CONTENTS Monthly AutoMark International August-2014 Chinese development are beyond expectation in Pakistan Motorcycle industry Exclusive Article by Yousuf Shaikh
12-13
Dire need for small engine power cars in Pakistan Exclusive Article by Owais Khan
14-15
One More Shock Awaits Exclusive Article by Engr. Asif Masood
16-17
Registration of Auto vendors with EDB Exclusive Article by Owais Khan
21
Pak Suzuki, EDB differ on trade with India Ali Hassan
22
Pakistani car industry slow to respond to rising demand - Review
24-25
New entrant in the market Exclusive Article by Owais Khan
33
Inauguration of Agriauto Stamping Company, Port Qasim Coprate Event - Update
35
Strong sales outlook for auto industry in 2014-2015 Exclusive Article by Owais Khan
36-37
Local Automotive news update
22-23
Motorcycle Production Figures 2013-2014
32
Car/Vehicles Market Price List
38
Motorcycle Market Price List
39
Neelum Jhelum Hydroelectric Project Special Report
42-43
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August-2014 edition Volume 07, Issue 8
Pakistan’s premier magazine on automotive, engineering & energy sector
Monthly
AUTOMARK International Editor-in-chief Muhammed Hanif Memon Technical Editor Muhammad Shahzad
Advertising Manager Tahir Siddiqui
Circulation Manager
Advisors Imtiaz Rastgar CEO, Rastgar Group & CBI External Expert, Ex-chairman EDB Islamabad
Abdul Khaliq
Graphic Designer Salman Hanif
Web Master
Engr. IHT Farooqui GM Plant P.M. Auto Industries Hyderabad
CONTRIBUTING IN THIS ISSUE
Muhammad Yousuf Shaikh Founder & Chairman Pakistan China Motorcycle Industry Council Karachi
M. Yousuf Shaikh Ali Hassan M. Owais Khan Engr. Asif Masood Mohammed Laman
Syed Mansoor Rizvi Principal Officer M/s. CNH Services (Pvt) Ltd. Karachi
Murtaza Hanif
Mr. Ashfaq Memon Senior Manager Marketing Memon Motors (Pvt) Ltd. Maker of Super Star Motorcycles Hyderabad
Postal Address Active Communications D-68, Block-9, Clifton,Karachi Tel : 021-32218526 Mobile: 0321-2203815 E-mail: automarkpk@gmail.com website: www.automark.pk
AutoMark Canada Office Managing Editor Mohammad Shahzad S.A.E. D.M.P. 41 Jordana Drive Markham (Toronto) Canada L3S 3N8 Phone: 905-472-8282 Email: automarkcanada@gmail.com AutoMark REGD: MC-1330 Published every month by M. Hanif Memon The views expressed by contributing writers and comments do not necessarily reflect the views and policies of the Monthly AutoMark magazine's management
10-day shut down to cost country Rs. 800 billion Pakistan's fragile and precarious economy will suffer huge loss of Rs. 800 billion during the 10 days countrywide shut down due to Eid-ulFitr holidays. We should worried about the country's economic and political affairs. Pakistan's total economy is around Rs 25,000 billion and if we take out Rs 800 billion in just one hit callously, then we should not talk about GDP and economic growth, expansion of economy or the poverty alleviation." How a country like Pakistan, engaged in a war with more than one million internally displaced persons (IDPs) and low growth rate could afford the luxury to shut down for 10 days and still hope for economic revival. It is worth mentioning that the government has given fou r d ays h olidays to th e government employees to celebrate Eid from Tuesday to Friday facilitating them to add another two weekends Saturdays and Sunday to make them 6 days. However, the government employees, by taking Monday as furlough would be actually availing 10 days leaves putting the affairs of the government on auto. The country's exports and industrial production would be very badly affected by the closure of Customs, Banks, Stock Exchanges for 10 days. No developing and poor country could afford such a luxury. Such mindless policies of the government wou ld lead to s oc ial an d ec on o mic . The country was already facing the crippling energy crisis and the vending industry is worst hit. Hundreds of vending units and small businesses have been closed due to the prolonged electricity outages. In th ese circumstances, closure of government offices for 10 days is really mind-boggling and depressing for the manufacturing sector. We fails to understand what the government would gain or where it is leading the nation by shunting the economic activities for such a long period whereas it should have promoted the culture of hard work, dedication and revival of depressed and closed down industrial units across the board.
Exclusive Article by Muhammad Yousuf Shaikh Chairman PCMIC
PCMIC Vision to reform the existing Pak-Chinese industry in new era and for this presence of Chinese LargeDisplacement Motorcycles, Necessary for Demand Change in Pakistan and to compete with Indian manufacturers. For several years, the motorcycle industry in Pakistan has seen the old 90’s style looking motorcycles. Any investor with less or no experience has developed and sold motorcycles in the market and the industry has been in a haphazard situation with no controls yet never decreasing demand. There are a very few choices given to the end users in design, quality and features. Despite t he ever increasing d emand of motorcycle (last year recorded 2 Million motorcycles sold), there is no R&D on developing motorcycles with a better aesthetic appeal which is highly in demand. Consumers spend 1/4th of the new motorcycle costs trying to modify their motorcycles aesthetic appeal and give it value. PCMIC vision is to revolutionize this industry by bringing in different types of motorcycles that fulfill the current demand in terms of quality, appearance and value with in an affordable price. The Pakistan motorcycle market, which is dominated by bikes having an engine of 70 cubic centimeters (cc), has started to see a change in consumer preferences. N ow a d a y s , c u s t o m e r s p r e f e r motorcycles with an engine of 100cc or above while the bikes with 70cc engines have seen a fall in market share, as the trend suggests. The 100cc and above bike segment witnessed a record growth, while the growth in sales of bikes having 70cc engines posted decline. The changing consumer choices have forced the local motorcycle assemblers to begin focusing
on production of bikes with engines of 100cc and above. Last year, over 1.5 million motorcycles were produced in the country, of which production of 70cc bikes were the bulk. However, analysis of segment-wise data shows that production of bikes having engines of 100cc and 125cc and above grew 34% and 20%, respectively, while production of the previously mostpopular 70cc bikes shrunk 10%. Bikes having engines of 70cc still make up 80% of the total market shar e. Changes in consumer preference patterns is not new to the automotive industry as India is an example where the demand for bikes with engines of 100cc and above jumped from 48% in 2005 to 65% in 2012. The real change in the industry has come with the transformation of Pakistan, and the phenomenal jump (in motorcycle production) from 100,000 motorcycles in 2000-01 to two million a year p resently is a testimony to this transformation. When per capita income touches the $3,000-barrier, the Pakistani auto market will experience a change in consumer behavior where the customer will opt for both luxury motorcycles and trendy bikes like scooters and so on. Per capita income is a very important factor in the development of the automotive industry of any country as it results in healthier competition when the economic situation is unfavorable. According to data from the Pakistan Bureau of Statistics, the country’s per
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Monthly AutoMark International capita income clocked in at $1,290 in 2012 – much lower compared to other developing nations. High economic growth rate raises the standard of living of the population, which in turn creates more demand for higher-end automobiles. Eventually, the rising standard of living when per capita income touches $3,000$4,000 mark will drive consumers to shift from motorcycles to cars. At that stage, the motorcycle industry will also shift focus from being a necessity market to somewhat luxury or sports-oriented market. This transformation will start bringing in bigger-engine bikes into the Pakistani market, which will be a good sign not only for the automobile industry but for the economy as a whole. The advantage of 100% localization of 70cc motorcycles, which the Pakistani motorcycle assemblers enjoy, has not only helped the prices stabilize and become competitive with the region, but it has also allowed local assemblers to gain a foothold in foreign markets such as Bangladesh and Sri Lanka. The local industry is also seeking to introduce locally-made bikes to South African and Iranian markets. According to theReport of Production and Sales Requirements and Investment A na lysis on China’s Motorcycle Manufacturing Industry in 2011 to 2015 (2012 Edition), China’s motorcycle consumption can be illustrated using a three-level pyramid structure. The lowest level consists of motorcycles whose prices are lower than 45,000 Rupees. These motorcycles are mostly sold in rural areas and account for 60% of the total sales volume. The middle level consists of motorcycles whose prices are between 45,000 Rupees and 60,000 Rupees. These motorcycles are mostly sold in towns and counties and account for 30% of the total sales volume. The top level consists of motorcycles whose prices are higher than 60,000 Rupees. These motorcycles are mostly sold in prosperous coastal cities and areas and account for 10% of the total sales volume. This indicates that requirements for motorcycles have changed in the new market environment. Residents in tier1 and tier-2 cities purchase motorcycles because motorcycles represent a type of culture. Th e residents th ere use motorcycle for leisure and sports purposes. Nevertheless, residents in
rural areas and counties use motorcycles mostly as a means of transportation. This phenomenon has been proved by researches. In rich cities such as Karachi, Lahore, Multan and Islamabad, the demand on large-displacement motorcycles has been increasing by years. Th ere, motorcycle club activities are actively organized. Nevertheless, the supply chain of components for motorcycle modification is inadequate. If this p roblem is resolved, motorcycle modification will be a new growth force to the motorcycle market. The motorcycle industry development trend indicates that, transition to large-displacement motorcycles is a necessary option. While the sales volume of motorcycles for transportation purposes decreases, the sales volume of large-displacement motorcycles increases steadily. (In China& Pakistan, large-displacement motorcycles are motorcycles having 150 cc or larger displacement. According to international specifications, larged i s p la c em en t mo t or c yc l es ar e motorcycles that have 600 cc or larger displacement.) In 2010, the sales volume of largedisplacement motorcycles accounts for only 2.3% of the total motorcycle sales volum e. In 2011 a nd 2012, the percentage increases to 3.4% and 5.3%, respectively. Chinese motorcycle manufacturers have been mainly focusing on markets in rural areas in a long period. Their products are cost-effective but they failed to pay e no u g h a t t en t io n t o p r od u c t appearances and brands. This leads to insufficient innovation and R&D capabilities. As a result, they were in a negative position facing the new consumption trend. However, the launch of WINNER VBR150cc and Honda CBR-150, 600cc shows that the quality of Chinese large-displacement motorcycles is improving and the m anu fa ctu r ers h a ve star ted counteraction in the market. I n a d d i t io n t o sh i ft i ng fr o m transportation-oriented motorcycles to lar ge-d isplacement m otor cycles, Chinese motorcycle manufacturers must change their marketing approaches to m eet new m arket r equ irements. Consumers of large-displacement motorcycles are completely different from consumers of small-displacement
motorcycles in terms of education background, life style, consumption levels, consump tion habits, and consumption psychology. However, researches reveal that the manufacturers adopted the same showroom sales approach for the two different types of p r od u ct. In over sea s ma r kets, manufacturers pay more attention to culture display and product experience for every large-displacement motorcycle m o d e l . In s te a d of l a u n c h i n g advertisements that have poor message delivery effect, manufacturers tie brand value with services and influential public events such as club activities and motorcycle race sponsorship to generate culture recognition.....
