to help save lives. I would like to thank Mr. Ahsan Ali Mangi, Mansoor Ahmed Khan - Directorate Emergency & Disaster Management and the entire CDA team and our special than ks to our distributor Escorts International for their generous support and financial contribution to this program," said Kamran Khan, Business Man age r, D uPo n t Pro te ctio n Technologies. -PR

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Automotive Inside - Exclusive Article

by Omar Rashdi from St. Patrick’s Technical Institute

Electronic Fuel Injection (EFI) & Carburetor

Fuel injection helps in emitting less air pollutants than a carbureted engine does and helps in reducing pollution Af ter carbu re tor, Electronic Fuel Injectio n (EFI) is the well-known technology to the world, which is co mpletely being used in Japan, America, Europe, Malaysia and other most developed countries, but in third world countries like India, Pakistan, Bangladesh and so fourth, there are still using both EFI and carburetor. In the late 1980s, the first world automobile companies stopped their assembly lines for carburetor; they have not been making carburetor cars since 1980s. There are many reasons and benefits behind this. EFI is fully computerized controlled system which takes help with sensors. It does not require tuning. It has fuel injectors in order to inject the fuel in cylinder, the injector break the fuel into fine particles which help to give better combustion in power stork. EFI consist on fuel system, air supply and fuel management. Fuel management is subdivided into sensor, ECU and actuator. It use electronically computerized fuel injector to spray the fuel. There are two basic systems. Throttle body injection (also called single point injection) and Multi-Point injection. Throttle body injection sprays the fuel into the air as it passes through into the intake manifold. Mul ti-Point injection has injector freed cylinder which sprays the fuel directly into the intake valve port.

Parts The hold system has a fuel tank to store the fuel. A Fuel Pump to circulate fuel and provide pressure in the system. A Fuel Filter to clean the fuel and protect the injectors. Fuel Rail pipe to supply

the fuel to the injectors. Injectors which spray into the intake valve ports. A Pressure Regulator to control the pressure in system. A Throttle body with Throttle valve to control the fowl of air to the engine. A air cleaner, ducking and air flow meter to provide clean measured air and a plenum chamber or search chamber to tempt the flow of air. There is also an Electronic Control Unit, a computer that receive data from sensors around the engine, it process is the starter and uses the results to operate the injectors.

Benefits Smoother and Dependable engine response during quick transitions. It exhausts less pollution to the environment. Better operation at a high or low ambient temperature. Increase fuel efficiency. Incr ease maintenance inter vals. Per liter, it gives more power At low temperature EFI engine starts earlier. It controls the ideal speed at low rpm.

Carburetor Carburetors have been around almost as long as the car itself. Its functionality can be explained as a device that delivers the correct amount of fuel to the engine according to the air that is forced through the engine by atmospheric pressure. The initial cost of a carburetor engine is almost five times cheaper than an electronic fuel injected one, although maintenance costs could perhaps set one back a bit. The clear advantage of a carburetor engine is that it is not restricted by how much gas is pumped from the fuel tank. This means that any modifications to the cam in an attempt to make the engine "breathe better" will allow the cylinders to pull more fuel through the carburetor resulting in a more dense explosive mixture in the combustion chamber. The end result… unrivaled power! The carburetor does, however, come with a host of disadvantages. Firstly, with the way the world is moving toward

AUTOMARK | January-2011 33

lower gas emissions, driving a car with a carburetor engine may get you locked up i n c er t a in countries. Secondly, fuel ec onomy is de fin itely no t something that you can expect fr om your standar d carburetor. You would have to almost indefinitely be tuning your carburetor engine to offset changing weather and atmospheric conditions. Finally, with the current unpredictable fluctuations in gas prices worldwide, maintaining a carburetor engine would eventually only is an option for car enthusiasts who are not adversely affected by erratic world markets.

Advanta ges of fuel injections A fuel injection system delivers a more accurate and equal quantity of fuel to each cylinder than carburetor does. This improves the cylin der-to -cylin de r distribution. The accurate fuel metering helps in red uc ing th e tox ic com bu stion byproducts emitted. Fuel injection helps in emitting less air pollutants than a carbureted engine does an d helps in reducing pollution. A fuel injected engine produces more power than an equivalent carbureted engine. Fuel injection improves fuel efficiency of the engine. Because of the cylinder to cylinder fuel distribution, less fuel is requ ir ed for th e same out pu t.

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Industrial Sector - Update

Industrial policy likely next month Consultation begin to formulate industrial policy: Soomro Federal Secretary, Ministry of Industries and Production, Abdul Ghaffar Soomro has said that the ministry has once again started consultation process with the st a keho lde rs t o prepa re a comp reh ensive industrial policy. Addressing a joint meeting of industry, investment and privatisation and human resources and social development subcommittees of Karachi Chamber of Commerce and Industry (KCCI) on Monday, he said that the country has no comprehensive industrial policy at present wh ich h as created many problems for smooth operation and investment in the industrial sectors. He added that earlier, efforts were made to prepare an industrial policy and

directives were issued to consult all stakeholders rather than preparing policy wh il e sitting in the office. However, he admitted, the draft of policy p rep a red i n co nsu lta ti on w it h stakeholders was neither impermeable nor practicable. He stressed that industries and investment issues can not be resolved without having a comp reh ensive industrial policy. Rep l yin g to a qu est io n a bo ut Engineering Development Board (EDB) which only caters to the needs of auto sector development and does nothing for other sectors, Soomro said the board's role in engin eering sector development will be defined in the industrial policy. He informed that a

Accord reached for cooperation in energy conservation The Engineering Development Board (EDB) and the National Productivity Organisation (NPO) have agreed to cooperate in the development and promotion of engineering industry of Pakistan, particularly in the area of energy conservation in steel industries. EDB CEO Aitazaz A Niazi and NPO chief Y ou sa f M K h a w a ja si g n ed a Memorandum of Cooperation (MOC) on Monday. The memorandum will remain in force for an initial period of five years and may be renewed by a further agreement. According to details, both organisations will cooperate in the development of pilot projects in the steel re -ro ll ing s ect or a c cor d i ng to recommendations and preliminary survey conducted by the EDB with the assistance of foreign experts. These will be implemented by energy audit teams of the NPO which will assess the quantum of energy saved for feedback. A joint survey of the entire rerolling sector will be conducted for

replicating the results of the pilot projects. The NPO and EDB in consultation with an engineering university will develop a â&#x20AC;&#x2DC;thermal modelâ&#x20AC;&#x2122; to assess the impact of various furnace parameters on energy consumption and furnace efficiency. It was also agreed to constitute a steering committee for the re-rolling sector for improving energy efficiency. It would consist of representatives from re-rolling sector, refractory, instrumentation, energy suppliers and subject specialists. Conferences, round table discussions, meetings, seminars, presentations and surveys will also be held and reports will be prepared. These will identify focal points to facilitate coordination and implementation of their activities for increasin g cooperation in clu ding appropriate follow-up review and assessment. For this purpose, a joint work plan with detailed roles, responsibilities, activities and milestones will be prepared...

