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GIVING PEACE AND TRUST TO PAKISTAN VENDORS BY RELIABLE EXPORTING OF MACHINES, MOULDS, RAW MATERIALS AND COMPONENTS.
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CONTENTS
Monthly AutoMark Automobile industry development policy (AIDP) 2013-2018 An Exclusive article by Ali Hassan
11-12
New entrant in motorcycle industry 13 Mandviwalla fails to guarantee incentives EDB begins preparing new five-year Auto Industry Plan - Report
15-16
Pakistan badly needs small locally assembled car An Exclusive article by M. Owais Khan
17-18
Ministry of Industries opens talks over auto sector roadmap
19
Auto Shanghai-2013
22
IMC holds Toyota Dream Car Art Contest
23
Developing countries transformed by Chinese motorcycles Exclusive Article by David McMullan
32-33
lnternational Automotive news
36-37
Pakistan is land of opportunity 40-42 for Chinese Auto Industry exclusive Article by Muhammad Yousuf Shaikh Another Case of Nepotism by the Ex Government Exclusive Article By Asif Masood
48
The Customer The Most Important Commodity By Mohammad Shahzad from Canada
39&43
Motorcycles Price List
46-47
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Pakistan’s premier magazine on automotive, engineering & energy sector Monthly
AUTOMARK Governments failed to create business-friendly environment
Editor M. Hanif Memon Technical Editor Muhammad Shahzad
Advertising Manager Tahir Siddiqui
Circulation Manager Abdul Khaliq
Graphic Designer Salman Hanif
Web Master Murtaza Hanif
CONTRIBUTING IN THIS ISSUE Muhammad Shazad Asif Masood M. Yousuf Shaikh Ali Hassan M. Owais Khan
Advisors Syed Mansoor Rizvi Principal Officer M/s. CNH Services (Pvt) Ltd. Karachi
Advisors Imtiaz Rastgar CEO, Rastgar Group & CBI External Expert, Ex-chairman EDB Islamabad Haider Nawab Advisor Planning & Development Toyota Southern Motors Toyota Defence Motors Karachi Muhammad Yousuf Shaikh Founder & Chairman Pakistan China Motorcycle Industry Council Karachi Abdul Majeed Sheikh President, AOTS-ABK Dosokai, Karachi Regional Center Director Industrial Lesion, NED University, Karachi Engr. IHT Farooqui General Manager Plant Karakoram Motors (Pvt) Ltd., Karachi J. Pereira Senior automotive professional Karachi
The views expressed by contributing writers and comments do not necessarily reflect the views and policies of the Monthly AutoMark magazine's management. AutoMark REGD: SC-1330
Published every month by M. Hanif Memon Postal Address Active Communications D-68, Block-9, Clifton,Karachi Visit us: www.automark.pk E-mail: automarkpk@gmail.com Tel : 021-32218526 Mobile: 0321-2203815
A historical issue facing Pakistan is that different governments from time to time have failed to create investmentconduc ive env ironment. Policies formulated by one government to lure investment are changed by its successor. Many of Former bureaucrat s agreed that inconsistent policies are the main drawback faced by businesses in Pakistan. “Feasibility made for a project under one policy assumed to last through the project’s life becomes a nightmare if the policy is changed every time power is transferred from one party to the other,” added. The lopsided foreign investment has roots in this very reason. Terrorism, is not a threat since the increased risk is covered by higher profits, which an investor is prepared to take in conditions prevalent in countries like Pakistan. Besides inconsistent policies the dealing of bureaucracy with investors is highly negative. “This has dampened and traumatised our potential for growth,”. Over 100 million population in Pakistan is below the age of 21. This young and energet ic consuming population could prove an asset or curse depending on the manner we nurture them. The involvement of youth in positive activities depends on how much you can invest in economy, it includes agriculture, industry and services. Rupee stability is crucial for our economy as a depreciation of Re1 in value against dollar creates a foreign debt liability of Rs65 billion (our foreign debt is $65 billion). We are undocumented cash economy, that no one wants to pay taxes world over, but in developed economies no one escapes taxes because of effective systems. The system should capture all economic transactions making computerised national identity card the medium though which transactions could be made. Exceptions and exemptions would have to go to ensure fair taxation in the country.
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Exclusive Article by Ali Hassan
Monthly AutoMark Magazine
Automobile industry development policy (AIDP) 2013-2018 Where bike assemblers stand in AIDP 2013-2018 and in AIDP 2007-2012 He recalled the good era of Shaukat Aziz, former finance minister when almost all the industrial sectors especially the bike industry witnessed boom in their production and sales. The former finance minister opened the market to Chinese bike assemblers in larger interest of consumers, who were previously paying high prices for Japanese bike. Muhammed The main reason of increase in bike production was Sabir Shaikh affordable rates, stability of exchange rate, low taxes and duties and industry friendly policy. The Ministry of Industries, Ministry of C o m me r c e , P S Q C A , F B R an d Engineering Development Board (EDB) have always treated the two wheeler industry especially small Chinese assemblers as step mother. The small bike makers were invited only on few occasions as compared to regular particip ati on of Japanese bike assemblers in various meetings called by different concerned ministries. In a caretaker government set up, the officials of the Ministry of Industry maintained their bureaucratic trend by ignoring the Chinese bike assemblers. The Ministry called upon entire auto sector in an important meeting about Auto Industry Development Policy (AIDP) 2013-2018 but the Ministry did not invite Chinese bike assemblers’ association (Association of Pakistan Motor Cycle Assemblers. (www.motorcycleexport.com) PAMA, PAPAAM, Dr. Manzoor Ahmed (former Ambassador to WTO), Dr. Safdar Sohail, DG, MOC, and CEO EDB attended the meeting and they also made their presentations. The ministry had started consulting the stakeholders regarding AIDP 2013-2018 about eight months ago and held several
consultative meetings to arrive at a consensus about policy initiatives meant to spur the auto industry. The stakeholders like parts makers and manufacturers were consulted. The Ministry’s letter of March 20 to the participating guests also mentioned about candid discussions to be done with customers to bring consensus before finalization of AIDP. However, it was not clear as to which consumers’ body had attended the meeting. The Ministry, in its letter to the stakeholders for inviting them in the March 26 meeting, was of the view that the underpinning of AIDP is protection t o t h e l o c a l au t o a n d p ar t s manufacturing industry which is a good thing if based on objective reality, rather than fear, which unfortunately was the case of AIDP (2007-2012). An irrational sense of foreboding kept driving all the stakeholders to postpone implementation of reduced tariff rates agreed in AIDP and yet even with high tariffs in place, the targets of increased volumes and higher indigenization was not realized. The Ministry of Industry believed the fear of unchartered territory – where
even the walls of high tariffs do not provide a false sense of protection, still reigns. Unless we take that fear headon with calculations based on real global data (as opposed to presumptions), the industry will continue to work in an environment that is neither good for the industry, nor for consumers. In the last five years the bike industry especially small Chinese assemblers were under stress due to old and cumbersome policies.