by Muhammad Yousuf Shaikh
Muhammad Yousuf Shaikh, An A u to Ind u st ry Cons ul ta nt, Motorcycle Ind ustry Expert, M otorcycle Designer, China S ou r ci ng Exp er t, Ser ia l Entrepreneur and the Founder & Chairman of Pakistan China Motorcycle Industry Council (PCMIC), offers his analysis of the m otorcycle trade & ind ustry trends from Pakistan & China. The Chairman PCMIC working with motorcycle trade & industry for over two decades, Yousuf believe that new projects could help motorcycle industry to design and produce new design, new tech & large displacement motorcycles in Pakistan to comp ete with Indian motorcycle industry as P ak ist an offer ed ex clu si ve incentives in taxation on new entrant to manufactu re new d e sig n, n ew tec h & la rg e displacement motorcycle. For further details and for assistance please email at p a kchi na.m ic @g m ai l.com
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Exclusive Article by Owais Khan Corolla sales continued to remain in red. Even Suzuki Swift after a powerful start faced consumers’ reluctance wh o preferred used imported vehicles like Toyota Vitz, Toyota Passo, Daihatsu Mira, Nissan AD etc at the price of Suzuki Swift. From 2011-2012 sales of 4,977 units of Honda Civic, its overall sales jumped to 9,950 units in 2012-2013 and 9,933 units in 2013-2014. City sales swelled to 13,741 units in 2013-2014 from 11,285 units in 2012-2013 and 7,142 units in 2011-2012. Toyota Corolla remained a big loser with sales falling to 29,087 units in 20132014 from 32,608 in 2012-2013 and peak sales of 46,207 units in 2011-
Urgent need for small engine power cars in Pakistan Prime Minister Nawaz Sharif in his speech at 37th exports award of FPCCI on February 08, 2014 and PAPS auto show of PAPAM on March 6, 2014 in Lahore had expressed his wish for a complete Pakistani made car besides doubling exports of Pakistan. People willing to take a shift from two wheelers to owning of small cars do not have much options in 660-800cc vehicles since Daihatsu Cuore, Suzuki Alto, Hyundai Santro etc had become a history in the manufacturing book of the local auto industry. Pak Suzuki Motor Company Limited (PSMCL) had unveiled Wagon R 1,000cc from April 2014 after a gap of almost two years while consumers had still been awaiting any replacement of Cuore for the last two years. The existence of Hyundai Santro Plus holds no importance as its production remained suspended from 2010-2011 to 2012-2013. Its ma nu fac turer resumed its production with only 210 and 152 units produced and sold in 2013-2014. In the meantime used car imports mainly small cars proved a bit relief to some extent but after change of age limit to three from five years coupled with cut in depreciation limit the import of used vehicles had plunged sharply, thus
closing another option for the buyers of 660-800cc vehicles. Due to change in age limit, low engine power vehicles became unaffordable for many people owing to their high prices. The Indus Motor Company (IMC) appears so far reluctant in introducing new 800 or 1,000cc vehicle as its management feels that it is unfeasible to roll out low engine power vehicle because of high price factor. Pak Suzuki gave a substitute of famous Suzuki Alto in shape of Wagon R but it is premature to give any firm opinion about its future survival. Pak Suzuki closed down Suzuki Alto when its sales were thriving. It did not exist from 2012-2013 while in 2011-2012 its sales were hit at 16,288 units from 11,932 in 2010-2011 and 10,794 units in 2009-2010. Desp ite h igh pr ices and c ostl y maintenance, good sales of cars like Ho nd a C iv ic a nd Hon d a Ci t y surprisingly improved earnings of Honda Atlas Cars while IMC’s Toyota
2012. Suzuki Swift achieved highest sales of 7,128 units in 2011-2012 which dropped to 6,096 units in 2012-2013 and to 5,128 units in 2013-2014. The above figures reveal that only Honda Civic and City remained the highest selling cars besides proving disastrous for struggling Toyota Corolla in terms of its flat sales. However, the IMC now looks more determined to recover its past glory of highest sales of Toyota Corolla by introducing new models of Corolla with a bang for which it invested $100 million in technology transfer and production facility improvements. IMC commenced taking customer’s order from July 16 for 1,800cc Corolla Altis Grande, the 11th generation Corolla which has been completely redesigned around the concepts of elegance and class-above prestige. IMC has announced booking for the new mod el Toyota Corolla on partial payment of Rs 500,000.
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The government did not have any second option to buy the small cars other than Mehran due to non availability of small cars in Pakistan. It is worth to mentioning here that people who take the opportunity of different government offer schemes also do not have any other option to use/buy locally assembled small car. High engine power car makers are more hopeful that the sales of such vehicles w ill remain ahead of low engine power cars in the current year and Corolla is expected to take a big slice from the market share of Honda cars initially. As long as demand from filthy rich class remains high, the future of costly locally assembled cars is bright but there are limited varieties for the middle income group who want to switch from two to four wheelers. IMC claims to have got overwhelming response for its costly Altis as buyers rushed to the showrooms to book the car d espite subd ued demand in Ramazan. Surprisingly, the most popular Suzuki Mehran 800cc sales faced turbulence from 2011-2012 (36,131 units), falling to 32,407 units in 2012-2013 and 29,509 units in 2013-2014. If the Punjab government would have not lifted Mehran under Punjab Taxi Scheme in 2012 then the sales figures would have been more depressing. However, it seems that nothing serious has been done so far which is evident from the Auto Industry Policy (AIP) which was lying in the cold storage for the last six to seven months. Due to slow pace of work at the ministries and other departments – it is too early to see the implementation of the PM’s dream for a complete Made in Pakistan car. Pak Suzuki, which is the oldest assembler, has failed to materialize this dream as Suzuki Mehran’s localization level has been stagnant at 70 per cent. Its price had been raised frequently due to change in rupee-yen-dollar parity. In contrast, the closure of Suzuki Alto had shifted 1,000cc buyers towards Suzuki Cultus which is visible from its improvement in sales to 14,682 units in 2013-2014 from 13,308 units in 20122013. After getting support of PAAPAM, Pak Suzuki has been taking up the case for many months urging the government to allow import of six HS Code, being CKD parts only, by removing them from the negative list of items importable from India.
PSMCL has informed that they do not desire any change in duty structure for import of CKD Parts from India. Specifically, import duties of CKD Parts and A-max parts under SRO 656 and SRO 693 should remain same whether import is made from Japan or India or any other country. The benefits highlighted by PSMCL are lower costs of CKD, Introduction of new models, technology transfer / joint ventures in parts manufacturing and possibility for exports. However, EDB is of the view that the above mentioned proposal is not specific to the vehicles of Pak Suzuki Motor Company Limited, as the afore-said HS Codes are universal for all vehicles. Hence removing of these HS Codes would imply opening up imports of aforesaid CKDs of all vehicles from India. Market sources said that Pak Suzuki has its ow n agenda regarding trade with India while other manufacturers offer different view. It means that there is no voice of the local car assemblers u nder the platform of Pakistan Automotive Manufacturers Association (PAMA). Market people feel that there is no harm if the government accepts Pak Suzuki’s proposal as it would at least bring down the prices of cars besides resulting in introduction of new models at par with Maruti Suzuki. Reduction in prices of small engine power will also help a number of people who want to move on four wheelers from two wheelers. The government, the concerned ministry and Board of Investment should reach those car assemblers either European, Korean or Chinese who are making 660cc cars. At least these cars can run 20-22km per liter of petrol almost equal to CNG consumption in brand new 800cc car. A number of people are plying used 660cc vehicle and they are happy enough due to its petrol consumption. However, Pak Suzuki is again lucky after getting orders for supply of 50,000 veh icles to Punjab government. PSMCL, having over 50 per cent market share, has entered into an agreement
The government, the concerned ministry and Board of Investment should reach those car assemblers either European, Korean or Chinese who are making 660cc cars. At least these cars can run 20-22km per liter of petrol almost equal to CNG consumption in brand new 800cc car. Market people feel that there is no harm if the government accepts Pak Suzuki’s proposal as it would at least bring down the prices of cars besides resulting in introduction of new models at par with Maruti Suzuki. Reduction in prices of small engine power will also help a number of people who want to move on four wheelers from two wheelers. with Bank of Punjab for sale of 50,000 units of Suzuki Ravi and Suzuki Bolan Van under “Apna Rozgar Scheme” of Punjab government. These vehicles will be supplied from October 2014 to October 2015 which is bound to improve the company’s earning by 13-20 per cent. Punjab government has allocated Rs 25 billion for the taxi scheme in its 20142015 budget. PSMCL has capacity to produce 3,000 units per month each of Ravi and Bolan on three shifts. The company sold 14,000 units of Bolan and 11,700 units of Ravi in calendar year 2013 (CY13). The company also produces 150,000 units (on double shift basis) and sold 7 6,000 c ars/ LCVs d u ring CY13 compared to 96,000 cars/LCVs during 2012. Earlier in 2012, the Punjab government, under its taxi scheme, had given an order of 20,00 0 cab s to P SMCL. The cabs produced under the scheme had 60pc share (12,000 units) of Suzuki Mehran and 40pc (8,000 units) of Suzuki Bolan....
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Automotive Sector - Update
One More Shock Awaits Awaits By Engr. Asif Masood
A
nother sharif’s scandal will come up in near future like Nandipur power project. This government has taken over the driving seat from Mr. Zardari another corrupt politician of Pakistan. Prime Minister Muhammad Nawaz Sharif performed the ground breaking of a landmark coal-fired power plant that will generate 1320 MW and help the country to meet its chronic energy shortage. The project comprising two u nits of 66 0 MW each w ill be operational in two years time and start adding electricity to the national grid by 2016. Before that the people should know about what happen to Nandipur power project. State Minister for Water and Power Abid Sher Ali recently claimed and lied the Nation in an interview that the Nandipur P ow er Plant is cont ribu ting 95 Megawatts to the national grid ever since its inauguration by Prime Minister Nawaz Sharif on May 31 this year, whereas, National Transmission and Dispatch Company (NTDC) disclosed that Nandipur plant was shut down just after five days of operation as it was not designed to run on costly fuel like diesel moreover it is not feasible to run at cost of Rs 52 per unit. The NTDC officials made this statement at a public hearing conducted by the National Electric Power Regulatory Authority (NEPRA). The hearing, presided over by NEPRA Vice Chairman
Habibullah Khilji, was also informed that the Nandipur Power Project had not yet officially or legally achieved its commercial operation date (COD). The first unit of the plants to come online was run on diesel fuel for five days after its inauguration, but closed down for being too expensive. In these five days, the plant produced electricity at an average cost of Rs 52 per unit.
NTDC officials said the hasty decision to bring this plant online was made by another (Sharif), Mr “Showbaz” Sharif, Chief Minister Punjab. NTDC and PEPCO had neither requested the operations, nor did they approve the premature generation. The Sharif family is rushing to get thing quickly without any planning. Actually, they have very less time to clutch exchequer money.
Prime Minister Sharif inaugurated this 100MW plant of the controversial Nandipur Power Project on May 31. The project had been delayed under the PPP government rightly amid allegations on the sharif”s family for grafting money. Meanwhile, the project cost increased more than double tuned upto Rs 61 billion (instead of Rs 23 billion) and the nation suffered a loss of Rs 38 billion. This game plan was revived by the Chief Minister Punjab. The project will be able to generate 425MW on furnace oil, which can be upgraded to 525MW if natural gas is used as fuel. However, the plant will take another year or so to achieve commercial operation status.
Pakistan is still suffering the worst Energy Crisis, only because of bad governance, corruption, poor policies and worst planning of government led by Prime Minister Nawaz Sharif. The government was fully aware of the situation from day one and yet it failed to deliver even after passing one and a half year. Even today half of the population in Pakistan has no reliable and affordable electricity supply.
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It is known fact that country is short of 7000MW, and is likely to reach about 8500MW by next year with this attitude and level of corruption. It is imperative to sustain the industrial as well as domestic consumer growth. Pakistan is full of natural resources like Oil, Gas and Coal reserves and has the potential to exploit Geothermal, Wind, Solar and hydel energy. Presently, Pakistan has fourth largest coal reserves in the world (Thar, Thatta & Sonda). Coal is the main source for producing cheapest electricity and its availability is in abundance in the country. It is a Black Gold of the cou ntr y. The r eserves have not yet been exploited to its optimum. Th e huge coal reserves are more than 200 Billion tones and the bulk of it is found in Sind province. In 1948, 60% of Pakistan’s power was produced fr om loc al coal, but it trickled down substantially. Despite Pakistan is among th e cou nt ries h aving largest coal reserves, yet it could only exploit 1%. After 60 years the energy sector has become more dependent in the region on imported fuels. Where as in India 65% of power is generated from coal and in China it is more than 70%. The G overnment is now finally convinced to enhance the coal share in overall energy mix and should make all out endeavor to develop Thar deposits
which are spread over 9000 sq Km, and can meet the demand of fuel for years to come. Recently, China has shown the interest to invest $600 million in Sindh coal project for setting up an integrated coal mining – cum power project. Project will produce 180 million tones of coal per annum, which is sufficient to meet the requirement of 400MW power plant. The Ch ina National Machinery import & export corporation (CMC) has submitted an informal proposal to Water & Power Secretary. The project will be set up at Sinda – Jherruk coal mines in Sindh. The Geological Survey of Pakistan (GSP) has carried out a detail study on coal gasification and found feasible where the gas has to travel less in pipeline.
Exploration of Thar coal will supplement the existing energy out put would give a boost to economy of Pakistan. Geological Survey of Pakistan (GSP) has identified the coal resources by which the country has emerged as one of the leading country of the world after discovery of huge lignite coal resources in Sind province.