AUTOMARK | January-2011 34

draft of national engineering export strategy has been prepared to boost export of engineering goods. This draft will be presented in the cabinet meeting for consideration and approval. "We have to diversify our exports," he said adding that Prime Minister's Quality A wa rd w ill b e l au nch ed soon. The federal secretary agreed that interest rates and cost of manufacturing are higher in Pakis tan and should be reduced. He further said the country's biggest issue is gas and power shortage. Efforts are being made and several p ow e r -g ene r at i ng p r og r a m me s launched to overcome this shortfall. He added that an agreement was signed with Iran for gas supply and said completing these w il l take time. Speaking on the occasion, Advisor to Chef Minister Sindh for Investment, Zubair Motiwala said Pakistan could not comp ete w ith its competitors in international marks due to high cost of utilities in Pakistan, which is 50 percent higher than Bangladesh. He termed Oil and Gas Regularity Authority (Ogra) and National Electric Power Regulatory Authority (Nepra) as 'white elephants'. These organisations did not bother about the interest of general public, he added. Former chairman Site Association of Industry (SAI), Engineer Abdul Jabbatr emphasised the need that EDB focuses all engineering sectors, adding that at present, it is more focused on the auto industry sector. In his address, Former SVP KCCI, Jawed Bilwani said EDB must take pain to collect intimation as to why industries are closing down in the country and adopt measures for revival of these. Earlier, Acting President KCCI Talat Mahmood briefed the federal secretary ab ou t KCCI' s w or king and it s membership.....

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FBR and Tax - Update

Purchase of agri produce Govt withdraws exemption from 3.5pc withholding tax The federal government has withdrawn th e exemp tion from 3.5 percent withholding tax on the purchase of agriculture produce vide FBR S.R.O.1161 dated 31st December 2010. Through this notification, FBR has amended SRO. 586 (1) / 91 saying: (a) In the aforesaid notification, in clause (ii) the phrase "a local authority" shall be replaced by the phrase "a local government" and (b) In the aforesaid notification, in the beginning of clause (v), the word "person" shall be replaced by the words "growers/producers of agriculture produce" and after the phrase "or an Association of Persons (AOP) having turnover of Rs 50 millions or above" the phrase "or an individual having turnover of Rs 50 millions or above" shall be inserted. Talking to media agro-economist and

tax experts apprehended that after this waiver of exemption flour, sugar, pulses and ghee will become costly and the prices of every such product will increase in which agriculture produce is used as a raw material. Criticising the government decision, Tax Expert, Shahid Jami said the policy makers have pushed the public and business class towards tax revolt by making decision against the ground realities such as prevailing economic c ru nch a nd th e food inflation. He recalled that through notification SRO 586 of 1991 agriculture produce was exempted from withholding tax. Now after elapse of twenty years when the in flatio n is at the peak , the exemption has been withdrawn where agriculture produce has not been purchased directly from the farmers.

Since most of the buying of agriculture produce is made through commission agent, therefore exemption available to the farmers would be meaningless. He said withholding tax at concessionary rate of 1.5 percent is already levied on rice, cottonseed and edible oil, which are not conside red as agriculture produce, whereas now such agricultural produce which have not undergone any processing withholding tax shall be charged at the higher rate of 3.5 percent and the commission agents would be forced to pay more tax than their earned commission. Therefore, withdrawal of such notification is in the interest of both government and the public, which has been issued untimely and unwisely and even the Federal Board of Revenue (FBR) has not issued any press release....

Machinery and equipment

FBR allows 50-90pc initial depreciation Allowance The Federal Board of Revenue (FBR) has allow ed initial depreciation allowance at the rate of 50-90 percent on various parts of machinery and equipment. The FBR has proposed amendment to the Income Tax Rules 2002 through a notification issued on Monday. The facility of initial depreciation allowance has been allowed through amendment in the companies' returns. The FBR has giv en legal back in g to the in itial depreciation allowance on plant and m a c h i ne r y t h r o u g h p r o p o se d amendment to the return. According to the proposed amendment, 90 percent initial depreciation allowance would be applicable on machinery and equipment qual ifying for 1st year allowance. However , the annual depreciation allowance would be 30 percent on machinery and equipment

qualifying for 1st year allowance . Zero percent in itial depreciation allow an ce would be avail able on computer hardware including printer, monitor and allied items that have been previously used in Pakistan. However, the annual depreciation allowance would be 50 percent on computer hardware including printer, monitor and allied items that have been used previously in Pakistan. The proposed notification said that zero percent initial depreciation allowance would be available to any plant or machinery that has been used previously in Pakistan. On the other hand, the annual depreciation allowance would be 15 percent on any plant or machinery th at has been used previo usly in Pakistan. Zero percent in itial depreciation allowance would be available to any

AUTOMARK | January-2011 35

plant or machinery in relating to which a deduction has been allowed under another section for the entire cost of the asset in the tax year in which the asset is acquired. Where as , the an nual depreciation allowance would be 15 percent on the same kind of plant or machinery. As per notification, S.R.O.1119 (I)/2010, the draft of certain further amendments in the Income Tax Rules, 2002, which the Federal Board of Revenue proposes to make in exercise of the powers conferred by sub-section (1) of section 237 of Income Tax Ordinance, 2001 (XLIX of 2001), is hereby published. The draft has been circulated for information of all persons likely to be affected thereby and notice is hereby given that the draft will be taken into consideration after fifteen days of its publication in the official Gazette.

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Oil & Gas - Update

BP sells Pakistan assets to UEG for $775 million The company expects transaction to be completed in the first half of 2011, “subject to closing conditions, including the receipt of all necessary governmental and regulatory approvals” British Petroleum (BP) announced on Tuesday it had entered into an agreement to sell almost all of its exploration and production assets in Pakistan to United Energy Group Limited (UEG) for a total cash consi der ati on of $77 5 m illi on. UEG - an unlisted company - would pay BP a total of $775 million in cash for assets that comprise nine producing and exploration blocks in Sindh and four offshore exploration blocks in the Arabian Sea. The assets are held by three associates: BP Pakistan Exploration and Production Inc., BP Pakistan (Badin) Inc. and BP Exploration Alpha Ltd. The company expects transaction to be completed in the first half of 2011, “subject to closing conditions, including the receipt of all necessary governmental and regulatory approvals”. Ear lier in the day, Oil and Gas Devel op ment Comp any Lim ited (OGDCL) notified to the stock exchanges that the joint bid by Pakistan Petroleum Limited (PPL) and OGDCL was no more under consideration. Company secretary at OGDCL Cram Ali Aziz discl osed to the bours e: “BP International Ltd. after considering the final offer submitted jointly by PPL and OGDCL has decided not to engage in further discussions or negotiations with us regarding the proposed sale of BP Pakistan upstream interests.” Already a 12 per cent stakeholder in BP, OGDCL, the country’s biggest listed firm, had made a joint bid with PPL for BP assets on Dec 6 -the last day for submitting the bid documents. The OGDC-PPL duo did not, however, disclose the price they had offered, but

analysts had put the cost of assets figure at around $690 million.The buyers, as such, seem to be going into acquisition at considerable prem ium to th e consensus fair value of BP Pakistan assets. Under the terms of the agreement with UEG, the prospective buyer is required to pay BP a cash deposit of $100 million with the balance of the proceeds due on completion of the sale. The company said in a written statement that the sale of those inte rests in Pakistan was part of the BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Market watchers commented that much of the global asset sale was aimed at raising cash to pay for its Gulf of Mexico oil spill. Before the agreement to sell those assets in Pa kista n, BP h ad conclu ded agreements (globally) in the amount, totaling approximately $21 billion. Bob Dudley, the BP group CEO was