“Our Association was not invited in the meeting which was certainly a biased attitude of the Ministry for ignoring one of the main contributors in the total bike production,” Chief Coordinator Association of Pakistan Motorcycle Assemblers (APMA), Mohammad Sabir Shaikh. He recalled that the small units had been facing this negative treatment for the last 10 years.
Ministry of Industry Government of Pakistan
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Exclusive Article - continued
Monthly AutoMark Magazine
After observing various aspects of the last AIDP, the Ministry put eight (8) questions before the stakeholders that need cogitated consensus.
Sabir Shaikh here answered the eight queries, though he was not invited in the meeting. 1) Where do we stand today and where do we see the auto industry in next five and 10 years? Sabir Shaikh: Like past practice, majority of the industry representatives will speak lie and misguide the new government and try to turn the SROs and notifications in their favor. 1) What is the level of appropriate tariff protection and for how long do need to required quality and is cheaper than depend on protection? import? Sabir Shaikh: As per past and current Sabir Shaikh: In motorcycle industry, practice in our country, the industry will the list of A-Max parts are not true continue to beg for protection and will because these lists made by one leading never give a clear and true picture of the motorcycle assembler, while others do industry. The industry people will never not have any single role. Due to wrong try to encourage the government for list of imported and local parts many providing a level playing policy. assemblers are using smuggled parts for 3) Why do we keep expressing our local assembly. concerns about CBU or CKD imports 7) Why has A-Max list still not more specifically from China and India? updated? What are we trying to hide by Sabir Shaikh: China and India are not providing information about parts ba si c al ly che ap e r so u r ce s f o r localized after 2004 and conduct a procurement of CKDs and CBUs of auto comparative analysis of cost of such sector as compared to other regional localized parts with imported parts. markets. There is no harm in bringing Sabir Shaikh: When A-Max list was parts and accessories from these prepared, influential people of every neighboring countries. sector tried hard to make the list as per 4) Is free trade with India a threat or their requirement due to which the opportunity? How can we thwart the localization targets were not met in the threat or cash on the opportunity? last one decade. Pakistani auto sector is Sabir Shaikh: As long as trade with still standing on the same level of India does not materialize practically localization which was achieved in 2003then we cannot decide yet whether Pak2004. The successive government and India is a threat or opportunity for both even the concerned departments left the the countries? auto sector to play havoc with 5) How real is the used car import a localization and as a result the currency factor for the local auto industry. Why exchange impact is still being felt on the should a new car manufacturer be auto sector in the shape of frequent price worried about a used (five year old) hike by the local industry. imported car? Are we admitting of low 8) If volumes have been affected due quality or higher or prices? to reduced domestic sales, what stops Sabir Shaikh:While taking consumers’ us from exports? point of view five year old used Japanese Sabir Shaikh: The future production cars is better than brand new locally forecast on two-wheeler sector by the produced cars in Pakistan which are PAMA and PAPAAM had been proved being produced by the same Japanese right. This was because of APMA assemblers. actually. PAMA and PAPAAM also 6 ) S ho ul d i nd ig e ni z at i o n b e claimed that the production of cars and implemented as policy or should it be LCVs would cross 500,000 units in treated as an individual economic 2012-2013 but it did not happen. There decision? Are there hidden motives for was no APMA so their fake claims importing a part that is locally continued to prevail besides misguiding manufactured, especially if it meets the www.automark.pk | April-2013 | Page
the government on policy making issues. However, Sabir felt that the Ministry was right in raising finger on the auto industry for failing to achieve higher indigenization and volumes owing to various reasons. He recalled the good era of Shaukat Aziz, former finance minister when almost all the industrial sectors especially the bike industry witnessed boom in their production and sales. The former finance minister opened the market to Chinese bike assemblers in larger interest of consumers, who were previously paying high prices for Japanese bike. The main reason of increase in bike production was affordable rates, stability of exchange rate, low taxes and duties and industry friendly policy. Bike industry made a history by achieving record production of 1.5 million units in 2007-2008 from less than 100,000 units a year. He said that after 2008, the bike industry faced turbulence owing to losing value of the rupee against Yen, Dollar and other currencies which pushed up cost of production. The low cost bike makers did not raise the prices due to intense competition and as a result their profits eroded.
After surviving in the last five years in which many units packed up their business, the Chinese bike assembler have high hopes from the new democratic government which should consider reducing the duties and taxes so that the volumes could cross over 1.6 million units and people get bikes at low rates, he said. Dr. Manzoor Ahmed, Chief Executive, World Trade Advisors, while comparing policies and results in motorcycle industry during the meeting, said there was severe competition as number of bike assemblers rose to 90 from nine over the last 10 years, high tariff protection and indigenization. However, according to him, the results are high growth from 100,000 units in 2001 to 1.6 million in 2011-2012, meeting all local needs, cheap prices, high capacity utilization but comparatively old-dated technology and not meeting the global standards....
12
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Monthly AutoMark Magazine
Automotive Sector - Update
New entrant in motorcycle industry Mandviwalla fails to guarantee incentives Former Finance Minister, Saleem H Mandviwalla, failed to guarantee incentives for a noted motorcycle brand as new entrant despite all efforts till last day, well informed sources told press media. The company has announced investment of $150 million in Pakistan to manufacture Yamaha motorcycle in Pakistan. A meeting was convened on March 14, 2013 in this regard on the pressure of the then Finance Minister, however, Secretary Industries, Shafqat Naghmi foiled his endeavour to notify the incentives for M/s Yamaha in the that meeting by constituting a submit committee under the chairmanship of CEO Engineering Development Board (EDB). CEO EDB is brother in law of Secretary Industries and a former employees of one the subsidiaries of House of Habib. Official documents reveal that Secretary Industries observed that new entrant policy should be defined based on economic considerations wherein new entrant in the automotive sector may be allowed a head start over existing players and lead time for development of vendors and related infrastructure. He suggested that EDB may include motorcycle as part of the auto policy. The tariff incentive for different auto sector may, however, be different for all kind of vehicles including motorcycles. The Chairman emphasised the need for a clear definition and qualifying criteria for new entrants covering all aspects including technology. The representative of Board of Investment (BoI) suggested that for the time being the exercise should be confined to the new entrant motorcycle as contained in the SRO issued by FBR.