The coal deposits of Pakistan are restricted to Paleocene & Eocene rock sequences. Economists say that the energy demand over the next 5 years is expected to grow by 7%per annum to meet the future demand of power. Domestic exploration would have to be intensified to increase the share of coal from 1% to at least 30% by 2020. The Geological Survey of Pakistan (GSP) had evaluated coal reserves in four specific tracts/blocks of Thar coal field. The evaluation study consists of drilling 167 bores with a cumulative depth of 50,000 meters & chemical analysis of 2000 sam ples . T he tec hnol og ic al developments with respect to coal, exploration, extraction, h andling and utilization w ould acceler ate future development of Pakistan’s coal resources & would reduce dependence on its fast depleting supply of natural gas & reduce the burden on Oil import bill. The government may therefore focus fully to overcome energy crisis and put these projects on top of the agenda. The lesson can be taken from our brother Islamic country “Indonesia” who realized that share of coal based power production was declining; they therefore decided th at th e next target of 10,000MW of power would come from coal until a balanced energy portfolio had been achieved......
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Automotive Sector - RECENT TRENDS
Monthly AutoMark International
PAKISTANI ASSEMBLED CARS VS IMPORTED CARS Pakistan has a very dynamic automobile market. But unfortunately Pakistani market has always been dominated by Japanese car manufacturing brands. In the due course Pakistan has not been able to produce a single Pakistani car brand. Actually the import of foreign brands in the early historic era in Pakistan had far reaching negative impacts on Pakistani automobile industry. Nobody could dare to create something against the mighty established Japanese brands. On the contrary neighboring India had a closed economy till 90s that m a d e t h ei r lo c a l a u t o m ob i l e companiesmotivated enough to establish themselves to a great deal before they allow ed foreigners to c om e in. Motor mechanics say that whichever oil you use, use it forever for you vehicle. Sounds amateur! What if particular oil does not have what your engine needs? Switching the brand seems more appropriate than trying over time and
again the same failed product. So my advice to you is not to follow advices blindly. Th ink yourself as w ell. That is the reason why Pakistan is facing huge problems to establish its own automobile brands. This has further limited Pakistani buyers with only two or three choices while deciding a car to buy. In other words Pakistani buyers have only a few products available to consider and include in their evoke sets. If we further narrow it down and start to look at the individual categories of the options on the basis of engine capacity or size, we are left with even lesser choices. If we observe Pakistani roads, we come to know that they are occupied by only a few models of Honda, Toyota and Suzuki. In addition to this the prices of cars in Pakistan have enormously increased making it impossible for a salaried person to afford a car. Internal situation of the country has also to do with it and playing its part in the drama.
H eavy ta x i mp osi ti ons by th e government have also increased the car prices in Pakistan. Impact of Imported Cars In th is scena rio th e used and reconditioned imported cars have brought a sigh of relief for some of the buyers. They are relatively cheaper than the new Pakistani assembled cars and more reliable according to a section of experts. A used Japanese assembled car according to many is more durable and performance giving than new Pakistani assembled cars. But the dilemma here is also the same. Buyers have a very low degree of assortment and choice to them. Conclusion Government should take necessary actions and lift the barriers to import u s ed c a r s i n P a ki st a n h e nc e monopolistic situation which is arisen due to bad policy making could be reversed. Every citizen should be able to buy an automobile for him or his fam ily i n rea sona ble p ri ces.....
Pak Suzuki gets order for 50,000 cabs Sales outlook for a leading Japanese local car assembler appears positive for the current and next fiscal year after getting additional orders for supply of 5 0,00 0 veh icles to t he Pu njab government. The Pak Suzuki Motor Company Limited (PSMCL) has entered into an agreement with Bank of Punjab last week for sale of 50,000 units of Suzuki Ravi and Suzuki Bolan Van under “Apna Rozgar Scheme” of Punjab government. The car assembler informed the stocks exchanges this week that these vehicles will be supplied from October 2014 to October 2015. This sale of vehicles will improve the profitability of the PSMCL which enjoys over 50 per cent market share. Punjab government has allocated Rs 25 billion for the taxi scheme in its 20142015 budget. Auto analysts at brokerage houses
believe that the Rozgar Scheme can lift PSMCL’s expected earnings in 20142015 by 13 to 20pc. PSMCL has capacity to produce 3,000 units per month each of Ravi and Bolan on three shifts. The company sold 14,000 units of Bolan and 11,700 units of Ravi in calendar year 2013 (CY13). The company also produces 150,000 units (on double shift basis) and sold 76 ,0 00 car s/LCVs d ur ing CY 13 compared to 96,000 cars/LCVs during 2012. Earlier in 2012, the Punjab government, under its taxi scheme, had given an order of 20,000 cabs to PSMCL. The cabs produced under the scheme had 60pc share (12,000 units) of Suzuki Mehran and 40pc (8,000 units) of Suzuki Bolan. Market sources said that the it seems that the Punjab government has given entire contract of vehicle manufacturing for taxis to Pak Suzuki while there was
another assembler – Al-Haj FAW (local assembler in partnership with Chinese FAW group), which was also capable of p r od u ci ng sm a ll p i c ku p - va ns . Though the Chinese group is capable of producing vehicles like FAW X-PV and FAW-Carrier but PSMCL remains a major beneficiary given its huge capacity and long association with the Punjab government in earlier sch emes. The Punjab government will take the vehicles from local assemblers which will be used as taxi in rural areas for mass transportation. When an official in Al Haj FAW was a sked t o c om m ent on Pu nj ab government’s decision of giving entire assembly of units to PSMCL, the official said his company was still in negotiation with the Punjab government and hopeful that the government would consider its requ est in giving some sh ar e in providing vehicles to Rozgar Scheme.....
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Automotive Sector - Update
Used car imports continue to be misused: PAAPAM The country’s automotive industry and auto part manufacturers are suffering h eavily fr om th e after sh ocks of inconsistent import policies, rampant import of used cars and frequent a m nest y sc h em es of t h e p a st government. Pakistan Association of Automotive Parts and Accessories Manufacturers’ Chairman, Usman Malik, stated that, according to recent press reports, a mafia of used car importers, in connivance with the Customs as well as FIA Immigration officials, are misusing the personal baggage schemes, which are meant only to facilitate overseas Pakistanis for importing their own used vehicles into the country. These press reports have proposed that, in order to control misuse by the mafia, all overseas Pakistanis, who bring their personal vehicles to Pakistan, should be required to register theseimported used cars in their own names in Pakistan, with the condition that they cannot sell or transfer it for few years. As per current rules, overseas Pakistanis are required
to stay abroad for at least two years and the vehicles, which they wish to import, must be in their possession during stay abroad. Besides they have to produce foreign vehicle registration certificates along with driving license at the time of clearance. However, according to reports, this scheme is controlled by a mafia, which is being patronised by a lobby of some customs and immigration officers. Now, majority of the vehicles, being imported under this scheme, are not owned by overseas Pakistanis but their passports are stamped by corrupt immigration officers and used for commercially importing used vehicles from Japan. PAAPAM Chairman further qu oted above reports regar ding purchase copies of passports of overseas Pakistanis by used car dealers for ex p loi ti ng th i s sc h em e. T h ese photocopies of passports were then imprinted with fake departure and arrival stamps to complete required formalities for imported vehicles clearance....
CNG bus project failed in Karachi
NG buses of Karachi Metropolitan Corporation (KMC) worth Rs1billion have been rusting at Surjani bus terminal; while the rulers of Sindh government, as per their traditional governance style, are least concerned about the wastage of the taxpayers’ money and inconvenience faced by the commuters. Five years back, a fleet of 95 brand new
CNG buses was purchased to reduce problems of Karachi commuters, but the fate of this urban transport project, was no d ifferent from the other failed public transport projects of Karachi. Th e KMC sou rces said th at the provincial government was not releasing fund s for repair of these bu ses.
Govt set to allow CNG sector to import 600mmcfd LNG In a major positive development, the government is all set to allow the Rs400 billion CNG sector to import 600mmcfd LNG in ph ases th rough pr ivate ar rang em ent besid es alloca ting 200mmcfd pipeline capacity for the sector in the first phase and 400mmcfd in the second phase. “We are going to table the summary in the next ECC meeting that is most likely to be held on August 8 seeking approval for the pipeline capacity to transport regasified LNG to be imported by the CNG sector,” a senior official of the Ministry of Petroleum and Natural Resources told press media. “Once this project gets materialised, the gas will be available at the CNG stations for seven days a week round the clock.” This means the CNG sector in Pakistan will emerge as the biggest LNG importer in the years to come. The CNG sector, the government official said, was hopeful of importing the LNG by March 31, 2015 replacing the local CNG. And the local gas being used by the CNG sector will be surrendered to the government that will use it either for the industrial sector or for power generation. If the government opts to use the local gas, abandoned by the CNG sector, for pow er generation, then it w ould immediately be in a position to generate 1,600MW electricity. The official said the LNG price would be de-regulated and sold in liters and not in kilograms. The government or Ogra will have no role in fixing the price. The CNG sector will regulate the price on its own and maintain it at 25-30 percent parity with petrol. The official said the CNG sector was going to ink a deal with Engro LNG terminal to import 200mmcfd LNG and 400mmcfd through other terminals being installed by other players under private arrangements. “The Engro LNG terminal has the capacity to handle the import of 6 9 0m m c fd g a s. H ow e ve r, th e dependable capacity of Engro terminal exists at 600mmcfd gas, out of which the government w ants to import 400mmcfd LNG while the remaining 200mmcfd will be imported by the CNG sector.”....
www.automark.pk | August 2014 | Page 19
Monthly AutoMark International
Automotive Sector - Update
Toyota, Honda and Suzuki are Pakistan’s top car brands It is common knowledge that the Indian auto industry is in the throes of deep depression. Same is the case with Pakistan auto industry. But slowly and steadily, both of them are emerging from the slowdown and posting increase in sales. S o c i et y of I n d i a A u t om ob i l e Manufacturers have revealed that India exported a total of 5,50,466 units during 2013-14 as against 5,47,22 units in 201213, while domestic car sales were at 17,86,899 units in FY14. Conversely the Pakistan auto industry sold only 124,807 locally assembled units which include LCVs, Commercial vehicles, vans and jeeps during first 11 months of FY14. The cou ntry exported auto p arts and accessories to a total of $18.677
million while imports of stood at $1.833 billion. The same scenario continued in the two wheeler segments in both India and Pakistan. India’s exports where two wheelers were concerned increased 6.52% to 20,83,938 units in FY 14 from 19,56,378 units in FY13. Domestic sales stood at 14.81 million. Across the border in Pakistan, motorcycle sales stood at 1.44 million in 10 months of FY14. However with imported cars making their way into Pakistan the overall perception of auto owners is undergoing a sea change. High quality cars in a higher price bracket with all the comforts and gadgets are in demand as was revealed in a market research. 10,000
respondents from all walks of life, age and income levels were surveyed. The survey revealed that 18.41% of car owners have at least one unit in the Rs.11.5 million category while 15.94% of car owners have one car below the Rs 0.5 million mark. While car buyers in Pakistan do not put much emphasis on tracking system, insurance cover, there is an increasing awareness where brand perception, fuel efficiency and drive quality is concerned. Toyota brand was the No.1 brand in Pakistan with 86.14% of respondents showing their preference for the brand which was followed by Honda with 83.33% and Suzuki which received 69.12%....