AUTOMARK | January-2011 36

quoted to have said: “Today’s agreement is further evidence of the rapid progress BP has made towards the divestment target we set out last summer. We now have agreements in place to secure the majority of our divestment target.” He further said, “We are continuing to identify further assets that may be strategically more valuable to others than to BP as we comp lete th e programme.” The company mentioned that curre nt net production of BP Pakistan was about 35,000 barrels of oil equivalent a day (boed). Gross oil production was around 10,000 bpd, while gas production was approximately 200 million standard cubic feet a day. Analysts at AHL Research observed that the BP asset buyer-United Energy Group Limited - is a listed company on the main board of Hong Kong Sto ck Exchange. The company is in investment holding business and principally engaged in upstream oil and natural gas business, including exploration, development, production of crude oil and natural gas. U EG a l s o p r o vi d es p a t e nt e d technologies supporting services to oilfields and property investment and management in China.....

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International Automotive - Sector

BYD to launch green-technology vehicles, products at North America International Auto Show Chinese automotive and green energy technology manufacturer BYD unveils plans to launch US-ready greentechnology vehicles and products at the North America International Auto Show from 10 to 23 January 2011. BYD wil l unveil their "green city solutions", their green electric vehicle series, and a portfolio of eco-friendly products which will help cities electrify all public transportation and reduce air pollution and carbon emis sio ns. The company will showcase the pureelectric vehicle- the e6 Premier a 2012 year model and the new dual mode electric SUV- the S6DM at the event.The world's first mass-produced F3DM sedan low-carbon version and the core drive technology of the pure-electric bus will also be showcased. BYD e6 Premier is a 5-seat crossover which has a dynamic and sporty exterior design and is equipped with BYD Ironphosphate "FE" battery and has an expected range of 186.4 miles with a projected top speed of 87 mph which is ideal for daily commuters and in-town driving. The vehicle can be fully charged in forty minutes on the 100kW fast charging cabinet and six hours to overnight-charge on the 10kW standard

charging pole. The core technology of the pure-electric 12-meter-long K9 e-Bus is equipped with in-wh eel electr ic dr ive and th e el ect roni ca lly- c ont rol led air suspension.It also features ample space and a low-floor for easy passenger loading and unloading and is able to run 155 miles on a single charge. The BYD S6 DM SUV is th e world ' s fi rst independent 4WD dual-mode electric SUV which can travel over 38 miles on electric power an d over 310 miles extended range when engaging the environmentally friendly 2.0L gasoline engine. This SUV is equipped with a 10kW electric motor (M1) paired with a smooth 6-speed dual -clutch transmis sion propelling the front wheels while a powerful 75kW electric motor (M2) powers the rear wheels. The F3DM low-carbon version also features the BYD Fe battery together with a BYD 371QA 1.0-liter gasoline engine. It is equipped with a solar panel sunroof to parallel charge the Fe battery and can travel over 38 miles and its extended range HEV mode allows the car to achieve another 313 miles with a maximum speed of about 93.2 mph.....

Electric Tata Vista to go on sale in Europe in 2011

Tata Motors is now very close to completing work on the lithium-ion battery-powered version of the Indica Vista, which will be manufactured in the UK and which will go on sale in Europe early next year. Th e Vista EV, Tata Motors’ firs t production-spec electric car, has been d eveloped by the company’s UK subsidiary, Tata Motors European

Technical Centre (TMETC) and will go into production at Tata’s West Midlands facility in the UK, later this month. The car, a fully electric four-seater hatchback that has a range of 175km and a top speed of 114km/h, will be offered in select European markets in 2011 and will be launched in various other markets (including, perhaps, India!) in 2012.

AUTOMARK | January-2011 37

Indus Motors reduces prices of Cuore, Toyota Corolla sedans Indus Motor announced that they would reduce the prices of Daihatsu Cuore and T oyota Corolla sedans effective December 29, 2010. The reduction ranges between Rs 15,000 to Rs 40,000 per vehicle. The company spokesperson added that over last several months IMC has made major capital investments amounting Rs 2 billion in the Phase 2 of Press Shop project and also in the engine assembly and testing facilities. These projects are now reaching implementation and start up stage that enables the company to p ass th e b enefits of enh anc ed localisation and assembly to our valued customers, accruing from these projects. The price reduction will be valid on all orders, received after December 29, 2010. The new selling price of the popular Corolla Xli will be Rs 1,337,000 down from Rs 1,354,000 and the new price of Gli will be Rs 1,462,000 from the previous price of Rs 1,479,000. The Altis MT (including Sun roof variant) price will be reduced by Rs 35,000, Altis AT (including Sun roof variant) will be reduced by Rs 40,000. Daihatsu Cuore prices will be reduced by Rs 15,000 across the range of vehicles. It may be recalled that the auto industry and the GOP have been in dialogue over car prices for some time. Weakening of the economic environment in the post floods scenario and strengthening of Yen adversely affected the business profitability for the company to consider any price reduction earlier. IMC is grateful to the Ministry of Industries and the Engin eering Development Board for their support which has enabled IMC to pass the benefit to the customers.-PR

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Farm Sector - Update

WHT on govt purchases may be major source to generate revenue According to sources, the farm sector is contributing nothing to the national exchequer, as far as federal taxes are concerned. A major revenue generation measure could include levying withholding tax on all kinds of procurement made by the government from the farm sector. Analysts told media that withholding tax is a major source of revenue generation on the direct tax side. Total share of withholding tax in gro ss collection rose to 66 percent in the first quarter of 2010-11 from 65 percent in the first quarter of 2009-10. The government is the single largest procurer of farm outputs. Therefore, imposition of withholding tax would not only generate revenue but would also help in documentation of the untaxed sectors. When the withholding tax is withheld the payee would be in a position to obtain adjustment, and liable to file his/her due income tax return. The information pertaining to the withholdin g tax deductio n on the purchase of farm outputs would help in determining the actual turnover and sales of farm sector. The government last year purchased about 7.5 million tons of wheat at Rs 950 per kg. Wheat is the only farm product for which the government fixes the 'support' price, while it announces 'intervention' prices for other major crops, like cotton, sugarcane, paddy and maize. According to sources, the farm sector is contributing nothing to the national exchequer, as far as federal taxes are concerned. The documentation of potential persons, engaged in agri trading and farming, is possible through imposition of withholding tax on procurement made by the government from the farm sector. The FBR has

proposed to impose 'reformed general sales tax' (RGST) on agri trading, but it is yet to be implemented. Analysts said that at present withholding tax is applicable on contracts executed, supply of goods and services to the federal government under section 153 of the Income Tax Ordinance 2001. Under section 153(1)(a) of the Ordinance 2001, payment for goods and services (supply) are subjected to withholding tax at the rate of 1.5 percent and 3.5 percent respectively. This source of withholding tax has huge potential, but the figures of actual collection of tax and due on the development expenditure of the government and deductions made by private sector need reconciliation. Therefore, a macro analysis of activities and monitoring of all withholding agents is necessary. The FBR has to examine the deduction for contracts executed, supplies made and services rendered. The Board could examine the total payments on account of purchases, services, expenses and amount of total deductions during the relevant period. Similarly, a comprehensive analysis of govern ment development projects should be cond ucted. All major