DECISIONS The chair decided to set-up a subcommittee under the chairmanship of CEO, EDB and with members from Board of Investment and Ministry of Commerce to review the new entrant policy and formulate new policy
framework for new entrants in the motorcycle sector for which EDB shall develop the Terms of References (ToRs) which will finalise it recommendations within 15 days after issuance of the notification. New entrant policy for motorcycles sector was not included in AIDP (20072012). New entrant policy for motorcycle of 100cc and above was notified by FBR vide SRO 09(I)/2013 on January 4, 2013 to encourage new investment and techn olog y i n thi s sub- sect or. As per decision of the ECC of the Cabinet the tariff structure for motorcycle sector was defined as under which is applicable across the board and are subject to review after one year. The tariff rates have been notified by FBR by amending relevant SROs. Raw materials, 0 percent duty; sub components/ components 7.5 percent duty; sub-assemblies, 15 percent duty; CBU (all engine capacities), 57.5 percent duty; CKD kits not manufactured locally, 10 percent duty and CKD kit s manufactured locally, 38.75 percent duty. The policy for new entrants was notified by FBR vide notification No SRO 09(1)/2013 dated 4th January 2013 stating that in line with summary on "Policy for New Entrants" submitted by Ministry of Commerce approved by the ECC of the Cabinet case No ECC135/14/2012 dated 23rd October 2012 which specifies that the additional
customs duty leviable under this notification shall not be charged on subcomponents and components imported in any kit form by a manufacturer declared to be a new entrant approved by the new ent rant commit tee comprising representatives of Ministry of Industry, Ministry of Commerce and Board of Investment for the motorcycles of 100cc and above with new technology for a period of five years from start of commercial production subject to following major conditions. At the start of commercial production by new entrants, localisation level shall be kept at a minimum of 25 percent. By the end of five years, localisation level shall reach a minimum of 85 percent. The new entrant committee shall be chaired by Secretary Industries comprising representatives of Board of Investment and Ministry of Commerce that shall receive and approve requests of new entrants in motorcycle sector and extension of benefits under new entrant policy. The committee shall also be empowered to decide on proposals relating to introduction of new technolog ies by the existing manufacturers as well as the localisation plan. The agreement template for new entrants, including the localisation plan, will be developed by EDB in consultation with the National Tariff Commission (NTC). The agreement would be designed in such a way that new entrant scheme is not misused. New entrant would mean a potential assembler/manufacturer, whether local or foreign, bringing in new technology for the first time in Pakistan and have had no assembly/manufacturing of similar motorcycles in Pakistan in the past. Any existing player bringing in new technology would be eligible for tariff incentives to the extent of parts and components to new technology....
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Popwer & Energy Sector - Update
Monthly AutoMark Magazine
Attock Petroleum wants to acquire Chevron Pakistan Attock Petroleum, Pakistan’s third largest oil marketing company, announced a bid to acquire Chevron Pakistan, the fourth largest oil retailer in the country. The announcement came through a letter send to the Karachi Stock Exchange on last week, saying that the board of directors of Attock Petroleum were ready to make a bid to acquire 100 percent of Chevron Pakistan. The company did not indicate any initial bid price. Attock is the first of the three parties that had begun due diligence to make an actual bid. The other two are Byco Petroleum, an oil refining and marketing company, and the Nishat Group, a diversified conglomerate with interests in banking, textiles, cement, and power. Analysts view Attock as the strongest contender for Chevron’s assets in Pakistan, which include 540 retail outlets that operate under the Caltex brand name. Chevron’s share in the Pakistani market comes to about 5 percent, placing it in fourth place behind Pakistan State Oil, Shell Pakistan, and Attock Petroleum. It is the largest petroleum retailer not to be listed on the Karachi Stock Exchange. In addition to its retail outlets, Chevron has 12
storage depots with a capacity of about 12,000 tons, an 11 percent stake in a cross-country white oil pipeline, and a 12 percent stake in Pakistan Refinery. The company also has a relatively high market share of about 27 percent in the high-margin lubricants segment. Attock Petroleum is the third largest oil retailer in the country and owns about 350 retail outlets spread across the country, though mostly on highways and major thoroughfares close to industrial areas. In addition to bidding to acquire Chevron Pakistan, Attock is also investing aggressively in organic expansion by building more retail outlets of its own. For the financial year ending June 30, 2012, the company had revenues of Rs153 billion, up 39.7 percent compared to the same period in the previous year. The company is part of the Attock Group, the largest private-sector energy conglomerate in Pakistan by revenues. In addition to Attock Petroleum, the group owns Attock Refinery and National Refinery, and Pakistan Oilfields, an oil exploration and development company. It also owns Attock Cement, a construction materials manufacturer. Were Attock to be successful in its bid
OGDCL’s exploratory efforts yielding results The Oil and Gas Development Company Limited (OGDCL) is successfully going ahead with its goals with spudding 11 new wells during the first half of the current financial year to meet the country’s growing energy needs. Giving details, the company’s spokesperson said 11 new wells include two exploratory wells namely Raja-1 and Multan North1, one appraisal well Chak Naurang South-2 and eight development wells namely Nashpa-4, Qadirpur-46 & 49, Bahu-5, 6, & 7, Rajian-7 and Bobi-10. Company’s exploratory efforts to locate new hydrocarbon reserves yielded three
new oil and gas discoveries at Naspha3 (Naspha E.L) in District Karak, Khyber Pakhtunkhwa, Zin SML-1 (Zin E.L) in District Dera Bugti, Balochistan and at Suleman-1 (Khewari E.L) in District Khairpur, Sindh. The company has also awarded contract for development of Kunar Pasakhi Deep and Tando Allah Yar Field Development Project PhaseII, the official said and added the project consists of gas gathering system which will convert 250 mmwcfd of raw gas into 225 mmscfd of pipeline quality gas and is expected to be completed within the next 12 months.
to acquire Chevron, it would be acquiring assets quite complementary to its own network. “Most of Chevron’s retail outlets are in Sindh, whereas Attock has most of its outlets further up north. It would also be gaining access to outlets in prime retail locations,” said Hussain Yasar, a research analyst at KASB Security, an investment bank. While a bid price has not yet been announced, analysts expect Chevron to accept bids between Rs15 billion and Rs17 billion. If the other two parties that have publically indicated interest go ahead with their bids, the price may rise to as much as Rs20 billion, especially since Total SA is rumoured to be interested in bidding as well. Chevron announced on March 13, 2012 that it was exiting the retail business in Australia, Egypt and Pakistan. The company did not offer much in terms of details, though the announcement seems to be part of the worldwide trend of the major global oil companies shedding their downstream assets – refining, marketing and retail sales – to focus on t he mo re pr ofi t abl e u p st re am businesses, such as oil and gas exp l o ra t i on an d d e v el o p men t . The market’s reaction to Attock’s bid was somewhat muted. In Monday’s trading on the Karachi Stock Exchange, Attock Petroleum’s shares closed at Rs498.51, up just 0.34 percent for the day.