Yamaha looking to increase market share by launching fuel efficient bikes in India A company operating in the Indian bike market can do only a few things to increase its sales and market position, such as manufacturing low cost bikes, signing up famous brand ambassadors and improving the fuel economy of their products. Japanese bike maker Yamaha seems to be going for the third option and it hopes to increase its market share by launching more fuel efficient bikes, thereby increasing its stronghold in India. The market for two wheelers in India is dominated by firms like Hero MotoCorp, Bajaj Auto and Honda Motorcycle and Scooter India (HMSI). Industry experts feel that one of the main reasons for their success is a product line that inclu des models with h igh fuel economies. Understanding the mentality
of the Indian buyer is absolutely critical and there are a couple of factors that seal the deal for him/her. First and the foremost is the price of a product, which, on most occasions, is the deal maker or breaker. Second, and almost an equally important factor is the fuel economy of a bike, which facilitate high sales of a bike. A large population of Indians ride bikes and there is a space for innumerable companies to coexist, given they sell the right kind of products. The Managing Director of Yamaha Motor Research, Toshikazu Kobayashi, spoke about the same, and said, "Fuel economy of course is a key factor that influences the buying behaviour of the Indian customer across segments. Hence, we are investing our resources in innovations in fuel economy
technologies across segments. Going forward, you may expect us to launch new models of two-wheelers with more fuel efficient technology in Indian market which provide best in class mileage as well as cleaner air to our customers." Yamaha recently launched the FI versions of FZ and FZ-S, fuel efficient versions, of its popular bikes and hopes to continue doing th e sa me by introducing a new variant of the Fazer as well. Industry experts feel that though it would be tough for Yamaha to compete with the likes of Bajaj Auto, Hero MotoCorp and Honda, the attempt to launch fuel efficient products is likely to pay off in the long run...
www.automark.pk | August 2014 | Page 20
Pakistan’s auto vendor industry
Monthly AutoMark International
Registration of Auto vendors with EDB
Exclusive article by Owais Khan
Up to 2003-2004, when deletion programs were active in Pakistan, there was a compulsory process that all the parts manufacturers had to register themselves with the EDB. But from July 2004 to July 2014 (one decade) this practice was abolished. “It is a good idea that the Engineering Development Board is again taking the issue of vendors’ registration with the EDB,” chairman Association of Pakistan Motorcycle Assemblers (APMA), Mohammad Sabir Shaikh said. In Pakistan, a number of parts vendors have become entrepreneurs having staff of less than five persons but are not registered with the Sales Tax due to low volume of production and lack of knowledge and education, he said. The EDB should avoid putting any pressure on such entrepreneurs that force th em to pa ck up th e ir busine sses. Howeve r, the y are genuine manufactures of many parts and supplying to small units through big vendors, Sabir said.
If the EDB wants to ensure registration of two three wheelers’ vendors with the EDB – the Board must include APMA chairman and vice chairman from Karachi and Lahore in a committee who will visit vendors for verifications otherwise the move to register vendors with the EDB would prove something negative. All the 2/3/4 wheelers are required to operate under the criteria defined in SRO 656(I)/2006 and procure their inputs through sources as defined in SRO 656(I)/2006 i.e. i) import through the system as per lists approved by EDB, ii) Manufacturing of parts through inhouse facilities and iii) procurement from Sales Tax registered vendors having in-house facilities for th e manufacturing of parts. While submission of initial list and submission of reconciled records at the end of the year, it has been observed that certain vendors having no existence or traders operating under the garb of vendors are reported by the OEMs which has opened the window for pass through of parts and also encouraged the supply of sub-standard parts to OEMs specially
of 2/3 wheelers. This mechanism has also discouraged the localization of parts in the country besides causing revenue loss to the national exchequer. It is also a fact that all the vendors reported by the OEMs in the list are not ap p r ove d b y EDB u nd er SR O 655(I)/2006 because they do not use the concessionary regime of the SRO 655. It is also to inform that all the vendors are also not member of PAAPAM and as such it becomes difficult for EDB to ascertain their ge nti li t y wit hou t a ss essi ng manufacturing facilities these vendors possess, as they are not operating under the concessionary regime of SRO 655(I)/2006. In order to have a complete data of the local vendors supplying parts to the OEMs, irrespective of their registration/ membership with EDB/ PAAPAM, it is proposed that all the vendors supplying parts to any of the OEMs should be required to register with EDB and made liable to provid e statu s of th eir manufacturing facilities to be verified by EDB to ensure the procurement sources. This measure would create ample space for further localization and growth of industry. The above issue will also be discussed at length in the 20th AIDC meeting to be h eld on Au gust 18, 2014....
www.automark.pk | August-2014 | Page 21
Exclusive Review by Ali Hassan
Monthly AutoMark International
Pak Suzuki, EDB differ on trade with India
The issue of liberalizing trade with India has been active and inactive for the last few decades. In the last few decades, industries in India, China, Indonesia, Malaysia and even Bangladesh have gone far through while in Pakistan no firm decision has yet to be taken whether trade with should be liberalized or not. Chairman Associaton of Pakistan Motorcyc le Assemblers (APMA ) Mohammad Sabir Shaikh said either Pakistan should decide not to indulge in trade with India or in case the government is willing to do it then it should take a stand and open its border with India for a more free trade. He said Pakistan should refrain from opening trade with India on finished good s’ im p ort s. B ut t h e t ra d e of raw materials and components should be considered as Pakistan is already importing au to par ts and accessories from Japan, China, Korea, Thailand, and many European countries.
He said when localization has not been achieved in the last few decades and under invoicing/smuggling of parts have been thriving then there is no harm in opening trade with India for import of assembl ies, r aw ma teria ls, su b assemblies, components and subcomponents. A discussion between auto stakeholders and the government officials under a meeting of Auto Industry Development Committee (AIDC) was scheduled to be held August 6, 2014 bu t as per PAMA/PAAPAM request, the 20th meeting of AIDC was postponed. The same will now be held on Monday- 18th August, 2014. Engineering Development Board (EDB) has received a representation from Pak Suzuki M otor Company Limited (PSMCL), through Ministry of Industries and Production/Commerce for allowing import of following 6 HS Code, being CKD parts only, by removing them from the negative list of items importable from India.
S. No. HS Code Item Description:
Accessories Manufacturers (PAAPAM). PSMCL has informed that they do not desire any change in duty structure for import of CKD Parts from India. Specifically, import duties of CKD Parts and A-max parts under SRO 656 and SRO 693 should remain same whether import is made from Japan or India or any other country. The benefits highlighted by PSMCL are lower costs of CKD, Introduction of new models, technology transfer / joint ventures in parts manufacturing and possibility for exports. However, EDB is of the view that the above mentioned proposal is not specific to the vehicles of Pak Suzuki Motor Company Limited, as the afore-said HS Codes are universal for all vehicles. Hence removing of these HS Codes would imply opening up imports of aforesaid CKDs of all vehicles from India. It is also worth mentioning that during the discussion on Trade with India held in the Ministry of Commerce, the Auto Industry insisting on inclusion of all
1) 8703.2111 - - - -Components for the assembly/ manufacture of vehicles, for engine capacity not exceeding 800cc Car, CKD 2) 8703.2191 - - - -Components for the assembly/ manufacture of vehicles, for engine capacity exceeding 800cc but not exceeding 1000cc Car, CKD 3) 8703.2210 - - - -Components for the assembly/ manufacture of vehicles, for engine capacity exceeding 1000cc but not exceeding 1300cc Car, CKD 4) 8703.2311 - - - -Components for the assembly/ manufacture of vehicles, for engine capacity exceeding 1300cc but not exceeding 1500cc Car, CKD 5) 8703.2194 - - - -Components for the assembly/ manufacture of vehicles, for Mini Van engine capacity exceeding 800cc but not exceeding 1000cc Car, CKD 6) 8704.3110 - - - -Components for the assembly/ manufacture of vehicles, for Pick-up G.V.W not exceeding 5 tons, CKD In 2003-2004 deletion program was frozen and after passing of one decade – the localization issue in Pakistan is still the same as of 2003- 2004.
Pak Suzuki Motor Company Limited has also informed that the above proposal has been supported by Pakistan Association of Automotive Parts and
auto sector related tariff line in negative list to be gradually phased out within five years time frame.
www.automark.pk | August-2014 | Page 22
International Automotive Disaster - Update
Monthly AutoMark International
China car parts plant blast kills 75, hurts 190 China suffered its worst industrial accident in a year on 2nd August-2014, when an explosion killed at least 75 people and injured more than 190 at a factory that makes wheels for carmakers including General Motors. The blast in the wealthy eastern province of Jiangsu occurred around 7:30 a.m. in Kunshan city, about an hour's drive from Shanghai, after an explosion ripped through a workshop that polishes wheel hubs. A preliminary investigation suggested the blast at Kunshan Zhongrong Metal Products was triggered when a flame was lit in a dust-filled room, the local government said at a news conference, describing the incident as a serious safety breach. State news agency Xinhua said two company representatives had been taken into police custody and that the death toll had risen to 69 by late Saturday. Xinhua quoted Chinese President Xi Jinping as d emanding a fu ll inquiry into the blast and saying th ose found responsible must be punished. Survivors with charred skin were seen being w heeled into ambu lances
as residents recalled hearing th e explosion from over a mile away. At the site of the blast, television images showed wrecked walls and heavy machinery that had been hurled through windows. "We heard a really loud blast at about 7 a.m. this morning so we rushed out of our dormitories," said Zhou Xu, a 26year-old working at a plant across the site. "First the ambulance came, then as the news surfaced in the media, many families -- especially the wives -- rushed
GM looks for alternative supplies in China after deadly factory blast General Motors Co. said it had asked its main Chinese supplier to find an alternative source of components after an explosion ripped through a factory killing at least 75 people. According to Zhongrong's Web site, the factory made wheels that are supplied to GM and many other carmakers. Distancing itself from Zhongrong, GM issued a statement saying it bought components from a company called Dicastal, which Zhongrong works with. GM went onto say it had no direct dealings with Zhongrong, which it describ ed as a Tier- 2 su ppli er . Tier-1 component suppliers such as Dicastal are "required to source from Tier-2 suppliers who must meet both in-country environment and safety
standards as well as quality standards," GM said. The GM statement said it was too early to determine the cause of the explosion as a n official investig ation w as underway. "We will closely monitor the investigation and, if asked, will provide any resources and information that can assist in th is matter," GM said . The blast was reported to have taken place in a workshop that polishes wheel hubs. A preliminary investigation suggested it was triggered when a flame was lit in a dust-filled room, the local government said on Saturday, describing the incident as a serious safety breach. Xinhua reported that police took at least two company representatives into custody.....
to the site to see if their husbands were okay." A security guard from an adjacent factory, who declined to be named, said the impact from the explosion was so great that it shattered the windows of his guard house, located about 500 meters away from the site of the blast. 80 percent burns The doctor said the final death toll could be "very high". Kunshan Zhongrong could not be reached for a comment. Its website said the firm is wh olly owned by an unidentified foreign investor, employs 450 workers and counts GM and other U.S. companies as clients. GM confirmed that th e company produces parts for Dicastal, a global supplier to the automaker, Bloomberg reported. Its operations include plating and polishing of metal parts such as wheel hu bs, accord ing to the w ebsite. The Kunshan government said 264 workers were at the site when the exp l osio n st ru c k a nd 44 d i ed immediately. Xinhua cited officials as saying that the number of injured totalled 187. "Of course, the foreign owner of the com p any wil l should er t he responsibility," said Duan Shenyi, a user of China's microblog Weibo said on Saturday. "But because we lack a workers' union, we do not have enough supervision of companies."