AUTOMARK | January-2011 38

organisations in public sector need to fil e annual contract awards and withholding reports, stating the tax deducted from payments to prime contractors of public funded projects. Besides, the contracts are sub-let very frequently in Pakistan, but deduction is restricted to the prescribed persons only. In the cases of sub-letting of contracts, the terms and condition and mechanism of tax deduction from the payments to sub-contractor should be examined, tax experts said. Sources said that the board had declared government departments/autonomous bodies as withholding agents for deducting 3 percent of the total 17 percent payable sales tax involved in transaction of supplies made to these depar tments. It is p rimarily an enforcement measure for compliance by both the withholding agents and the s u p p l i er s t o t h e g ov e r nm e n t departments. However, it has been observed th at some gover nment departments do not provide details about persons from whom they have withheld sales tax under the Sales Tax Special Procedure (Withholding) Rules, 2007. Resultantly, the FBR could not maintain the data of suppliers, etc, of government departments, which is necessary for obtaining accurate infor mation about the bu siness transactions made by them. In this case, some departments are not providing information of their suppliers from whom sales tax has been withheld on supplies made to the autonomous or g ani sa ti ons a nd g ov ern men t departments/organisations, tax experts added....

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Environment and Transport

by Asif Masood

Environmental Sustainable Transport Sector Development - Pakistan Road Transport is one of the major areas where energy efficiency measures can be applied very effectively. An increasing amount of oil is consumed by the transport sector. Energy sector issues and development continue to severely constrain Pakistan’s economy in 2009-2010. Against the backdrop of a sharp increase in the international price of oil in 2009, which put enormous upward pressure on the cost structure in the power generation and transport sector, in particular, large domestic supply shortages of electricity and gas occurred. Lower accumulation of water reserves in dams compounded the severity. The cumulative effect of the energy crisis on the economy is estimated at 2 per cent of GDP during 2009-2010 alone. The Government of Pakistan has resolved to revitalize national action towards achieving greater energy efficiency in the country to help meet the challenges of rapid demand growth, improving economic competitiveness, ensuring equitable and affordable energy access across all consumer categories. Transport System has always played an important role in the development of economics of the country. There cannot be two views on the fact that efficient, reliable, affordable movement of People & Cargo is basic & fundamental to economic prosperity. Public Transport provides people with mobility, access for employment, Medical care and recreational opportunities to the masses. Mass transit provides benefits to those who choose to ride & also to those who have no other choice. Public transport also helps the people to expand business opportunities, reduce sprawl and create sense of community. It also enhances safety & security in society.

Pa k is ta n ’s Pr im a r y Comm er cial En er gy Supply Situation Government of Pakistan is working on a program to phase out Diesel buses & wagons in major cities of Pakistan. The program combines economic as well as environmental considerations. The program will reduce the import bill of Diesel Oil & on other hand this will improve air quality. During financial year 2008-09, primary commercial energy supplies witnessed a decrease by 0.6% to 62.6 million tonnes of oil equivalent (MTOE) from 62.9 MTOE in 2007-08. Increase in the supplies came from oil (0.9 MTOE), natural gas (0.4 MTOE) and imported electricity (0.01 MTOE). Supplies from coal, nuclear, hydro and LPG showed decrease as compare to the last year. The share of natural gas in primary energy supplies during 2008-09 was 48.3% followed by oil 32.1%, hydro electricity 10.6%, coal 7.6%, nuclear electricity 0.6%, LPG 0.6% and imported electricity 0.1%. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to

agriculture (36%), d om es ti c (19 % ), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by Asif Masood power (7%). Product- Chief Technical officer ENERCON / ECF wise, Fu rn ace Oil (FO) consumption increased by 6% and gasoline by 5%, wh ile High Speed Diesel (HSD) consumption was decreased 8% over the last year. Imports of petroleum produ cts incr eased by 10.5% as compared to the previous year. FO imports increased by 19% while HSD imports decreased by 3% during 200809. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to agriculture (36%), domestic (19%), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by power (7%). Productwise, FO consumption increased by 6% and gasoline by 5%, while HSD consumption was decreased 8% over the last year.

AUTOMARK | January-2011 39

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Environment and Transport

Visuals replicate the situation in countries, which Pakistan seeks to imitate, where development is accompanied by high levels of pollution. The combined global environmental consequences are likely to be disastrous. Energy sector issues and development continue to severely constrain Pakistan’s economy in 2009-2010. Against the backdrop of a sharp increase in the international price of oil in 2009, which put enormous upward pressure on the cost structure in the power generation and transport sector, in particular, large domestic supply shortages of electricity and gas occurred. Lower accumulation of water reserves in dams compounded the severity. The cumulative effect of the energy crisis on the economy is estimated at 2 per cent of GDP during 2009-2010 alone. The Governme nt of Pak is tan has resolved to revitalize national action to wards achievin g greater energy efficiency in the country to help meet the challenges of rapid demand growth, improving economic competitiveness, ensuring equitable and affordable energy access across all consumer categories. Transport System has always played an important role in the development of economics of the country. There cannot be two views on the fact that efficient, reliable, affordable movement of People & Cargo is basic & fundamental to economic prosperity. Public Transport provides people with mobility, access for employment, Medical care and recreational opportunities to the masses. Mass transit provides benefits to those who choose to ride & also to those who have no other choice. Public transport also helps the people to expand business opportunities, reduce sprawl and create sense of community. It also enhances safety & security in society.

energy supplies witnessed a decrease by 0.6% to 62.6 million tonnes of oil equivalent (MTOE) from 62.9 MTOE in 2007-08. Increase in the supplies came from oil (0.9 MTOE), natural gas (0.4 MTOE) and imported electricity (0.01 MTOE). Supplies from coal, nuclear, hydro and LPG showed decrease as compare to the last year. The share of natural gas in primary energy supplies during 2008-09 was 48.3% followed by oil 32.1%, hydro electricity 10.6%, coal 7.6%, nuclear electricity 0.6%, LPG 0.6% and imported electricity 0.1%. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to agriculture (36%), domestic (19%), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by power (7%). Productwise, Furnace Oil (FO) consumption increased by 6% and gasoline by 5%, wh ile High Sp eed Diesel (HSD) consumption was decreased 8% over the last year. Imports of petroleum products increased by 10.5% as compared to the previous year. FO imports increased by 19% while HSD imports decreased by 3% during 200809. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to agriculture (36%), domestic (19%), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by power (7%). Productwise, FO consumption increased by 6% and gasoline by 5%, w hile HSD consumption was decreased 8% over the last year.