SC seeks record of 450 illegal CNG stations The Supreme Court directed the federation to file para-wise comments on the awarding of licenses to some 450 CNG stations and sought relevant record of the stations. This was directed by a three-judge bench headed by Chief Justice Iftikhar Muhammad Chaudhry during the hearing of a suo moto notice of awarding licenses to illegal CNG stations. The apex court had taken action on a news report that some 450 CNG stations were awarded licenses illegally.
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Monthly AutoMark Magazine
Automotive Sector - Update
To curb the misuse of import schemes and to provide an opportunity to expatriate Pakistanis to buy new Pakistani assembled cars instead of used cars, the AIP envisages duty free purchase of locally manufactured cars. sub-components and sub-assemblies. Provision for such incentive is proposed to be created in SRO 656(I)/2006; (ix) profits earned from exports would be exempted from corporate tax; (x) Duty and Tax Remission on Exports (DTRE) scheme under SRO 450(I)/2001 will continue, whereby an industry is entitled to avail benefit of zero percent duty and sales tax on import of inputs used for the manufacture of goods meant for exports; and (x) Duty Drawback Scheme(DDS) under SRO 450(I)/2001 will also continue whereby an industry is entitled to claim duty drawback on inputs used for export. The AIP also envisages priority development of quality and safety standards for all vehicles in the following five critical areas during the first year of policy period ie brakes, emission, impact testing, suspension- wheel rims and tyres and lights. Other performance standards (fuel efficiency, noise and ergonomics) will be developed and adopted latest by the fourth year of the AIDP. The AIP envisages separate national standards for trucks and buses, including standards for bus and truck bodies to eliminate the trend of using same chasis for both trucks and buses. The AIP will integrate efforts to adopt global harmonised vehicles regulations. Internationally, the major forum for this ro l e is t he Wor ld F o ru m f o r Harmonisation of Vehicle Regulations (WP.29) under the United Nations Economic Commission for Europe (UNECE).
AIP would continue to focus on implementing proposals as contained in AIP with regard to setting up of Auto Industry Skill Development Company (AISDC) as well as establishment of two centres of excellence by AISDC one each at Karachi and Lahore. Automotive Testing and Training Centre Ltd (AT&TC), Karachi Electric Supply Pak German Auto Training & Testing Institute, Lahore (Spinning Machinery Corporation). These will be supported through HEC, NAVTEC, TEVTA, VTCs and TUSDEC. Policy also focus on
implementing JICA's recommendations with regard to short term training program by Japanese technical experts, improvement program for vocational skill training and establishment of the skill certification system.
According to the new policy amount of advance payment for booking will be limited to 75 percent of the total vehicle price and price will be fixed at the time of booking while interest on the advance payment for the period from payment till delivery will also be discounted from the final payment. According to the EDB this arrangement will help shorten delivery time and ensure availability of vehicles with the dealers and OEMs. Matching grants will be provided to enhance vendors' technology levels and encourage localisation through an Engineering Industry Development Fund (EIDP) for technology, research, design and development. This fund is to be created through grants by the Government, International Donor Agencies or share from Export Development Fund (EDF).
Preference will be given to hi-tech, high value added parts including alternators, starter motors, water pumps, fuel pumps, engines, transmission systems, regulator rectifiers, ignition coils, fuel injection systems, pistons, fuel cocks, automotive electronics, and clutch assemblies. To curb the misuse of import schemes and to provide an opportunity to expatriate Pakistanis to buy new Pakistani assembled cars instead of used cars, the AIP envisages duty free purchase of locally manufactured cars. This would help improve existing capacity utilisation of domestic OEMs
and reduce fixed cost incidence per car for overall reduction in prices. This scheme will be extended only to expatriate Pakistanis who have remitted at least Rs 1.5 million to Pakistan during past one year through banking channels. At present various schemes under trade policy are being misused such as importing sprinkler lorries and water bowsers under 'special purpose vehicles' category and converting these to trucks by removing a simple tank from the chassis, thereby adversely hurting the local industry. AIP will rationalise the age limit for used vehicles imported under any scheme to three years for all vehicles types. The plan will also rationalise the used car scheme through following effective regulation so as to inhibit misuse by importers and non-entitled persons: (i) There will be a single rate of duty for vehicles of all origins. SRO 577(I)/2005 is proposed to be revised to read [all origins]; (ii) Tariffs for used vehicles to be revisited for rationalisation. In this regard it is proposed to take the base year price for the new car and depreciate it @1 percent per month to arrive at the FOB price and add other incidental costs to arrive at CIF price for ascertaining the duty at prevailing CBU rate instead of a fixed rate of duty; (iii) Imported used vehicles must be registered in the name of the applicant (returning expatriate Pakistani); (iv) Applicant must have a valid driving licence; and (v) 1 percent depreciation per month shall be allowed to a maximum of 36 percent . Globally, production bases for foundry products are relocated to regions where labour cost is competitive and environmental regulations are less st ringent . This prov ides ample opportunity for Pakistan to become a global source for casts, forged and machined parts. The EDB has proposed duty exemption on plant, machinery and equipment for forged, cast and p r e ci s i o n m ac hi n e d p ar t s . . . . . .