www.automark.pk | August 2014 | Page 23
Automotive Sector - Review
Pakistani car industry slow to respond to rising demand This fact made a strong case for assembling lower-cost economical cars in order to tap into the enormous middle class of 30 million, whic h currently relies la rgely on old second-hand cars and motorcycles. The rise of the middle class in Pakistan is offering a great opportunity for automakers from across the world to tap into the potential demand for small vehicles. When Pakistan ended protectionist policies for the automotive sector, major players began setting up local assembly operations, starting with Suzuki and followed by Honda and Toyota. Local assembly numbers increased by sixfold from just 33,000 units in fiscal 1995-96 to 204,000 in 2006-07, the industry’s peak year. However, production is still quite low in a country where per capita income has reached $ 1,380 and a teeming population of 180 million, including 2 million people who reach age 25 annually. And while sales dropped by half in the two years following the 2006-07 peak, amid an economic slowdown and higher car financing r ates, th ey are now stabilising, with about 137,000
local ly assem bled ca rs sold in 2013-14. In any case, current production levels are not indicative of actual demand, as car imports rose significantly when the government relaxed its import policy. In fiscal 2012, the import duty on cars was relaxed from an age limit of three years to five years. Pakistan imported 54,000 units in that year. However, mounting pressure from domestic assemblers caused th e government to reverse the decision in December 2012 and imports diminished to 39,000 units in 2012-13. Clearly, there was a direct link between lower prices and higher demand. This fact made a strong case for assembling lower-cost economical cars in order to tap into the enormous middle class of 30 million, which currently relies largely on old second-hand cars and motorcycles. Cars with engines from 800cc to 1800cc that are assembled locally currently for
between 30% and 50% more than what consumers pay for the same vehicles in Ind i a, T h ai la nd a nd V ie tna m . Pakistan's domestic auto sector was protected for 20 years in order to advance the industry to gain economies of scale. A 'deletion policy' in place up to 2005 promoted a shift from importing au to p ar ts to relyi ng on l ocal manufacturing. However, the policy has not been successful as Pakistan still does not manufacture even a single electrical or mechanical component Only tyres and some rubber parts are locally produced. In 2005, when the deletion policy was phased out and the industry was supposed to be opened to the rest of the world, domestic players were still not ready to face the storm of free-market competition. T h e y s u c c e s s fu l l y c o n v i n c e d policymakers to not remove the duties on completely built imported units, and to retain the duties on imported
www.automark.pk | August-2014 | Page 24
Monthly AutoMark International
The All Pakistan Motor Dealers 'Association has responded with a three-point proposal to address the above-mentioned issues: a level playing field for all stakeholders; an environment of competition to discourage monopolies and encourage performance; and protection of consumer rights. parts that were also available through local production. It was a 'prisoner's dilemma' (a term coined by Nobel laureate John Nash that shows why two purely-rational' individuals might not cooperate even if it is in their best interests). Therefore, as a way out, the government decided to replace the deletion policy w ith a tar iff- based system a nd i nt ro d u ced t h e Au t o Ind u st r y Development Programme. However, the industry has yet to grow out of its state of infancy. In essence, local assemblers engaged in rent-seeking behaviour and continued to pocket high margins w i th ou t ac tu al ly ex pa nd ing or innovating to become competitive. In the entire process, the only loser was the consumer. Th e All Pakistan Motor Dealers 'Association has responded with a threepoint proposal to address the abovementioned issues: a level playing fi el d fo r a ll st a keh ol d er s; a n envir onment of com petit ion to discourage monopolies and encourage p er form anc e; and p rotec tion of consumer rights. Th e Competition Commission of Pakistan (CCP), in a detailed report on the auto sector, has observed that the industry remains inward-looking and tries to protect its interests through mercenary regulatory instruments. The CCP recommended discouraging the cur rent rent-seeking culture through the opening up of the domestic market to imports of new cars at reasonable tariffs, removal of entry barriers to imports, and other liberal measures. The counter argument presented by the auto manufacturers is in the form of the question: 'Do we want to be an auto manufacturing or an auto trading country? Employment and transfer of technology will only follow if we help c r ea t e a n ec on om y b as ed on manufacturing,' says Pervaiz Ghias, the CEO of Indus Motors.
He added that because Pakistan is a low per capita income country, there is not enough demand to justify expansion by manufacturers or to entice new players. ‘Pakistan has 12 passenger cars per 1,000 people at a per capita GDP of about $1,200. Look at the numbers for India: it has 17 passenger cars per 1,000 people w ith a per capita income of $1,500 to $1,600. That's very little difference, and is explained by the low income levels in both countries' The main difference between the two countries is the size of the population and th at is why India is able to manufacture cars at much lower p rices. It remains unclear wh at policy Pakistan will adopt in the coming years. Looking at demand for the more economical motorcycles, Mr Ghias said that increased income levels and rationalised prices of two-wheelers had led to a boost in production. He pred icted a similar revolution in th e fou r-w heeler ind ustry based on a further rise foreseen in income levels. Pakistan sells around 1.6 million motorcycles a year, compared with 10 million in India. Furthermore, the prices of two-wheelers in Pakistan a re int ernat ionally comp etit ive because the industry has reached a certain scale. A key factor in the emergence of the motorcycle industry as a success story is the entry of new players, which lowered unit prices due to economies of scale and competition. The price of a stand ard Honda motor cyc le has remained almost constant throughout the last decade. This stability in the value of the product was due, in part, to the entry of a few Chinese companies, which forced the existing players not only to innovate technologically but also to lower their prices. Therefore, at least in the twowheeler industry, the consumer is
Cars with engines from 800cc to 1800cc that are assembled locally currently for between 30% and 50% more than what consumers pay for the same vehicles in India, Thailand and Vietnam. Pakistan's domestic auto sector was protected for 20 years in order to advance the industry to gain economies of scale. A 'deletion policy' in place up to 2005 promoted a shift from importing auto parts to relying on local manufacturing. The counter argument presented by the auto manufacturers is in the form of the question: 'Do we want to be an auto manufacturing or an auto trading country? Employment and transfer of technology will only follow if we help create an economy based on manufacturing,' says Pervaiz Ghias, the CEO of Indus Motors. winning. Similarly, the tractor industry in Pakistan is a successful market, as local manufacturers are producing basic but reliable models at affordable prices; consumers are satisfied and market demand is saturated. However, the tractor industry was hurt when the goods and services tax (GST) was raised in fiscal 2012-13, and sales plunged to a seven-year low of only 34 ,000 units. Th e cu rrent budget returns GST to 10% from 16% a year earlier, and sales are moving back up. The car industry would do well to learn th e key lesson fr om th e oth er manufacturers in th e country: to be more open to competition through accepting the presence of importers. Furthermore, there is much potential for growth and expansion through creating a market in Afghanistan and other landlocked Central Asian states. Source: Bangkok Post http://www.bangkokpost.com/busine ss / new s/ 4 2 28 5 6/ p a ki st ani -c ar industry-slow-to-respond-to-risingdemand
www.automark.pk | August-2014 | Page 25
Preferential trade - Update
Monthly AutoMark International
Turkey ready to sign PTA, blames Pakistan for delay
Turkey has expressed its willingness to sign the much-awaited preferential trade agreement (PTA) with Pakistan as it has no outstanding issue to settle but the accord is being delayed by Islamabad. Commercial Attaché at the Consulate General of Turkey in Karachi, Murat Mustu, stated this while speaking at the Karachi Chamber of Commerce and Indu stry (KCCI) on Wednesday. Mustu said the PTA would provide concessions on a number of goods to Pakistan’s exporters, who would have the advantage to smoothly penetrate into the Turkish market. Commenting on Pakistan-Turkey ties, he stressed that both the countries had been continuing to enjoy strong and friendly relations for decades and had been supporting each other during difficult times. “It is the desir e of the Tu rkish government to strengthen trade ties with Pakistan. We must make efforts to
incr ea se th e t rad e volu me and investments in both countries,” he added. He highlighted various sectors in which business communities of th e tw o countries could enter into joint ventures. Among these, Pakistan’s livestock sector had the potential to considerably increase exports to Turkey as its meat was more delicious and cheaper than the Turkish product, he said. “Through collective efforts, we can certainly raise the existing trade volume to new heights.” He announced that a three-member Turkish delegation would visit the KCCI on August 13 to brief the businessmen about the 15th Musiad International Fair and 18th International Business Forum Conference, which would be organised in Istanbul from November 26 to 30 this year. Besides Karachi, the delegation will also make a trip to Lahore and Islamabad in
ord er to seek ad vice on h ow to contribute to the development of bilateral trade. A no th er t w o -m em b e r T u r k is h delegation will arrive soon to ensure participation of Pakistan’s businessmen in th e Istanbu l Jew ellery Sh ow , scheduled to be held from October 16 to 19. KCCI President Abdullah Zaki underscored the need for a fast-track signing of the PTA between Pakistan and Turkey. “It is high time to ink this imp ortant agreement, which will substantially improve the trade volume.” KCCI’s Diploma tic A ffair s Sub committee Chairman Abdul Jabbar pointed out that the Turkish government had imposed anti-dumping duty on textile products in July 2011, which terribly affected Pakistan’s exports. He sought the diplomat’s help in persuading his government to abolish the duty and help improve Pakistan’s textile exports.
www.automark.pk | August 2014 | Page 26
Petroleum Sector - Update
Monthly AutoMark International
PSO willing to buy but won’t heed to Byco’s condition PSO buys petroleum products from local refineries on a 30-day credit, paying for the products after a month. In essence, Byco wants to use the LCs from PSO as assurance to convince banks to finance its own crude oil imports. Pakistan State Oil (PSO) stands ready to buy petroleum products from the troubled Byco refinery but it cannot do that at the cost of piling burden on its already leveraged books, officials told The Express Tribune. Byco International Incorporated’s (BII) 120,000 barrels per day (bpd) oil refinery has run intermittently since commercial production started earlier this year because of financial constraints and difficulty to find market for its key high speed diesel (HSD) products. “PSO has no issues with Byco. We just want reliable supply and that’s all,” said a senior official of the state-run petroleum marketing giant. “But Byco wants us to give them letter of credits (LCs), which they can use to import crude oil. That proposition appears difficult.” PSO has a monthly limit of around Rs100 billion to borrow from banks to import petroleum products like HSD and furnace oil. Extending that would require government intervention and consent of the State Bank of Pakistan, the official added. Being a government entity, PSO faces minimal risk of default and banks would easily raise the credit limit for the company to accommodate Byco. But th at seems unlikely now as the government plans to use PSO’s balance sheet, which reflects annual sales revenue of over Rs1.2 trillion, to import liquefied natural gas (LNG) from next year. BII has built country’s largest oil refinery and petrochemical complex with an investment of around $600 million. The sheer size of the refinery requires at least 3 tankers with 70,000 tons of crude oil to be imported every month. That means financing lines of Rs15 billion to Rs16 billion. PSO buys petroleum products from local refineries on a 30-day credit, paying for
the products after a month. In essence, Byco wants to use the LCs from PSO as assurance to convince banks to finance its own crude oil imports. Byco’s refinery, located in Hub, Balochistan, has faced difficulty in taking diesel to customers, most of which are based in Punjab and further north. Initially when the refinery was being set up, BII hoped to use Asia Petroleum Limited’s (APL) 82-kilometre long pipeline to move diesel to Port Qasim. But negotiations with the APL sponsors did not materialise. The APL pipeline is used to supply furnace oil to Hub Power Company’s 1,300 megawatts (MW) power project, which is Byco refinery’s next-door neighbour. APL charges $12 per ton to transport that furnace oil from the port. Byco says it couldn’t have matched that. As an alternative, the company came up with a plan to ferry diesel from its refinery to Port Qasim from where it could be pumped upcountry through cross country white oil pipeline. HSD makes up 40% of the refinery’s output. Byco has a single point mooring (SPM) facility, a floating jetty connected with storage tanks with a 15km long pipeline, which allow ships to take and offload oil without coming to the shore.
The company has already retrofitted the facility with pumping machines to pump diesel into the ships. A tanker will be hired to move the cargo. The entire operation from filling 50,000-ton tanker, shipping it to Port Qasim and then offloading it will take three-and-ahalf days. BII estimates that it will cost around 70 paisa per litre to take diesel from the refinery to Port Qasim and this amount should be covered under the inland freight equalisation margin (IFEM), a central pool of funds used to keep price of petroleum products same across the country. However, government has yet to give a nod for recovering this cost from IFEM. Some industry people also say that there is a strong lobby within PSO that favours p ur ch ase of HS D from Kuw ai t Petroleum Company (KPC) instead of Byco. But a senior PSO official denied the allegation and said that it was the government, which has forbidden it to disturb import volumes of 2.7 million to 3 million tons of HSD from KPC. “As a matter of fact, before we were locking orders for 2014 with KPC, we asked Byco for their supply schedule but they didn’t provide any confirmation.” Courtesy: The Express Tribune
www.automark.pk | August 2014 | Page 31
Production Figures - Statistics
Monthly AutoMark International
www.automark.pk | Agust-2014 | Page 32
Exclusive Article by Owais Khan
Monthly AutoMark International
New entrant in the market It is a good sign that some new entrants are trying to enter the local auto market after taking over of PML-N government. These new entrants are in constant touch with the Engineering Development Bo ar d (ED B) d is cu ss ing th e ir investment proposals. The entry of new entrants in Pakistan will open new job avenues directly and indirectly both at assembly and vendors’ end besides enhancing government’s revenue earnings. According to sources in Engineering Development Board (EDB), New Allied Motors were granted new entrant status for the assembly/ manufacturing of following vehicles under contract assembly agreement at Adam Motor Company facility vide AIDC approval in its 19th meeting held on February 19, 2014. i. Subuk Raftar Shinery, Mini Van, 996cc ii. Subuk Raftar Shinery, Mini Truck, 996cc After lapse of five months, New Allied Motors have not yet commenced
production at Adam Motor Karachi facility. Now the firm has approached EDB for approval of their Lahore facility for the assembly/manufacturing of following vehicles i. Subuk Raftar Shinery Mini Van, 996cc Power Steering ii. Subuk Raftar Shinery Mini Truck, 996cc Power Steering iii. Guru Diesel Truck, 2200cc. EDB’s technical team has conducted two visits of the facility at Lahore. After rectification of facilities as p er requirement of EDB, the plant has been fou nd satisfact or y for assem bly operations. Meanwhile, EDB has asked the firm to clarify their position with regard to Karachi operations including shifting of machinery without approval of EDB. New Allied Motors responded EDB that Adam Motor Company changed the cond itions of contract assembly agr eem ent w hich is still under negotiation and has not been finalized yet. Therefore, assembly/ manufacturing
at the facility is not possible. Wh ereas Adam Motor Com pany informed EDB that New Allied Motors h as bor row ed t he w eldi ng jig s etc and as soon as th ese jigs are received back alongwith CKD at our plant, assembly process can start immediately. The matter is to be placed before the 20th AIDC meeting to be held on August 18, 2014 in Islamabad for the following consideration. i. Cancellation of AIDC approval for the assembly / manufacturing process at M/s. Adam Motor Company. ii.Grant approval of assembly/ manufacturing at their Lahore plant for the assembly of following three vehicles under new entrant policy. a. Subuk Raftar Shinery Mini Van, 996cc Power Steering b. Subuk Raftar Shinery Mini Truck, 996cc Power Steering c. Guru Diesel Truck, 2200cc.