AUTOMARK | January-2011 40

per capita terms. However, the more alarming implications from a national and global perspective are demonstrated by the exponential growth of emissions over this period. This trend is based on a number of developments:

• Depleting natural gas reserves have begun to induce a switch to oil based products, particularly in private power generation • Large, high-sulphur, coal deposits in the Thar desert are likely to be tapped as oil imports become difficult to sustain • There will be considerable expansion of rural energy infrastructure • A pp l i a n c e u s e w i l l intensify • Selective subsidies for highly emitting fuels, such as diesel, will continue to remain po lit ic ally intractable Visuals replicate the situation in countries, which Pakistan seeks to im ita te, w h er e d evelop ment is accompanied by high levels of pollution. The combined global environmental consequences are likely to be disastrous and, as such, Pakistan has an obligation to adopt pre-emptive measures to lower emissions.

Government Strategies on Environment Sustainable Transport (EST) The transport sector is emerging as the fastest growing source of global GHGs emissions and accounts for 23% of energy-related CO2 emissions in the world. The concept of Environment Sustainable Transport (EST) is centered on the tran sportation system and transportation activity that meets social,

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Environment and Transport Energy sector issues and development continue to severely constrain Pakistan’s economy in 2009-2010. Against the backdrop of a sharp increase in the international price of oil in 2009, which put enormous upward pressure on the cost structure in the power generation and transport sector, in particular, large domestic supply shortages of electricity and gas occurred. Lower accumulation of water reserves in dams compounded the severity. The cumulative effect of the energy crisis on the economy is estimated at 2 per cent of GDP during 2009-2010 alone. The Go vernment of Pakistan has resolved to revitalize national action towards achieving greater energy efficiency in the country to help meet the challenges of rapid demand growth, improving economic competitiveness, ensuring equitable and affordable energy access across all consumer categories. Transport System has always played an important role in the development of economics of the country. There cannot be two views on the fact that efficient, reliable, affordable movement of People & Cargo is basic & fundamental to economic prosperity. Public Transport provides people with mobility, access for employment, Medical care and recreational opportunities to the masses. Mass transit provides benefits to those who choose to ride & also to those who have no other choice. Public transport also helps the people to expand business opportunities, reduce sprawl and create sense of community. It also enhances

safety & security in society.

Pa k is ta n ’s Pr im a r y Comm er cial En er gy Supply Situation Government of Pakistan is working on a program to phase out Diesel buses & wagons in major cities of Pakistan. The program combines economic as well as environmental considerations. The program will reduce the import bill of Diesel Oil & on other hand this will improve air quality. During financial year 2008-09, primary commercial energy supplies witnessed a decrease by 0.6% to 62.6 million tonnes of oil equivalent (MTOE) from 62.9 MTOE in 2007-08. Increase in the supplies came from oil (0.9 MTOE), natural gas (0.4 MTOE) and imported electricity (0.01 MTOE). Supplies from coal, nuclear, hydro and LPG showed decrease as compare to the last year. The share of natural gas in primary energy supplies during 2008-09 was 48.3% followed by oil 32.1%, hydro electricity 10.6%, coal 7.6%, nuclear electricity 0.6%, LPG 0.6% an d imported electricity 0.1%. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to agriculture (36%), domestic (19%), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by power (7%). Productwise, Furnace Oil (FO) consumption increased by 6% and gasoline by 5%, wh ile High Speed Diesel (HSD) consumption was decreased 8% over

* @ 3412 Btu/kWh. Includes railway traction. ** Compressed Natural Gas (CNG). Source: Pakistan Energy Yearbook 2009 AUTOMARK | January-2011 41

the last year. Imports of petroleum produ cts incr eased by 10.5% as compared to the previous year. FO imports increased by 19% while HSD imports decreased by 3% during 200809. Oil consumption decreased by 1% during 2008-09 over the preceding year. The decline in consumption was due to agriculture (36%), domestic (19%), industry (10%) and transport (6%) while the increase was in government sector (18%) followed by power (7%). Productwise, FO consumption increased by 6% and gasoline by 5%, wh il e HSD consumption was decreased 8% over the last year.

Energy Demand and Emission Forecasts Pakistan is presently not a major contributor to global warming and is not likely to become one in the foreseeable future either. Following are some serious concerns; Beginning from a low base, th e emissions reach a figure of 475 million tons of CO2 in the year 2020. This, in relative is low, both in absolute and in per capita terms. However, the more alarming implications from a national and global perspective are demonstrated by the exponential growth of emissions over this period. This trend is based on a number of developments:

• Depleting natural gas reserves have begun to induce a switch to oil based products, particularly in

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Oil & Gas - Point of view

Byco's market share jumps to 2.7 percent: said Siddiqui Byco Petroleum has urged the government to resolve the circular debt crisis and increase oil refinery margins. Both these steps will help reduce the countryâ&#x20AC;&#x2122;s reliance on refined oil imports. The overall market share of Petroleum Marketing Business (PMB) of Byco Petroleum Pakistan Ltd (BPPL) in petrol, diesel and furnace oil segments has jumped from 0.7 perce nt in July-November 2009 to 2.7 percent in the same period in 2010. This was stated by the president PMB of BPPL, Kalim A.Siddiqui while talking to reporters including Automark magazine, at an informal interaction last month. "This is a robust growth and we have taken over som e m arket sh ar e of other oil marketin g co mpanies (OMCs) with the help of our aggressive and innovative marketing strategy", he said. Siddiqui pointed out that his company is 7th in size and 6th in market share among OMCs in the country. He said the number of retail outlets have been increased to 163 all over the country and some 50 to 100 more will be added to the existing network by June 2011. He pointed out that 60 of them have been com pletely r e-b ra nd ed t o new design and colour scheme with all the ambiance. Mo st of them are in Karachi, Lahore and Islamabad, he

added. He maintain ed that PMB is not compromising on quality. "We are ensuring that the customers must get quality products and full quantity at Byco outlets. We will launch three fully loaded mobile testing laboratories to ch eq ue qu ality and qu ant ity of petroleum products at our outlets", he added. Responding to a question about the second refinery, he said that 80 percent of the work has been completed of the second refinery with 120,000 barrels per day capacity coming up in Hub at a cost of $ 500 million. However, we are currently focussing on our single point mooring which will enable Byco to directly receive 150,000 to 250,000 metric ton of large tankers to get oil. This will cut the transportation cost by at least $ 2 per barrel, he noted. Similarly, our isomerizing plant is also ready to covert naphtha in to high quality motor gasoline and hi-octane. We are also producing and marketing liquefied petroleum gas and our LPG cylinders are in sold in the market, Kaleem Siddiqui. Replying to a question, he said that talks are continued with Asia Pipeline Ltd

(APL) and PSO to lay a 500 meter pipeline to supply oil to HUBCO instead of 85 kilometers long pipeline of APL. To another question, Siddiqui said that the issue of circular debt can be resolved by bringing in efficiency in power sector, cutting line losses and raising the share of nuclear, hydel and coal in power generation.....