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Exclusive Article by Owais Khan
Monthly AutoMark Magazine
Pakistan badly needs small locally assembled car The Gala has established itself as the most trustworthy venue for the purchase of used cars. It has been noticed that many people wait for the Gala so that they could purchase a certified vehicle backed by warranty and guarantee. From the birth of Suzuki FX 800cc in 1984 to transformation into Mehran Euro II 800cc model last year is a milestone achieved by Pak Suzuki Motor Company Limited (PSMCL) amid some reservations. Suzuki FX and Mehran have remained the highest selling four wheelers of the country. Mehran’s contribution in total Pak Suzuki vehicle sales is immense. T ak i n g a l o o k at c o m p a n y ’ s achi evements, Pak Su zuk i was established as a joint venture between Suzuki Motor Corporation (SMC) of Japan and Pakistan Automobile Corporation (PACO), government of Pakistan in 1983. Commercial operations were kicked off with production of Suzuki FX in 1984. The company was listed in stock exchange in 1985. The 800cc Alto now called Mehran was introduced through local manufacturing in 1988. It shows that the FX existed for only four years and this small car is still very much visible on the roads. There is something missing which many people do not understand as they are either driving Alto 800cc by the name of Mehran or Suzuki FX improved version in shape of Mehran as per information available on the company’s website. If we look at the engine of Suzuki Mehran prior launching of Euro II model in 2012, there is no difference between Suzuki FX and Mehran engines and only the body shape is entirely changed. It is not clear whether Alto was also launched in other countries in 800cc and 1,000cc both especially in India or there is only one model of Alto 1,000cc all over the world. In Pakistan anything unusual can happen especially in the auto sector. In 1988, Swift car later on called Khyber 1,000cc was introduced through local
manufacturing. In 2,000, Cultus and Alto 1,000cc were introduced. In 2010 the 1,300cc Swift was introduced. Again it is confusing whether the Swift is manufactured in 1,300cc or 1,000cc in various countries or it is just a name change game or some other model. No one can understand how engine power capacity has been replaced in Pakistan with another model especially of same name in case of Mehran which was actually Alto 800cc and how Swift became Khyber and then Swift 1,300cc was launched. One is at least certain that this kind of strange practice had not been adopted by other assemblers of all over the world. Suzuki FX was discontinued in just four years but there is certainly no expiry date of Mehran announced by the Pak Suzuki. Mehran holds a distinction of being the oldest model in the country and also in the world if compared with its original launch in 1988. Successive governments have not paid any heed over running of around 25 year old engine and model of Mehran when the people in the world are now using Euro IV and Euro V engines. Those who compare Mehran’s price with the existing used imported cars of five year old lives in fool’s paradise as at least one is getting a new shape, latest engine,
fascinating colors, facilities, power windows and steering, central locking, air bags, safety as per world standards etc. In contrast what Mehran offers at price of Rs 595,000 for VX Euro II and Rs 652,000 for VXR Euro II. Everybody knows about the quality of locally produced Suzuki cars but customers are bound to go wild for Mehran as they do not have other option in locally produced 800cc. Many consumers are taking risk of buying costly imported used small cars knowing lack of any after purchasing service and warranty except for verbal satisfaction from the used car dealers of managing parts supply from Dubai. Here Mehran excels with imported cars due to company’s warranty and easy availability of parts and accessories. However, for many people, warranty holds no importance as customers know that the authorized dealers of any locally produced vehicles charge exorbitantly for service and tuning so they have to take risk of maintaining their car with the help of their old mechanics. As Mehran does not offer any facilities like central locking, power steering and air bags at high price tag there is no question of fault on this account for customers. Mehran also enjoys an edge over other imported used cars due to low maintenance cost and easy parts availability at low cost while one must have extra cash in his pocket for maintaining a used imported car. Mechanics easily handle Mehran as many of them (without any academic background and knowledge) have become masters by handling it for the last 25 years. However, mechanics may find used imported vehicle difficult to handle owing to changed engine technology. In a country where many people cannot afford costly big cars, Mehran is the only hope. Many people prefer Mehran owing
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Monthly AutoMark Magazine
Exclusive Article - continued to its high re-sale value as compared to other locally produced cars and especially the imported used small to big cars. If Honda CDI-70cc is a hard cash then in cars Mehran holds same status as at least people do not face difficulties in selling this car even after using for many years. The main reason of its high re-sale value is the continuation of its local assembly in higher numbers. As long as Mehran continues to roll out from the plant its re-sale value will remain very strong. At a time when many people are afraid in taking risk of purchasing used imported small vehicles, Pak Suzuki has been successfully running a Used Car Gala at Expo Centre Karachi after every three months in which over 100 Suzuki certified vehicles are put sale. Around 70-80 per cent of vehicles are sold out on the day of Gala as the company offers six months to one year warranty despite the fact that it is selling used vehicles which were sold out from their authorized showrooms to the customers few years back. The Gala has established itself as the most trustworthy venue for the purchase of used cars. It has been noticed that many people wait for the Gala so that they could purchase a certified vehicle backed by warranty and guarantee. However, what the local assemblers are doing is not enough as Pakistan badly needs a new 800cc vehicle from Japanese, European and Korean manufacturers after termination of Daihatsu Cuore last year.
Indus Motor Company (IMC) official said that the company had searched at least three to four small vehicles for local assembly but they did not prove feasible as Daihatsu Mire was costing $12,000 in world market. A number of Chinese small cars are available in China but in car segment investors fear that Chinese small car may not click the mind of people due to various reasons since they have developed a habit of using Japanese cars.
Coming to policy matters, the Ministry of Industries opened a debate on the future road map for the entire auto sector in the last week of March under a caretaker government set up. All the stakeholders of the auto sector held talks with Ministry of Industry officials where former ambassador to WTO and Chief Executive World Trade Advisors, Dr. Manzoor Ahmed gave a presentation on Auto Vision 2020. On g lobal trends for auto manufacturing, he identified six trends which included a constant search for new ways and means to remain ahead of their competitors, dramatic increase in foreign direct investment (FDI), global production and cross border trade, strong regional patterns of integration and emergence of global manufacturing hubs, new concepts such as “just in time” and flexible production lines, production of several different models on the same assembly and industry has to be nimble or flexible to be adjust to changing circumstance.