through loans, SUKUK bonds etc. About US $ 600 million financing has been arranged in collaboration with Economic Affair Division (EAD) from the Middle East Donors. Loan agreement for US $ 448 Million of EXIM Bank of China has been signed and will be effective shortly. c. Revised PSDP (2013-14) allocation or Self financing through Neelum Jhelum Surcharge levied by GoP is Rs. 25,045 Million. Overall Financial Progress is 38.35 % Up to the end of May, 2014.
Prime Minister Muhammad Nawaz Sharif viewing the model during his visit of Neelum-Jhelum Hydro Project on June 19, 2013
THE MAIN PROGRESS OF THE PROJECT WORKS IS AS UNDER; Overall Physical Progress is 60.50 % up to the end of May, 2014. FINANCING G OP h a s a p p r o ve d f i na n c i a l
arrangement for the project; Ne elu m J h elu m Hydropower Company for Project Implementation. b. Imposition of surcharge @ 10 Paisa per unit on power tariff for providing 50% Local Component (LC) equity of project estimated cost at the acceptance of tender. Balance equity to be arranged
a. Est ab li sh ed
PROJECT BENEFITS Reduction of dependence on thermal power generation through reducing the import of fossil fuel thereby saving in foreign exchange. Employment opportunities during construction and later on during operation of the Project. Improved standard of living. Social-economic uplift of the area. Updated as on 01-07-2014 Source: htt p://www.wapda.g ov.pk/
www.automark.pk | August-2014 | Page 33
Automotive Sector - Update
Monthly AutoMark International
Transport sector declared major air polluter Pakistan is a country of 188 million people with average population density of 236 persons per square kilometre, which is higher as compared to many other developing countries. The country has very high migration rate to urban centres which has made the cities very congested and tur ned th e civic infrastructure inadequate, according to new Pakistan Economic Survey 201314. Air quality data recorded in cities c o nf i r m e d p r es e n c e o f h i g h concentration of suspended particulate matter in air (2-3.5 times higher than the safe limit). Oxides of Nitrogen (NOx) is continuously increasing in major cities mainly due to increased number of CNG operated vehicles. Formation of photo-chemical smog and haze is a common phenomenon in our cities. Most urban citizens rely either on their private motor vehicles or two wheelers or the informal transport sector for urban transport. This has led to a sharp increase in private vehicle ownership. The surge in the demand for private vehicles originated from the increasing affordability on the one hand and availability of vehicle financing from the banking system on the other.
Amongst these, diesel vehicles using crude diesel oil and motorcycles and rickshaws are of most serious concern. Due to overloading, faulty injection nozzles and weak engines, diesel vehicles emit excessive carbon (visible smoke) while motorcycles and rickshaws, due to their two-stroke engines, are the most inefficient in burning fuel and thus contribute most to emissions. The number of motorcycles/scooters is growing fastly in Pakistan and has increased by 133.8 percent in 2012-13 when compared with the year 2001-02. Rickshaws have grown by 24.4 percent in 2012-13. The main causes of air pollution are the abrupt increase in the number of veh icl es, ineffici ent au tomotive technology, u se of unclean fuels, uncontrolled emissions of industrial units, emissions of brick kilns, the burning of garbage and the presence of dust. Vehicular emissions in all the major cities of Pakistan are the primary source of air pollution. The transport sector is the largest user of petroleum products. The use of adulterated fuel and poorly maintained vehicles are some of the reasons for excessive and highly toxic emissions
from vehicles. Brick kilns are another source of pollution in many areas. The use of low-grade coal and old tires in brick kilns generates dense black smoke and other kinds of emissions. The main pollutants from these industries are particulate matter, and sulphur- and nitrogen oxides, which are emitted by burning fuels. The use of coal has increased by 34.3 percent for brick kilns in 2012-13 when compared with year 2001-02. Like other forms of air pollution, the magnitude of industrial air pollution has not been fully assessed but sporadic surveys have been carried out in the country by some governmental institutions and scientists in a few major cities. The industrial sector in Pakistan is likely to expand further in future due to a liberal gover nm ent p olic y. Al most a ll metropolitan cities have industrial estates, where a cluster of industries of different types exist. Cement, fertilizer, sugar units, and pow er plants a considered to be the most air polluting industries of Pakistan. Many of these are located either in the rural areas or are in the vicinity of secondary towns. Those located in the vicinity of towns cause urban air pollution......
www.automark.pk | August 2014 | Page 34
Corporate Event - Update
Inauguration of Agriauto Stamping Company, Port Qasim The Inauguration ceremony of Agriauto Stamping Company was held on 9th June 2014, at Port Qasim. The ceremony was an impressive gathering of business community from the Auto Industry, which included high officials from OEMs, members of the auto parts m akers a ssoc iati on, c ust omers, representatives from House of Habib and Agriauto family. Agriauto Stamping Company, a wholly owned subsidiary of Agriauto Industries
Limited, has been established with Technical collaboration of Ogihara Thailand Company, one of the largest makers of dies & sheet metal parts for the automotive industry. This facility will be a benchmark for the auto part makers in Pakistan. The company has a modern, custom made plant which houses state of the art equipment and facilities. The setting up of the company is a hallmark in the Auto Industry of Pakistan, which would
pave the way for die making and developing high tensile sheet metal parts for the auto industry in Pakistan. The C om p an y w i ll p r o v i d e d i r e c t employment to 120 skilled members. Ten of Company’s engineers and technicians have received specialized training in Thailand for three to six months to match the parts quality as of the imports. - Press Release
www.automark.pk | August-2014 | Page 35
Exclusive Article by Owais Khan
Strong sales outlook
FOR AUTO INDUSTRY IN 2014-2015
Huge expansion in road network is anticipated in next few years which is considered to be a backbone of the economy. Pakistan’s road network which carries over 92 per cent of inland freight The future outlook for local auto sector in terms of sales growth appears quite healthy in view of some decisions taken in federal and provincial budgets 20142015. One of the most encouraging news was the cut in general sales tax (GST) on tractors to 10 per cent from 17 per cent which is bound to boost sales in the current fiscal year as price cut by Rs 30,000 to Rs 90,000 will encourage growers/farmers. Another booster for the auto industry and its vendors came from the Punjab government which allocated Rs25 billion for the taxi scheme in its 2014-2015
b ud get wh ich w ill imp rove t he profitability of Pak Suzuki Motor Company Limited having over 50 per cent market share. “Although details of the short-listed manufacturers are yet to be announced for the scheme, we see high probability of Pak Suzuki’s (PSMC) selection,” JS Research reported “The leading local car manufacturer will provide vans/pickups which will be used as taxi in ru ral areas for m ass transportation,” Sherman Securities said. If short listed, the yellow cab scheme can lift PSMC’s expected earnings in year 2014 and 2015 by 13 to
20 per cent, as earnings impact is likely to be spread over its Jan-Dec reporting period. On a standalone basis, rough estimates suggest an annualized earnings impact of Rs10 per share for the company.
The contract of taxis may be given to Pak Suzuki Motors (PSMC) and Al-Haj FAW (local assembler in partnership with Chinese FAW group), as both are capable of producing small pickup-vans. Though the Chinese group is capable of producing vehicles like FAW X-PV and FAW-Carrier, which are slightly cheaper than the vehicles produced by PSMC, it is expected that PSMC remains a major beneficiary given its huge capacity and long association with the Punjab government in earlier schemes. PSMC has capacity to produce 3,000 units per month each of Ravi and Bolan on three shifts. The company sold 14,000 units of Bolan and 11,700 units of Ravi in calendar year 2013 (CY13). The company also produces 150,000 units (on double shift basis) and sold 76,000 cars/LCVs during CY13 compared to 96,000 cars/LCVs during 2012. “Earlier in 2012, the Punjab government,
www.automark.pk | August-2014 | Page 36
under its taxi scheme, had given an order of 20,000 cabs to PSMC. The cabs produced under the scheme had 60 per cent share (12,000 units) of Suzuki Mehran and 40 per cent (8,000 units) of Suzuki Bolan. Though this time, the government has quoted over 50,000 cabs to be distributed; however, based on current market prices and same proportion of Mehran and Bolan (60%:40%), it is estimated that 38,000 to 40,000 cabs would be distributed to fully utilize the Rs25 billion allocated for the project”, BMA capital reported. Hopefully all vehicles will be distributed during within three years. In contrast, the Sindh government had decided to provide 7,000 tractors in the current fiscal year. Besides, short-term triggers, there are medium-term triggers which may lift overall sales of auto and allied which are, Huge expansion in road network is anticipated in next few years which is considered to be a backbone of the economy. Pakistan’s road network which carries over 92 per cent of inland freight, any improvement will flourish service sector and eventually generate demand for autos and allied products. The present government in collaboration with Chinese companies, will establish China-Pak Economic Corridor by the end of 2017 with total cost of $5-7 bn wh ich will be mainly fund ed by consortium of banks including China Development Bank, and ExportImport Bank of China. These projects include, Karakorum Highway (RaikotIslamabad via Mansehra), KarachiLahore Motorway (Multan-Sukkur section) and Gaw adar East Bay Expressway. It is generally seen that economic slowdown has spill over impact on autoindustry. Pakistan’s auto-industry which is operating at only 30 per cent of its
capacity, is down almost 30 per cent compared to 6 years back. This is primarily due to the fact that Pakistan’s GDP on an average grew by only 3 per cent in last 6 years compared to previous 6 year average GDP growth of more than 6 per cent. With midterm plan to raise GDP growth to 7 per cent as envisaged by government under 11th Five Year Plan , 2013-18, which signals revival in auto industry as well. To support rural economy, govt. Is likely to continue taxi scheme (as announced in Budget FY15) and allocate higher farm credit to support agriculture. Stability in Pak Rupee versus the dollar also anticipated to positively impact auto sector as it may protect their gross margins.
“The leading local car manufacturer will provide vans/pickups which will be used as taxi in rural areas for mass transportation,” Sherman Securities said. If short listed, the yellow cab scheme can lift PSMC’s expected earnings in year 2014 and 2015 by 13 to 20 per cent, as earnings impact is likely to be spread over its Jan-Dec reporting period. On a standalone basis, rough estimates suggest an annualized earnings impact of Rs10 per share for the company.