He said the number of retail outlets have been increased to 163 all over the country and some 50 to 100 more will be added to the existing network by June 2011. AUTOMARK | January-2011 42

AUTOMARK MAGAZINE

Car / Light Vehicle Price List

SUZUKI

HONDA

Model MEHRAN VX 800cc MEHRAN VX (CNG) 800cc MEHRAN VXR MEHRAN VXR (CNG) ALTO VX 1000cc ALTO VX (CNG) ALTO VXR ALTO VXR (CNG) SUZUKI SWIFT 1.3L PETROL CULTUS Efi VXRI CULTUS Efi VXRI (CNG) CULTUS Efi VXLI CULTUS Efi VXLI (CNG) LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) LIANA 1.3L LXI MT PETROL LIANA 1.3L LXI (CNG) LIANA 1.6L Eminent AT RAVI PICKUP ST308R VX RAVI PICKUP ST308R VX CNG BOLAN VAN VX Petrol BOLAN VAN VX CNG BOLAN VAN VTR PETROL BOLAN VAN VTR CNG SUZUKI VAN CARGO

Price Rs. 453,000 Rs. 499,000 Rs. 505,000 Rs. 549,000 Discontinued Discontinued Rs. 656,000 Rs. 705,000 Rs. 1058,000 Rs. 850,000 Rs. 891,000 Discontinued Discontinued Rs. 1,149,000 Rs. 1,219,000 Rs. 1,140,000 Rs. 1,210,000 Rs. 1,241,000 Rs. 473,000 Rs. 524,000 Rs. 532,000 Rs. 584,000 Rs. 592,000 Rs. 645,000 Rs. 507,000

CHEVROLET Model CHEVROLET JOY CNG CHEVROLET JOY Petrol

Price Rs. 569,000 Rs. 539,000

NISSAN CARS Model Sunny Ex-Saloon 1.6L M/T Sunny Ex-Saloon 1.6L CNG S. Super Saloon 1.6L M/T S. Super Saloon 1.6L CNG S. Super Saloon 1.6L A/T NISSAN S. S. Saloon 1.6L A/T CNG

Price Rs. 1,225,000 Rs. 1,305,000 Rs. 1,370,000 Rs. 1,450,000 Rs. 1,470,000 Rs. 1,550,000

NISSAN DIESEL TRUCKS Diesel Truck PKB 211 Diesel Truck PKD 411H Diesel Truck PKD 411E Diesel Truck PKD CD 411 Diesel Prime Mover CWM 454

Rs. 3,000,000 Rs. 4,150,000 Rs. 4,260,000 Rs. 4,600,000 Rs. 5,500,000

Model ACCORD ACCORD CR-V CITY I-VETC MT CITY I-VETC AT CIVIC VTI Mt CIVIC VTI Mt Oriel CIVIC VTI Pt CIVIC VTI Pt Oriel

HYUNDAI

Price Rs. 5,866,000 Rs. 5,316,000 Rs. 1,324,000 Rs. 1,454,000 Rs. 1,659,000 Rs. 1,834,000 Rs. 1,779,000 Rs. 1,909,000

TOYOTA COROLLA Model XLi 1.3 VVT-i GLI 1.3 VVT-i 2.OD Std. 2000cc 2.OD SALOON M/T 2.OD SAL SUNROOF ALTIS 1.8 VVTi M/T ALTIS 1.8 VVTi A/T

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Price 1,337,000 1,462,000 1,385,000 1,734,000 1,824,000 1,705,000 1,790,000

CHERY QQ Model

Price

CHERY QQ Petrol CHERY QQ CNG

Rs. 588,000 Rs. 628,000

LAND ROVER

DAIHATSU Model Price CUORE CX Rs. 6,85,000 CX ECO (CNG) Rs. 7,30,000 CX AUTOMATIC Rs. 7,15,000

Model DEFENDER (90 S/WJEEP STD) (110 S/W A/C) (90 Soft Top)

MASTER Model Price Master Highland M-260 (1,5T) Rs. 625,000 Master Forland Super M-330 (3T) Rs. 699,000 Rs. 930,000 Master Econg M-390 (3.5T) Master Grande M-410 (4.5T) Rs. 11,30,000 Master Rocket Faw (7.5T) Rs. 12,60,000 Master Feng EQ 1032 Strip Chassis Rs. 832,000 Master Feng EQ 1061 Strip Chassis Rs. 832,000

Price updated January 2011

Price Rs. 2,269,431 Rs. 2,545,000 Rs. 2,150,260

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January-2011

AUTOMARK MAGAZINE

Automotive Sector - Event

Glimpses of the event

6th T-Tep Career Day Event at St. Patrick’s Institute of Science & Technology Indus Motor makes careers with Toyota Technical Education Program

AUTOMARK | January-2011 45

AUTOMARK MAGAZINE

Automotive - Commercial Vehicles

Master Motors Launched Mitsubishi Fuso in Pakistan MMC entered into an agreement with Mitsubishi Fuso Truck and Bus Corporation (MFTBC), Japan for the assembling, manufacturing and marketing of Trucks and Prime Movers in Pakistan.

The OEM enter in Pakistani market with the FE lightduty trucks with gross vehicle weight (GVW) of 6.5 to 7.2 tonnes, and FV supergreat heavy-duty prime movers with GVW of 28 tonnes. Mitsubishi Fuso will import these trucks from Japan as completely knocked-down (CKD) kits. On the day of 20th December 2010 and at the venue of Expo Centre, the city of Karachi becoame witness to the event of the future. Yes! The launching of locally assembled Fuso commercial vehicles by Master Motor Corporation Limited, the authorized assembler and distributor of Mitsubishi Fuso in Pakistan. Mitsubishi Fuso is a top Japanese brand as Mitsubishi Fuso

Cater Truck is a global market leader in light commercial vehicles category while Mitsubishi Fuso FV Prime Mover is a recognized global performer. T he wh o’s w ho of the indu stry c o m p r is i ng p ro m i nen t a nd distinguished personalities from all sections Of auto and auto related sector, financial institutions, military and paramilitary forces, corporate and public, private and priv ate organizations were in full attendance at this most anticipated event which was graced by the Chief Guest none other the Federal Minister of Industries and Production, Mir Hazar Kh an Bij ara ni wh o r end ered a heartwarming speech on the occasion. The Guest of Honour and Vice president Sales and Services Inte rnational, Mitsubishi Fu so Trucks and Bus Corporation, Dr. Kai-Uwe Seidenfuss gave an extensive presentation of his company.

AUTOMARK | January-2011 46

Also honouring the event were Mr. T. Ichida, Assistant General Manager, Sumitomo Corporation Tokyo, Dr. Akram Sheikh and Mr. Aitazaz Niazi, CEO Engineering Development Board. Mr. Nadeem Malik, Manager Director – Master Motor Corporation Limited, enlightened the audience with the current state of the automobile industry and apprised listeners of his Company’s achievements, Goals and fu ture as pir ations to everyone’s applause. There were many highlights of this grand event starting with the unveiling of the Fuso Canter Truck and Fuso FV Prime Mover amidst a glittering light and laser show. Technological prowess was on full display with the Fuso Canter Truck appearing agile, athletic, adaptable, stylish and efficient while the Fuso FV Prime Mover Looked robust, powerful, highly enduring, ro omy and safe. Following this the guests were dazzled

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AUTOMARK MAGAZINE

Automotive - Commercial Vehicles

by a spectacular aerial acrobatics show performed by a famous group of acrobats flown in especially from Dubai. The event concluded with the icing on the cake being the performance of fusion of eastern and western composition of Dhol and drums by the very popular pop group Overload and Pappu Saeen. All in all an event that could easily be termed as the defining event of the technological advancement in the 21st century and not to have been missed as we don’t know when we would witness such a spectacular show every again.