On auto policy in developing countries, he said till the implementation of WTO rules, all major auto manufacturing countries promoted use of local contents. During the last 10 years, most have abolished these requirements for example Malaysia (2002), Thailand (2000), the Philippines (2003), India (2002), China (2009), Mexico (2004) and Argentina (2003). Pakistan, Iran, Egypt, Venezuela and Cambodia continued to maintain localization policies through incentive measures in the form of customs duty reductions for use of local parts. In India, production of cars, commercial
vehicles and bikes have risen sharply after it abolished local contents rule. On relationship between the deletion programs and the production of passenger cars in various countries, he said in Pakistan tariff based system (TBS) ensures continuation of local contents policies and production of cars was 153,393 units as compared to 162,194 units in 2011. In China, policy of charging higher duties on imported parts eliminated after WTO ruling in 2008. Production of cars rose to 18,418,876 units in 2011 as compared to 5,708,421 units in 2005. In Mexico deletion program is phased out in 2004 and car production surged to 2,680,037 in 2011 from 1,624,238 units in 2008. In Turkey car production jumped to 1,189,131 units in 2011 from 879,452 units in 2008 after phasing out of deletion program. I n Malaysi a and So ut h Af ri ca a d m i n i s t r a t i v e g ui d e l i n es ar e encouraging local content usage. In Malaysia car production fell to 533,695 units in 2011 from 563,408 units in 2005, while in South Africa car production slightly improved to 532,545 in 2011 from 525,227 units in 2005. In Indonesia where deletion program was phased out, car production increased to 937,948 in 2011 from 500,408 units in 2005. Some of the salient features of Pakistan’s auto policies are localization, requiring new investors to use a minimum percentage of local parts, higher tariff protection for cars, bikes and auto parts (customs duty of 50-10 per cent), no tariff concessions for any FTA partners, import of cars and auto parts not allowed from India and import of threes year old cars at depreciated value under various schemes. Counting problems with Pakistan’s current auto policies, Dr. Manzoor Ahmad said these are high tariffs on auto parts making our industry uncompetitive, high dependence on one source for CKD kits making our industry vulnerable, capacity utilization is likely to remain low, difficult to bring new investment and difficult to keep up with changing technology. Terming auto policies as seriously flawed in Pakistan, he said that can be rectified by abolishing localization programs (TBS), rationalizing tariffs, normalizing trade with India, negotiating bilateral auto trade agreements and restricting import of used cars......
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Automotive Sector - Update
Ministry of Industries opens talks over auto sector roadmap Ministry of Industries (MoI) allegedly u nder p ressure fr om Planni ng Commission and Ministry of Commerce has reopened negotiations with the auto sector on a five-year roadmap for the industry, sources close to CEO EDB. A meeting convened on last week at the MoI was attended by the representatives of all major sectors including Munir K Bana, Chairman and Usman Vice Chairman of PAAPAM represented the vending arm of the industry, with the OEMs represented by Pervaiz Ghias, Chairman, Abdul Waheed Khan DG PAMA. Chairman Indus Motor Company Ali Habib also attended the meeting. The meeting chaired by Shafqat Naghmi, Secretary Industries was attended by Kazi Ebadullah, CEO EDB and official of Ministry of Commerce. Dr Manzoor, former ambassador to WTO, also made a presentation. In their presentations, the representatives of the industry compared economies of different and comparable sizes and discussed their auto policies with special emphasis on tariffs. Citing examples of India, Malaysia and other regional countries the industry argued that every country protects its industry.
Ghias of PAMA mainly spoke about the negative impact of frequent policy changes on the industry. PAAPAM's presentation made by Aamir Allah Wala focused on contribution of vending industry to the growth of auto sector in Pakistan. The value addition by the sector
through quality manufacturing was emphasised by him. He also pleaded the case for a consistent policy for the industry. "Pakistan industry will continue to lose volumes if tariffs are not brought down," emphasised Dr Manzoor. He cited the examples of India, the Philippines, Thailand and Malaysia and said that each country had dismantled the high tariff walls and welcomed competition in the last ten years.
To this, Ali Habib responded that "Malaysia and India have very high tariffs and we have documents to prove it." He disputed the veracity of figures presented by Dr Manzoor. The debate became quite interesting when Dr Manzoor insisted that Malaysian and Indian tariffs were available on the net. Ali Habib responded that local auto sector had SROs from India and a feasibility from Malaysia to prove that tariffs were not what were being quoted by
Dr Manzoor. The examples of Argentina, Brazil trade pact and that of NAFTA agreement between Mexico, Canada and the US were termed most irrelevant for the industry in Pakistan. "The size of the e co n o mi es an d t h e s t a ge s o f development of industry have nothing in common with Pakistan," the sources quoted Munir Bana as insisting. The presentation by Dr Manzoor reportedly totally discounted the impact of NTBs on Pakistani exports while discussing trade with India.
A Millat Tractors representative said that his company had been trying to export tractors to India and facing one barrier after another and it had not been able to export. Indus Motors also shared their experience of problems while trying to export their product. The negotiations with different sectors of the industry will continue next week, especially on tariffs. However, the industry was visibly disturbed on the thrust of the tariff plan which proposed reduction of CBU rate on the assertion that a lower CBU will improve investment in the country. This logic was completely lost on those present. Increasing duty on nonlocalised CKD for tractors to 5% which is presently at 0% was another thing that perturbed the industry. Above all, the proposal that the additional duty on import of localized parts should be abolished was most disturbing for the industry. "The industry was at a loss to understand the theme of this new proposal, " the sources said.. ...
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Monthly AutoMark Magazine
Energy Sector - Update
PSO, Engro sign MoU on Thar Coal project With an eye towards diversification of its business line, the country’s leading public sector company, Pakistan State Oil (PSO) has signed a Memorandum of Understanding (MoU) with Engro Powergen Limited (EPL) to review of the technical and economical feasibility of the Thar coal project. The MoU was signed between Naeem Yahya Mir, CEO & MD PSO and Muhammad Ali Ansari, President and CEO, Engro Corporation Limited. Also present at the occasion were Zubair Motiwalla-Chairman Sindh Board of Investment and Chairman Sindh Engro Coal Mining Company (SECMC) and Shamsuddin Ahmed Shaikh, CEO SECMC along with Mohammad Arif Khan, Additional Chief Secretary (P&D) Government of Sindh, Ejaz Ahmed Khan, Secretary of Coal and Energy Development Department Government of Sindh and other directors of the company. This MoU has been signed keeping in view the fact that as coal is comparatively cheaper and easily available in comparison to other fuel sources, it has become the fuel of choice for developed nations across the world. Therefore, with an aim of responsibly providing for the
rising energy needs of the country, PSO is exploring multiple investment opportunities in the energy sector with special emphasis on Thar Coal and intends to acquire 50 percent of Engro Powergen Limited shares in SECMC as part of this plan. Both PSO and Engro are in agreement that coal is the best possible indigenous fossil fuel resource for Pakistan and has the potential to address the country’s
severe power shortage and bring energy security to the country. Through this project, not only will the energy chain be strengthened it will also generate extensive economic activity nationwide while developing Pakistan’s human capital through the execution and operation of state-of-the-art coal mining and coal-based power generation projects.- PR
Coal gasification projects LCCI urges govt to encourage private sector investment The Lahore Chamber of Commerce and Industry (LCCI) has asked the caretaker government to encourage private sector investment in coal gasification projects that offer one of the most versatile and clean ways to produce electricity. The LCCI President Farooq Iftikhar in a statement said that 175 billion tones of Thar coal reserves could provide guaranteed long-term energy security to Pakistan. He said that several thousand megawatts energy was being derived in Russia, Central Asian States, Europe, the United Kingdom, Canada, Australia, China and South Africa from Underground Coal Gasification. He said that in view of the power
generation and energy demand, rich coal reserves of Thar not only promise energy independence for Pakistan but also offer lots of opportunities for prospective investors. He said that the current energy crisis was causing losses of Rs. 230 billion and 400,000 jobs every year. He said it was a matter of concern that industrial units were being shifted to the other countries. Capital flight could lead further economic aggravations, he added. He said that coal gasification offers the most effective solution to the electricity shortage that has jolted the economic base of the country. The LCCI president said that it was unfair on the part of the government as the Punjab province was being subjected to over several hours power cuts than
the other provinces. He said that the private sector is engine of the growth but it would be unable to give results if it would not be provided with an enabling environment. How the FBR would be able to meet its revenue target when the industrial wheel is not running properly. The LCCI President said that the gov ernment should underst and unemployment and industrial closures always give birth to lawlessness. Therefore, the government should reset its priorities regarding provision of electricity to the industry. Farooq Iftikhar said that Pakistan had already lost a number of global markets because of an acute gas and electricity shortage.