MC introduces new model of Corolla US$ 100 million invested in technology transfer and production facility improvements Indus Motor Company Limited (IMC), the manufacturers and distributors of Toyota and Daihatsu range of vehicles, a nnou nced th e com m encem ent of Customer’s order taking from 16th July for the much anticipated New Model of their flagship Toyota Sedan, Corolla. Corolla Altis Grande, the 11th generation Corolla has been completely redesigned around the concepts of elegance and class-above Prestige. The exterior design reflects modernity and attention to details, with a dynamic front and harmonious lines defining the exterior silhouette. The sleek, cutting edge shape gives the new corolla a very striking image and the aerodynamics provides g reater a gility and r ed uc ed air resistance. The new front and rear lamps provide a greater aesthetic appeal, in line with the continuous, free flowing design concept. The new Corolla Altis is powered by 1800 CC, Dual VVTI engine with a 7 S p eed Cont i nu ou s Va r ia b le Transmission (CVT), that ensures seam less gear sh ifting , smooth acceleration, and low RPM while accelerating, resulting in superior performance and fuel efficiency. In order to enhance driving thrill, a sport type, Paddle gear shifting is also provided. The lower stance reduces air drag, resu lting in improved road gr ip & g reat er fu el ec onom y and a softer suspension system ensures a comfortable and smooth rid e.
www.automark.pk | August-2014 | Page 37
MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST
70cc Motorcycle Sr./ No. 1. 2. 3. 4. 5. 6. 7. 8.
Product & Model Name Hero RF-70 Hero RF-70 Plus Honda CD-70 Honda CD Dream Hi-Speed SR-70 Ravi Premium R1 Road Prince bullet Road Prince 70cc
Retail Price Rs. 46,000/= Rs. 47,000/= Rs. 69,900/= Rs. 73,500/= Rs. 43,000/= Rs. 46,950/= Rs. 45,000/= Rs. 39,000/=
125cc Motorcycle No. Brand & Model Name 1. Super Star SS-125 2. Super Star SS-125 DLX 3. Honda CG-125 std Euro II 4. Honda CG-125 DX 5. Ravi Piaggio Storm 125 6. YD Sports 125cc
Retail Price Rs. 59,000/= Rs. 67,000/= Rs. 102,500/= Rs. 124,000/= Rs. 112,000/= Rs. 10,6000/=
Suzuki Motorcycle (Heavy Bikes) Sr./ No. 1. 2. 3. 4.
Product & Model Name Inazuma GW 250 Intruder M800 Hayasuba GSX1300R Bandit GSF650SA
Retail Price Rs. 725,000/= Rs. 1,600,000/= Rs. 2,500,000/= Rs. 1,500,000/=
Sr./ No. 9. 10. 11. 12. 13. 14. 15.
Product & Model Name Ravi Hamsafar-70 Sitara GT-70 Super Star SS-70 Super Power SP-70 Super Power Delux Unique UD-70 Bionic AS-70
Retail Price Rs. 45,450/= Rs. 40,000/= Rs. 44,000/= Rs. 44,700/= Rs. 48,200/= Rs. 44,000/= Rs. 44,500/=
100cc Motorcycle No. 1. 2. 3. 4. 5.
Brand &Model Name Honda Pridor Super Star SS-100 Super Power SP-100 Road Price Jackpot 110cc Yamaha Junoon 100cc
Retail Price Rs. 86,000/= Rs. 57,000/= Rs. 60,000/= Rs. 44,000/= Rs. 79,300/=
Suzuki Motorcycle Sr./ No. 1. 2. 3. 4. 5.
Product & Model Name SD110 Sprinter ECO SD110 Sprinter ECO Del SD110 Raider GS-150 Euro-II GD 110 Euro-II
Retail Price Rs. 90,400/= Rs. 85,400/= Rs. 98,400/= Rs. 122,500/= Rs. 109,900/=
www.automark.pk Price update: August-2014 www.automark.pk | August-2014 | Page 39
Car / Light Vehicle Price List www.automark.pk SUZUKI Model Model
WAGON-R VX 1000cc Euro II WAGON-R VXR 1000cc Euro II WAGON-R VXL 1000cc Euro II MEHRAN VX 800cc Euro II MEHRAN VXR 800cc Euro II SUZUKI SWIFT 1.3L DX SUZUKI SWIFT 1.3L DLX SUZUKI SWIFT 1.3L Automatic CULTUS EFI VXR Euro II LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) BOLAN VAN VX 800cc E2 BOLAN VAN VX 800ccm (M)E2 SUZUKI VAN CARGO Euro II RAVI PICK-UP STD 800cc E2 RAVI PICK-UP STD 800cc (M) E2
APV 1.5L GLX MT (Petrol)
HONDA Price Price Rs. 919,000 Rs. 1074,000 Rs. 1114,000 Rs. 635,000 Rs. 688,000 Rs. 1,321,000 Rs. 1,382,000 Rs. 1,518,000 Rs. 1,059,000 Rs. 1,465,000 Rs. 1,544,000 Rs. 695,000 Rs. 700,000 Rs. 666,000 Rs. 637,000 Rs. 642,000 Rs. 2,418,000
Model Honda Aspire Manual Honda Aspire Prosmatec Honda City Manual 1300cc Honda City Prosmatec 1300cc HYUNDAI Honda Civic VTI Manual 1800cc Honda Civic VTI Manual SR (Oriel) Honda Civic VTI Prosmatec 1800cc Honda Civic VTI Prosmatec SR (Oriel) Honda CR-Z Sports Hybird Manual Honda CR-Z Sports Hybird Automatic
TOYOTA COROLLA Model XLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 A/T 1299cc Petrol GLI VVT-i 1299cc LE ALTIS 1.6L Dual VVT-i M/T ALTIS 1.8L Dual VVT-i MT GRANDE 1.8L S.R. M/T GRANDE 1.8L S.R. A/T CVT-i FORTUNER 2.7L A/T FORTUNER 2.7L A/T TRD Sportivo
PM Auto Industries (Pvt) Ltd. Model Faw Truck Super 3 Ton (3200cc) Faw Truck Prime 2 Ton (2600cc)
Price Rs. 1,260,000 Rs. 1,034,000
Sokon - Mini Truck (1050cc) DFSK - Mini Truck 2700MM Deck DFSK - Mini Truck 2500MM Deck DFSK - Mini Truck (Double Cabin-AC) 1400MM Deck Introductory Price DFSK - Mini Truck (Double Cabin Non-AC) 1400MM Deck Introductory Price
Rs. 900,000
Hilux Pickup 4x2 sc Model
Rs. 938,000 Rs. 840,000 Rs. 977,000 Rs. 740,000 Rs. 685,000
Tractor Euro Ford 85 HP Tractor Euro Ford 60 HP Tractor Euro Ford 50 HP Price List - Ex Factory (Hyderabad)
Rs. 1,859,500
Hilux Pickup 4x4 E
Rs. 1,145,000
Sokon - MPV 07 Seater (1050cc) DFSK Without AC Rs. 817,000 Rs. 887,000 With Dual AC Dual AC - Power Steering Rs. 928,000
Price
Brand New Toyota Hilux Pickup, 4x2, 2500cc Single Cabin, White only, Hilux STD
DAIHATSU
Sokon - Cargo Van 1050cc DFSK
Price 1,627,500 1,752,500 1,827,500 1,712,500 1,952,500 2,027,500 2,152,500 2,302,500 4,755,500 5,005,500
Rs. 950,000
11 Seater (Dual AC-Power Steering) Rs. 1,134,000
Dual AC - Power Steering+ Power Window
Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.
Rs. 763,000 Rs. 731,000
Sokon - MPV 11 Seater (1300cc) DFSK - MPV 11 Seater (Without AC) Rs. 1,034,000 Rs. 1,084,000 11 Seater (Dual AC) 11 Seater (Dual AC - Power Price Model Steering +Power Window)
Price Rs. 1,772,000 Rs. 1,914,000 Rs. 1,612,000 Rs. 1,763,000 Rs. 2,185,000 Rs. 2,417,000 Rs. 2,306,000 Rs. 2,538,000 Rs. 3,286,000 Rs. 3,366,000
Model
Price
Toyota HILUX 2494cc, Diesel Turbo Charger Common Rail Engine, 4x4 Double Cabin - Standard Model
TOYOTA VIGO DAIHATSU Model Model
Price Price
Rs. 3,109,500
AL-HAJ FAW MOTORS Model
Vigo Champ M/T Rs. 3,423,500 FAW Carrier (WHITE ,BLACK,STRONG BLUE & SILVER) FAW X-PV Std Vigo Champ A/T Rs. 3,623,500 FAW X-PV A/c (WHITE ,BLACK,STRONG BLUE & SILVER) Sirius S80
Monthly AutoMark Magazine - International
Price Rs. Rs. Rs. Rs.
699,000 799,000 844,000 1699,000
Price updated August- 2014
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August-2014
Energy Sector - Review
NEELUM JHELUM HYDROELECTRIC PROJECT
ORGANIZATION The Project is running through Neelum J helu m Hyd r o-P ower Com pa ny (NJHPC) WAPDA, headed by a Board of Directors (BOD). The Chairman of the BOD is Chairman Wapda. Members of the Board are Chairman Wapda, Member (Water) WAPDA, Member (Power) WAPDA Member (Finance) WAPDA, CEO (NJHPC), CFO of the Company and EX-CEO of NJHPP, Chief Secretary Azad Jammu & Kashmir, Additional Secretary Ministry of Water and Power , Additional Secretary E con o mic Af fair Divis ion , Additional/Special Secretary Ministry of Finance. MD/Chief Executive Officer, the representative of Board of Directors, has his office at Islamabad whereas Project Director (General Manager) h as h is offic e at Mu zaffara bad (AJ&K).
LOCATION: Neelum Jhelum Hydroelectric Project (NJHEP) is located in the vicinity Muzaffarabad (AJ&K). It envisages the diversion of Neelum river water through a tunnel out -falling into Jhelum River. The intake Neelum Jhelum is at Nauseri 41 Km East of Muzaffarabad. The Powerhouse will be constructed at Chatter Kalas, 22 Km Sou th of Muzaffarabad. After passing through the turbines the water will be released into Jhelum River about 4 Km South of Ch att er Kal as. Neelu m J h el um Hydroelectric Project has installed
capacity of 969 MW. The Project will produce 5.15 Billion units of electricity annually.
SALIENT FEATURES Overall Project Cost: Rs. 274.882 Billions Installed Capacity: 969 MW, Four Units @ 242.25 MW each Dam, Type Composite Dam (Gravity + Rock fill) Height / Length: 60 / 160 Meters Average Annual Energy: 5.150 Billion electricity Units Annually A v e r a g e H e a d : 4 2 0 M et e r s Design Discharge: 280 Cumecs Tunneling: Twin Tunnel,Single Tunnel Tailrace Tunnel Length 19.54 km each Length 8.94 km Length 3.54 km EIRR: 25.46 % Date of Commencement: 30-01-2008 Expected Completion date: November 2016 Implementation Period: About 9 years A composite Dam (Gravity + Rock fill) 160m long and 60m high will be constructed on Neelum River at Nauseri. It is a Gated Diversion Dam. The dam will create a head pond of 10 million cubic meters which will allow a peaking reservoir of 3.8 million cubic meters to meet daily peaking of power for
more than 4 hours. A six gate tunnel intake stru cture of 280 cumecs capacity will be connected three conventional flushing surface basins installed at their end for taking sediment back into river. The total length of headrace tunnel is almost 48 Km. A 19.54 Km stretch of the tunnel from the Nauseri site will be constructed as a twin tunnel system each with cross sectional area ranging from 52-58m2. The remaining headrace tunnel down to the surge chamber will be a single tunnel having cross sectional area 100m2 approximately. The tunnel portion to be excavated with TBM will be shortcrete lined with a concrete invert while the drill and blast portion of the tunnel will have full face concrete lining. The tunnel crosses under the Jhelum River at EI. 602.0, m asl, approximately 180m below Riverbed. The tunnel is accessed by 8 construction Adits for removal of excavated spoil. The Surge Chamber consist of 341m high riser shaft and 820m long surge tunnel, four steel lined Penstock tunnels 118 m long and having 3.8 m internal diameter will also be constructed. The underground power Station will have four units with a total capacity of 969 MW. The Pow er Station will be connected with Gakhar Grid station th r ou gh 5 0 0KV do ub le c ir cu it transmission line. The Neelum Jhelum Hydroelectric Project is split into the following three
www.automark.pk | August-2014 | Page 42
Monthly AutoMark International Monthly AutoMark International
Automotive Sector - Update
The tunnel crosses under the Jhelum River at EI. 602.0, m asl, approximately 180m below Riverbed. The tunnel is accessed by 8 construction Adits for removal of excavated spoil. main geographic areas.