Today, Master Enterprises alone has a market share of more than 60% and enjoys the trust of millions of customers. Products such as MoltyFoam Mattress, Master Office Chairs, Master Celeste Springs Mattress, Master ThermoShield (Spray-Polyurethane roof insulation), MoltyFiber Pillow and Comforters offer a perfect peace of mind to its users. Their bran d 'Molty' has become a household name all across the country. Master Motor Corporation came into being and became a flagship unit of

Master Group, MMC has entered the automobile market with long-term plans and h uge tas k of as sembl ing and manu factur in g excellent qu al ity, competitively pr iced vehicles in Pakistan. Master Motor Corporation came into being and became a flagship unit of Master Group, MMC has entered the automobile market with long-term plans and h uge tas k of as sembl ing and manu factur in g excellent qu al ity, competitively pr iced vehicles in Pakistan. MMC has the most state of the art technology at its newly built plant at Bin Qasim, Karachi and has introduced 1.5 ton, 3 ton, 3.5 ton, 4.5 ton and 6.5 ton light duty trucks. With innovative marketing approach and a commitment to deliver quality, Masters Trucks have become the leading brand among its competitors by achieving 25% market share in 3 ton category and 50 % market share in 3.5 ton and 4.5 ton category in front of already established Japanese and Korean companies. It also promises a comprehensive AfterSal es-Service back up through 3S D ea l er s N e t w or k n a t i on w i d e . Master believes in the future of technology and will continue to expand industrially. We believe in striving

AUTOMARK | January-2011 47

constantly to better ourselves. Our team at Master is driven by the quest for perfection and is determined to provide high quality products to the customers.

Objectives of MMC - Build high quality and affordable vehicles, to meet the demand of the Pakistani customers. - Provide high quality of after sales services including immediate availability of Spare Parts. - Efficient dealer network to provide best customer service and support all over Pakistan. - Achieve the deletion level as per Government’s policies defining deletion program. -Adopt progressive Advertisement and - Sales promotional activities through effective product Ads, Sales Campaigns, and Events. - Explore potential markets in the neighboring countries for the export of vehicles produced by MMC - Realize high resal e value for the vehicles produced by MMC.

Awards & Certification Ma ster Motor Corp or ation ha s ISO9001:2000 and currently in the process of acquiring TS 16949:2002 certification.

AUTOMARK MAGAZINE

Automotive Sector - Article

by I.H.T. Farroqui

Dynasty Electric Car Pakistan’s first peek into a greener future Karakoram Motors is a well kno wn na me in l oc al A ut om ob ile in d us try, t hey a re as semb ler a n d ma n u fa ct urer s o f Ch an g an u til it y v eh icles an d a re so le dis tribu to rs for LIFAN & GONOW products. In two wheelers Raftar 50cc motorbike was an indigenous concept of Karakoram motors; this motorbike was known for its supreme fuel economy

As it has been discussed earlier, the running & maintenance cost of an electric vehicle are significantly low. With the growing demands of the world of today for sustainability of energy & Envir onmental friendliness, th e Automobile industry finds itself at a challenging curve in its history that itself expands for over a mil lennium of production. Due to the advancements in technology & common awareness of global warming & depletion in ozone layer, drastic measures are either taken or planned by authorities globally. Automobile industry faces utmost concerns due to the immense pollution hazards, the produ ct of the indu str y cau ses. Similarly, the reserves of mineral oil are deter ior ating so rep lacem ent of technology of propelling an automobile is a major concern. As far as Asia is concerned most of the countr ies in th is continent ar e developing countries so, very little e mph asis i s give n to th e se

characteristics. However in Pakistan, eyeing the future; recently an initiative has been taken by Karakoram motors to revolutionize the means of urban transport. Karakoram Motors is a well known name in local Automobile industry, they are assembler and manufacturers of Changan utility vehicles and are sole distributors for LIFAN & GONOW products. In two wheelers Raftar 50cc motorbike was an indigenous concept of Karakoram motors; this motorbike was known for its supreme fuel economy. Having established its authority in the local industry, Karakoram Motors now intend to introduce an electric car, the first of its kind in Pakistan Automotive sector. The technology of this electric car is based on Dynasty Electric Car Company of Canada.

AUTOMARK | January-2011 48

Dynasty was designed by a well known international automobile designer Paul Dutchman who had designed several models for General Motors, Daewoo & Benz. The company was established in the year 2003 but due to certain reasons could not survive. Karakoram Motors bought all the plant equipment and machines including the proprietary rights . In 2007 Karakoram Motors shifted all the manufacturing facilities of Dynasty car from Canada to their assembly plant at Karachi , and erected and installed the facilities at their plant. Additionally the company developed in house facilitie s for chassis frame assembly, body panels and sheet metal components. An electric car is a car powered by an electric motor rather than a gasoline engine. Under the hood, there are a lot of differences between gasoline and electric cars:

• The gasoline engine is replaced by an electric motor. • The electric motor gets its power from a controller. • The controller gets its power from an array of rechargeable batteries. A gasoline engine, with its fuel lines, exhaust pipes, coolant hoses and intake manifold, tends to look like a plumbing project. An electric car is definitely a wiring project. There is no Radiator, no water and fuel hoses, no fuel tank, no muffler, no catalytic convertor, no fuel and oil filters etc, etc. So there is no question about the emission problem

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Automotive Sector - Article

Running & maintenance cost of an electric vehicle are significantly low. The dynasty electric automobile costs Rs 1.76/km as compared to 6 km/l & 3.87 km/l of an ideal 1.0L internal combustion engine vehicle, running on Petrol & CNG respectively. and the vehicle is called as Zero Emission Vehicle. Dynasty introduces this vehicle as a smart hatchback & makes it available in 5 d i ff er en t v a r ia nt s . G ene r a l configu ratio n is 4 door,4 seater passenger car & 2 door 2 seater utility vehicle. The vehicle is best suited for industrial parks, airports, universities & parks etc. The car features an High g rade Aluminum chassis along with a fiber glass body which makes the structure very light, however safety does not gets compromised in the process. The car meets NHTSA & DOT (International Agencies of Automobile safety) safety requirements. As an electric automobile it also features zero emissions & no noise pollution.