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Automotive Sector - Update
Customs Collectorate denies facility of duty-free raw material import without commission Only big exporters and large scale manufacturers are availing full benefit of duty-free raw material under DTRE Scheme, because SMEs can neither comply with the lengthy, complicated and cumbersome procedures nor can they import full consignment of containers. This was stated by Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) Chairman Munir Bana and Vice Chairman Usman Malik. Mr Munir Bana, Chairman PAAPAM, observed that the procedure of Duty Tax Remission for Exports (DTRE) has been so designed that not a single company from the auto engineering sector in Pakistan is benefiting from this scheme to increase the country’s export volumes. Stressing the need for consistency in
export-related policies, he asked the government to simplify the complex nature of several segments of its policy, including DTRE and Sales Tax Refund system. “If the government removes all the bureaucratic red tape from the DTRE Scheme, making it practical and simple, exports of auto engineering sector can be enhanced manifold, as production cost will be minimised by at least 15 per cent, he added. Mr. Bana appreciated the government’s efforts to introduce such “exportfriendly” schemes, but showed reservations over implementation process of these plans, and suggested that the authorities should remove all impediments and apply the schemes in its true spirit. Vice chairman Usman Malik stated that around 90 per cent of export-oriented
Pak Suzuki sells old motorcycle plant to Reckitt Benckiser The Pak Suzuki Motor Company (PSMC) has reportedly sold its old motorcycle assembly plant to Reckitt Benckiser Pakistan. Pak Suzuki, in its recentlypublished annual report for the year ended December 2012, says the company has entered into an agreement with Reckitt Benckiser Pakistan for the sale of its old motorcycle plant. The deal covers the sale of the land, building and waste water treatment plant, for a total consideration of Rs280 million. The plant had been operational since 1986 in the SITE industrial area – one of the oldest and most congested industrial zones of Karachi. But PSMC says that since it has shifted to a new plant at Bin Qasim, an industrial cluster outside Karachi city, there is no use for keeping the old land. “This old plot was no longer in our use, so the management decided to sell it because there was no need or reason to keep it,” a PSMC spokesperson replied to local print media through an email. The company’s new plant in Bin Qasim
has been operational since July 2011, and is located in the same vicinity of its four-wheeler assembly plant. While replying to a question, the company spokesperson said the company’s operations, logistics, administration and management is now much easier and smoother, as both plants are located in t he s ame ar e a. T h e co mp an y spokesperson declined to provide further details about the deal. The annual production capacity of the motorcycle plant was 44,000 units but it produced only 21,312 units in fiscal 2012, slightly above 50% of total installed capacity. Motorcycle sales in 2012 have been highest for the company in the last four years. Sales have been increasing gradually since 2009 – when the company produced just 14,530 units. Pak Suzuki is a major player in Pakistan’s four-wheeler market, with over 60% market share in the segment. However, its share in the motorcycle segment is slightly less than 2%.
auto engineering units are located in Punjab, and because this province is already overcome by the worst energy crisis, these units have not been in a position to avail import of duty-free raw material, with a view to avoid delay in export orders, as audit of DTRE takes up to six months. He appealed to the government to also proactively deal with the ongoing energy crisis and other issues to avert industrial closures and resultant economic downturn. He said that the power shortage had not only caused unrest among the businessmen but it was depriving country of 2 per cent of much-needed GDP with an impact of Rs52 billion per annum on revenue generation and if seriousness is not shown practically, it is not the industrial production alone but all economic activities will come to a grinding halt in totality. Mr Usman expressed his dismay over the government’s inability to tackle power crisis in its over four and half years’ tenure, and pressed upon the policy makers for implementation of a result-oriented mechanism. He said that circular debt, electricity theft, fast increasing line losses, inefficiencies of government-owned generation and distribution companies; overstaffing; free provision of electricity to the tune of Rs100 milli on a day; p oor maintenance of plant equipment; the use of obsolete technologies need to be tackled head-on and without any further loss of time. He also urged the government to ensure equal supply of electricity throughout the country as the province of Punjab was worst hit and investment scenario has totally spoiled in the province. Mr Usman also stated that Auto engineering industry is totally different from other sectors, which is very sophisticated and complex and DTRE rules cannot be implemented to it. So, the goverment, keeping in view of the complexity of the auto sector, should align the rules of DTRE as per its requirements to give a jump start to the export of automotive parts, he concluded.