1. NAUSERI AREA (ALSO KNOWN AS C1) A 60m high Composite (Gravity + Rock fill) diversion dam and sedimentation basin near Nauseri is on the Neelum River. The dam has 3 No. Radial gates and 2 No. flap gates designed to pass floods of 1000 year recurrence period and also allow the reservoir to be drawn down for sediment flushing. The sedimentation basins are designed to trap sediments that could erode the turbine blades at the powerhouse. The intake works are designed to divert up to 280m3/s into the headrace tunnels.
an underground powerhouse. The water is discharged back into the Jhelum River near Zamainabad through a 3.54 km tailrace tunnel. Associated facilities include a transformer hall, surge shafts, access tunnels, a 500 kv switchyard and housing facilities for the operations and maintenance personnel.
CONSULTANTS ENGINEERING, DESIGN AND CONSTRUCTION SUPERVISION
2. MAJHOI/THOTA (ALSO KNOWN AS C2) The headrace tunnel is 48 km long including twin tunnel and conveys the water from the intake area at Nauseri to the Powerhouse area near Chatter Kalas. The tunnel crosses under high g r o u n d a nd a l so a c r o ss t h e Muzaffarabad fault zone. A 19.54 Km stretch of the tunnel from the Nauseri be constructed as a twin tunnel system each with x-sectional area ranging from 52-58 m2 and the rest of the route, a single tunnel of x-section area 100 m2 approx, has been proposed. The tunnel portion to be excavated with TBM will be shortcrete lined with a concrete invert while the drill and blast portion of the tunnel will have full face concrete lining. The tunnel crosses under the Jhelum River at 602 m asl, approximately 180m below Riverbed.
3. CHATTER KALAS AREA (ALSO KNOWN AS C3) The headrace tunnel will feed four vertical-shafts Francis turbines with an installed capacity of 969 MW housed in
arrived at site and TBM assembly has been completed. The Soft Opening / Inauguration of TBM was held on August 06, 2012 and the Honorable Prime Minister of Pakistan graced the occasion by pressing the button. Both the tunnel boring machines (TBMs) have been assembled and tested. The operation of first TBM started on 28-01-2013 whereas second TBM st art ed mining on 22 -0 2- 2013. Operation of both tunnel boring machines (TBMs) remained in progress.
PROJECT IMPLEMENTATION CONSTRUCTION Construction Contract was awarded, on July 07, 2007 to M/s CGGC-CMEC Consortium China for implementation of the project at a cost of Rs. 90.90 Billions including Rs. 46.499 Billions foreign component. Pre parato ry w o rk s in clu din g construction of Contractor's camps aggregate crushing & batching plant, site access roads and site/test laboratory have been completed. Board of Director NJHPC has approved the deployment of Tunnel Boring Machines (TBM) for the Project on 23.11.2010. The Contractor has arranged procurement of two TBMs from M/S Herrenknecht Germany. The deployment of TBMs will certainly help to put the project on scheduled track and recover most part of delayed period envisaged for the project completion. All the parts of TBM have been
Neelum Jhelum Consultants (NJC), a Joint Venture Comprising of five firms including MWH International Inc., USA, NORPLAN A.S., Norway, National Engineering Services Pakistan NESPAK (Pvt.) Limited, Associated Consulting Engineers ACE (Pvt.) Limited, National Development Consultants of Pakistan, have been selected for Engineer Design and Supervision (EDS) as Project Consultants. Consultancy Agreement was signed on May 15, 2008. Letter of Commencement was issued on May 16, 2008. Services have been started since June 03, 2008.
www.automark.pk | August-2014 | Page 43
continued on page no.33
International Automotive Industry - Update
Yamaha Indonesia produces 30 million motorcycles in 40 years
Y a m ah a I nd o n e s ia Mo to r Manufacturing (YIMM) has produced 30 mi lli on mot orcy cl es acro ss different segments thus far. The company established roots 40 years ago in Indonesia (July 6 1974) and has become one of prestigious two wheeler brands there. C urrent productio n capacity of Yamaha Indonesia is 3 million units of motorcycles per year. YIMM has 6 plants, 160 vendors and dealer distribution network with 4,300 nodes including 6 DDS (Direct Distribution System) / Flagship Stores (FSS). About 20,000 people work for YIMM, of which some young Indonesian experts are routinely sent to work and study in Japan for technology transfer. The Japanese motorcycle maker is the largest shareholder in matic segment with 52.9%, about one third of market in duck segment with 32.5% and 14.6% in sports bike space (according to data of last 5 years). Increasing popularity in last segment hav e paved opportunity for the company to prepare for export to 14 countries. Y am ah a I n d o n e s i a i s gl o ba l production base for Yamaha R25 quarter litre sports bike, to be shipped to Japan, India, Europe and other neighbouring countries of Indonesia. Due to unexpected burst of online booking immediately after launch in May 2014, export plans were pushed by mont hs away from original schedule. Local delivery for first 500 customers began just some days back, rest of 2,300 customers will be waiting f urt her t o re cei ve th eir ri des.
Toyota to release hydrogen-fueled car Top automaker’s move pushes fuel cells toward mainstream Rocket science long dismissed as too impractical and expensive for everyday cars is g etting a pu sh int o th e mainstream by Toyota, the world’s topselling automaker. Buoyed by its success with electricgasoline hybrid vehicles, Toyota is betting that drivers will embrace hydrogen fuel cells, an even cleaner technology that runs on the energy created by an electrochemical reaction when oxygen in the air combines with hydrogen stored as fuel. Unlike internal combustion engines which power most vehicles on roads today, a pure hydrogen fuel cell emits no exhaust, only some heat and a trickle of pure water. Fuel cells also boast
greater efficiency than the internal combustion process, which expends about two-thirds of the energy in gasoline as heat. Toyota’s fuel cell car will go on sale before April next year. Toyota, which began working on fuel cells in 1992 but won’t disclose how much it has invested, is not the first automaker to produce such a vehicle. Toyota’s decision as the world’s topselling automaker to start commercial production of a fuel cell car is an important boost to the technology’s prospects for wider adoption. Its release also will win the automaker plaudits for corporate responsibility....
Honda's largest scooter plant in the world expected to be set-up in Gujarat Honda has been a strong brand in the Indian two-wheeler and four-wheeler market. The Japanese auto giant has a strong fleet of vehicles across segments in the local market. Honda has seen a good amount of sales number in the automatic scooter segment, especially with its popular ‘Activa’ scooter. The recently launched Activa 125 has further boosted its sales numbers. As per a recent report, scooter sales in the country have grown to 29% this year and account to form about 27% of total two-wheeler as against 8% seen a decade ago. New customers have shown an increase in interest for unisex scooters. To cater to this new trend Honda has reportedly been considering setting-up a world’s largest scooter plant at a cost of about Rs. 1,100 crore in Ahmedabad, Gujarat that shall hold capacity of rolling out about 12 lakhs units annually.
Speaking more on the occasion YS Guleria, Honda VP for marketing and sales in India said, “Even as we have more than doubled our scooter capacity in India, we have not been able to match up with the demand. After 13 years of its launch, Activa continues to be on 'w aiting' even as competition has multiplied ten times. Even though we raised our production with three new scooters, demand still outstrips our estimates. While scooter production has trebled in the past decade, we still have a backlog of 60,000 scooters that should multiply in the festive months ahead.” Honda Motorcycles and Scooters India (HMSI) holds about 53% market share, thereby leads the scooter market in India. The new plant is expected to g enerate abou t 3,000 m ore job opportunities in the country and aid the company in bringing down the waiting periods to a considerable extent.
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Monthly AutoMark International
VW may raise stake in FAW Chinese joint venture
Yamaha Motor's 1st Half Operating Income Soars 62%
Volkswagen's only acquisition deal on the horizon is a possible increase of its stake in its highly profitable Chinese joint venture with First Automobile Works Corp., VW finance chief Hans Dieter Poetsch said. Unlike its other Chinese joint venture with Shanghai Automotive Group that is a 50 -5 0 sp lit in ownersh ip , Volkswagen controls only 40 percent of th e equ ity in FA W-V olksw ag en Automotive. UBS auto analyst Philippe Houchois has estimated the cost to VW for increasing the stake in FAW to 50 percent at around 4.5 billion euros. VW does not include earnings from its two joint ventures in China in its operating profit. Their earnings are instead booked as part of its financial result since it is accounted for at equity. But Volkswagen does break out its Chinese JV results separately and its six-month report showed VW's share of the two joint ventures' profits rose to 2.62 billion euros, up more than 10 percent from 2.37 billion in the previous year's period. According to Audi’s accounts for last year, it received a 382 million euro dividend for its 10 percent share in FAW-Volkswagen Automotive. That would imply that the venture’s overall profits were 3.82 billion euros in 2013....
JAC to challenge Ford EcoSport with Refine S3 JAC has launched the Refine S3, a new B segment crossover similar in size to the Ford EcoSport. This small crossover was first seen at the Shanghai motor show in April 2013 where it wore 'Heyue S30' badges. A pre-production model followed a year later at the Beijing show, this time labelled as the Refine S3. Like its rival the Dongfeng Peugeot 2008, the Refine S3 is front-wheel drive only. The standard engine at launch later this month is a 1.5-litre four-cylinder petrol unit....
Yamaha Motor Co., Ltd. announced on August 5 its consolidated operating income in the January-June first half surged 62.4% to 49.1 billion yen, or about 480 million (USD), from the previous year. The company is now forecasting operating income of at least 80 billion yen for the current full year, one year earlier than originally targeted under its 2013-2015 business plan. Net sales rose 7.6% to 756 billion yen, with increases recorded in all business segments of the company. Ordinary income surged 60.6% to 49.1 billion yen and net income rose a brisk 57.6% to 32.2 billion yen. The large jump in operating income reflects strong sales of motorcycles and marine products in developed markets. Large-model marine products have sold especially well and motorcycle sales have
recovered even better than expected. Yamaha Motor is launching products aggressively in each of business segments - motorcycles, mar ine products, power products, industrial machinery and robotics. Organizational reforms are progressing, including the streamlining of domestic production and European business structure, as well as cost reductions.The full-year forecast for net sales remains unchanged at 1,500 billion yen. Increased sales of marine products and motorcycles in developed markets are expected to compensate for decreased sales of motorcycles in Thailand and Vietnam. During the second quarter, the Japanese yen traded at 102 yen to the U.S. dollar, a year-on-year depreciation of 6 yen, and 140 yen to the euro, a depreciation of 14 yen.
Tata Motors showcases Revotron technology across malls in Mumbai Tata Motors has been clear in its views to deliver cars with advanced modern technologies. The Indian auto giant has come up with its latest engine based on innovative Revotr on technology. Speaking more on the occasion, Ranjit Yadav, President and Head, Tata Passenger Vehicles Business Unit, said, "The Revotron 1.2T will power our upcoming cars, the Zest and the Bolt. To narrate this exciting technology story, in the most impactful way, we are engaging with our customers through various exciting platforms like the Labs, the multi-drive-mode game, holograms and unique digital and on-ground activations." Tata Motors has reportedly been working on the launches of the Zest sedan which is due to be launched in August, followed by Bolt hatchback launch in September this year. Both the cars will be housed with the new Revtron 1.2 litre turbocharged, four cylinder petrol engine that develops a maximum power output of 85 Hp along with a peak torque of 140 Nm. Diesel variants of
Zest and Bolt will be packed with a 1.3 litre Quadrajet diesel powertrain offering varied power output for Zest and Bolt. Tata Zest will be equipped with the VGT version of the engine churning out pinnacle power of 90 PS and peak torque of 200 Nm while the Bolt hatchback will get 75 PS and 190 Nm of diesel powertrain. A five speed manual gearbox will be paired to petrol and diesel motors. Tata will bestow automated manual transmission on the diesel versions of Zest and Bolt. To explain the technicalities better to the audience, the company has set-up five Revotron labs across major cities like Delhi , M umba i, Bang alor e, Ludhiana and Hyderabad. In Mumbai, the company showcased Revotron Lab at Infinity mall located in Malad. From July 11th to July 13th, 2014, Tata Motors exhibited Revotron Lab at Viviana Mall, followed by Inorbit Mall between 18th, July to 20th July, 2014. The Revotron Lab features dedicated zones that introduce customers to various benefits of the mill...
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