The standard variant that has been introduced itself weighs just 400 kg & can seat 4 passengers to carry a maximum p a yl oa d o f 7 00 -75 0 kg . Maximum speed of the vehicle is around 45-60 km/h & on a full charge the vehicle gives a range of 50 km. The batteries that power the standard variant are Deep Cycle gel batteries. In total 6 batteries, each giving a potential difference of 12V is utilized, giving out 72V & 8.8 KW of power in total. The Deep Cycle Gel batteries can be recharged completely within 68 hours & is designed to give 1000 cycles of complete charge & discharge. This constitutes to 2.7 years of use of the battery if it gets complete charge & discharge on daily basis, before its life ends & replacement is required.

km/ l of an id eal 1.0L inter na l combustion engine vehicle, running on Petrol & CNG respectiv ely. This constitutes to an annual budget of Rs 29,200 of Electric car to Rs 98,550 & 63,510 of Petrol & CNG vehicles respectively. The electric car introduced by dynasty has been designed to supply power to grid in case of power failure. In this way car works out as an instant means of power supply as a backup source. Another feature of the vehicle is the regenerative braking system. It ensures that the brakin g energy losses are recovered & are utilized to charge the batteries instantaneously. As far as future plans are concerned Karakoram motors intend to offer the car with Li-ion batteries. These batteries not only increase the range of the vehicle drastically (150 km) but also reduce the charging time to almost half of Deep Cycle gel batteries, giving very similar cycle time in the process. However the Li-ion batteries cost a lot more than the Deep Cycle gel batteries; so it is a major dis advantage. Future plans also include on board charging facilities via a gas generator or solar panels to enhance the range of the vehicle.

One of the major developments credited to Karakoram motors is the localization of various parts that include in house production capabilities of fiber glass doors, roof, side panels etc, while seats, wiring harness, trim parts,

As it has been discussed earlier, the running & maintenance cost of an electric vehicle are significantly low. The dynasty electric automobile costs Rs 1.76/km as compared to 6 km/l & 3.87

AUTOMARK | January-2011 49

rims etc are made available locally utilizing various vendors. However some complex parts that include electric motor & controller, battery, chassis frame material etc have to be imported as locally the technology needed for the production of these components does not exist. Coming back to the scope of the electric car it is worth mentioning that international government like from European countries, America & others welcome the concept of introduction of electric cars in their countries, In fact many governments wave off import, custom, road, vehicle, registration taxes etc in order to promote customers inte re st in this green technology . Dynasty electric car has a wide scope in the international market as w ell, enquiries from UK, Japan, Poland, North America & Singapore have been received. In accordance to an international survey by http://ecomodder.com/bl og/10electric-cars-buy-today/Dynasty is ranked 3rd amongst the best electric cars an individual can purchase today, globally. As far as local availability is concerned Karakoram motors intends to introduce this car as soon as possible in the local market. The cost of the car has been estimated to be around Rs 800,000 Pak Rs. for a basic model, subject to allow the import of electric components at zero rate of custom duty , this wil l facilitate the company to compete more with the international car manufacturers who are planning to launch their electric cars in the coming years (Suzuki, Toyota, GM, Nissan, BMW ). The effort of Karakoram motors has to be appreciated & applauded, for being the pioneer industry in Pakistan to break the shackles of local monopoly & introducing a vehicle that basical ly represents the future. We hope that this vehicle receives over whelming response from consumer sector & government also supports the cause in the process. The future is Electric cars and Dynasty & Karakoram Motors, working for a greener future......

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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST

70cc Motorcycle

Sr./ No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

Product & Model Name Aan AI-70 Asia Hero AH-70 Bionic AS-70 Crown Lifan CRLF-70 Diamond SD-70 Dhoom YD-70 Eagle DG-70 Ghani GI-70 Guangta GT-70 Grace CT-70 Hero RF-70 Hero RF-70 Plus Habib HB-70 Honda CD-70 Hi-Speed SR-70 Jinan JN-70 Leader LD-70 King Hero KH-70 Moon Star MT-70 Master MD-70 Metro Hi-Tech MR-70 New Asia NA-70

Retail Price Rs. 42,500/= Rs. 39,000/= Rs. 39,000/= Rs. 39,500/= Rs. 398,000/= Rs. 45,300/= Rs. 39,000/= Rs. 39,500/= Rs. 41,000/= Rs. 39,900/= Rs. 46,000/= Rs. 47,000/= Rs. 41,000/= Rs. 62,900/= Rs. 40,000/= Rs. 40,500/= Rs. 38,500/= Rs. 38,500/= Rs. 38,000/= Rs. 38,500/= Rs. 42,900/= Rs. 38,000/=

Sr./ No. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44.

Product & Model Name Pak Hero PH-70 Ravi Premium R1 Ravi Hamsafar-70 Road Prince RP-70 Royal Star RS-70 Royal RL-70 Racer AS-70 Safari SD-70 Sakai SK-70 Star DL-70 Sohrab JS-70 Sonica SM-70 Super Asia SA-70 Super Star SS-70 Super Power SP-70 Super Power Delux Toyo TG-70 Target TT-70 Unique UD-70 Union Star US-70 United US-70 Zxmco ZX-70

Retail Price Rs. 42,500/= Rs. 47,000/= Rs. 43,000/= Rs. 39,000/= Rs. 39,000/= Rs. 42,500/= Rs. 39,000/= Rs. 40,000/= Rs. 39,000/= Rs. 39,900/= Rs. 41,500/= Rs. 42,400/= Rs. 39,500/= Rs. 40,500/= Rs. 40,500/= Rs. 45,000/= Rs. 39,500/= Rs. 39,500/= Rs. 41,000/= Rs. 42,000/= Rs. 40,000/= Rs. 40,500/=

Price updated Jan-2011

AUTOMARK | January-2011 50

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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST

125cc Motorcycle No. 1. 2. 3. 4. 5. 6. 7. 8.

Brand & Model Name Habib HB-125 Sitara ST-125 Super Star SS-125 Hero RF-125 Honda CG-125 STD Honda CG-125 DX Metro MR-125 Ravi Storm-125 Euro II

Retail Price Rs. 88,000/= Rs. 55,000/= Rs. 54,000/= Rs. 75,000/= Rs. 86,500/= Rs. 108,900/= Rs. 55,500/= Rs. 78,000/=

Yamaha Motorcycle Sr./ Product & Model Name No. 1. Yamaha YD100 2. Yamana Yama4 3. Yamaha YB100 Royale

Retail Price Rs. 73,300/= Rs. 69,900/= Rs. 70,000/=

100cc Motorcycle No. 1. 2. 3. 4. 5. 6. 7. 8.

Brand &Model Name Asia Hero AH-100 Ghani GI-100 Habib HB-100 Honda CD-100 Sitara ST-100 Super Star SS-100 Super Power SP-100 Unique UD-100

Retail Price Rs. 46,000/= Rs. 45,500/= Rs. 55,000/= Rs. 70,900/= Rs. 51,000/= Rs. 48,000/= Rs. 45,500/= Rs. 52,000/=

Suzuki Motorcycle Sr./ No. 1. 2. 3. 4. 5.

Product & Model Name Suzuki Sprinter ECO Suzuki Sprinter STD. Suzuki GS-125 Suzuki GS-150 Suzuki Shogan

AUTOMARK | January-2011 51

Retail Price Rs. 67,000/= Rs. 70,000/= Rs. 79,900/= Rs. 86,000/= Rs. 76,000/=

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