Courtesy: The Express Tribune
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International Automotive Event - Update
Monthly AutoMark Magazine
AUTO SHANGHAI-2013
International Automobile and Manufacturing Technology Exhibition Auto Shanghai is nurtured by China`s huge automotive market. With a history of 27 years, Auto Shanghai 2013 has grown up to one of the most influential auto events in the world, an important platform of trade and information exchange for national and international automotive industry and an important carrier to lead automobile consumption and industrial development. The high-profile event for global automotive industry, The 15th Shanghai International Automobile Industry Exhibition (Auto Shanghai 2013), will be held at Shanghai New International Expo Center from 21st to 29th April, 2013. The organizers of Auto Shanghai 2013 include China Association of Automobile Manufacturers (CAAM), China Council for the Promotion of International Trade, Shanghai Sub-Council, and China C ou nci l fo r t he Pro mo t io n of International trade, Automotive Industry Committee; and the coorganizers are Shanghai International Exhibition Co., Ltd. and MMG-Messe Muenchen International/IMAG. The event is also specially supported by China Machinery Industry Federation and The Society of Automotive Engineers of China. According to the statistics analysis by CAAM, China automobile market has presented slight growth in 2011 with automobile production and sales rising to over 18 million respectively. In 2011, the production and sales of passenger vehicles were both over 14 million, or to be specific 14,485,300 and 14,472,400 respectively, a year-on-year increase by 4.23% and 5.19%. Both of the growth rates are above the industry level. The year 2012 is the beginning of the "12th Five-Year-Plan" as well as the start to achieve our new target. The growth of China equipment manufacturing industry is based on the theme of scientific development, to adhere to the path of new industrialization, to
implement the strategy of "adjustment & transformation, innovation & upgrading", to emphasize on fostering strategic emerging industries and to achieve leapfrog development. The State Council has prioritized the new-energy automobile as one of the strategic emerging industries, offering a political support to the development of automotive industry. It can be expected that national and international automotive industry will strive to achieve technological innovation and leapfrog development. Auto Shanghai is nurtured by China`s huge automotive market. With a history of 27 years, Auto Shanghai 2013 has grown up to one of the most influential auto events in the world, an important platform of trade and information exchange for national and international automotive industry and an important carrier to lead automobile consumption
and industrial development. Debuted as the first China auto event in Shanghai in 1985, Auto Shanghai had only 73 exhibiters with a show scale of 15,000 sq.m., it attracted great attention and care from all the relevant parties. Along with China`s entrance to the WTO, China automotive industry accelerated its development. With 9 editions and 18 years` growth, in 2003 Auto Shanghai successfully moved to the Shanghai New International Expo Center and reformed its organizing body and became a member of International A-Level Auto Shows. In 2005, the international automobile tycoons, known as "6+3", all participated in Auto Shanghai. The mainstream domestic automobile enterprises all regarded Auto Shanghai as a top global auto show, and made great effort in showcasing their products, thus elevating the overall level of Auto Shanghai. In 2007, a number of spectacular global "auto debuts" were first staged in Auto Shanghai. In 2009, the basic concept of "people-orientation" and "innovation", and detail-oriented management featured the auto event. In 2011, Auto Shanghai has attracted 2000 automotive enterprises from 20 countries and regions. The number of exhibiting vehicles amounted to 1100(900 domestic, 200 overseas), including 75 global auto debuts. The show scale of Auto Shanghai 2011 reached 230,000 sq.m.. It has attracted 715,000 visitors, 9872 journalists from over 2700 domestic and international medias. All these figures set up new records for Auto Shanghai itself as well
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Automotive Sector - Update
IMC holds Toyota Dream Car Art Contest
Indus Motor Company (IMC) organised 7th Toyota Dream Car Art Contest at a local hotel here in which more than 300 schools from across the country participated. Today’s contest was first of the series of three regional events, while the rest will be held in Lahore and Islamabad next month. Out of total 10,000 entries received from across the country, 3,000 entries were from Karachi. A large number of special children also participated in this countrywide contest. Presiding over the event, renowned painter and artist, Jimmy Engineer, lauded the efforts of Indus Motor Company (IMC) to promote art and providing the children with an as China exhibition industry. At the very moment when global automotive industry is undergoing a new revolution and China automotive revitalization plan is issued, Auto Shanghai 2013 will again stage an impressive and classic auto event in the spring of 2013, with the support from all the automobile tycoons. Auto Shanghai 2013 is expected to occupy all 17 indoor exhibition halls (13 halls used in 2011) and outdoor temporary exhibition halls, and the estimated show scale would reach 280,000 sq.m.. As most automobile makers customarily prefer their new car release to be on the first day of the exhibition, the organizer will only arrange one media day (April 20) and expand the media release time to 8 p.m. Subsequently the exhibition dates will be increased by one day, i.e. from 21st to 29th April 2013 (21st and 22nd for professional visitors, 23rd to 29th for the public), leaving visitors more ample time. The theme of Auto Shanghai 2013 is "Innovation for Better Life". Innovation
opportunity to showcase their talent. I am very happy to know that an organisation like IMC has taken an initiative through Toyota Dream Car Art Contest to promote art among the children. What is more heartening to see is the participation of students with special needs, he added. The IMC has been organising the contest regularly for the last six years as part of the global Toyota initiative aimed at developing Toyota brand awareness, affinity and association. The contest was judged by a panel comprising Faryal Sethi, Assistant Professor, of Fine Arts at Indus Valley School; Tehmina Khalid, Media and PR Professional and Arshad Karim, an upcoming artist in Karachi. 15 entries will be announced as winners of the contest in the upcoming events to be held in Lahore and Islamabad. Later, the artworks will be dispatched to Toyota Motor Corporation (TMC), Japan for inclusion in the World Art Contest to be held in Japan during current year.
will lead to industry development, which creates a better life. Auto Shanghai has not only testified the development of China`s automobile industry, but showcased a better lifestyle brought about by green technology. As one of the most important international auto shows, Auto Shanghai will bear the dreams of global automotive players, burden the responsibility to promote the healthy development of China`s selfowned brands, as well as direct the auto culture and reflect the public`s aspiration for auto lifestyle. Auto Shanghai 2013 will keep on displaying the updated automotive technology, and focusing on the new trends and highlights in the global automotive industry. Adhering to the basic management and service concept of "continual innovation" and "people orientation", the organizer will actively promote the concept of energy-saving and environment–friendly technologies. Various supporting activities that promote automotive knowledge and explore automotive civilization will be
New Suzuki sedan concept to debut at the 2013 Shanghai Auto Expo Japanese auto maker Suzuki intends to unveil a new sedan concept at the upcoming the 2013 Shanghai Auto Expo. Not much is known about the upcoming concept car but from what can be made out of these teaser images, the new car might come with sporty exterior styling and a sophisticated rear end. It is expected that that the new car will spawn a new sedan that would have a long wheel base and reduced height. This car would cater to the C segment of the Chinese car market Suzuki might have no plans at all to launch the new car in Indian market. However, there is also a possibility that the new car might actually be the replacement for the SX4 sedan that is on sale in India and China. The styling of the new sedan might not have to do much with that of the S-Cross Crossover that was unveiled at the 2013 Geneva Motor Show...... incorporated into the event. Auto Shanghai will not only promote new technologies, release new cars and exchange latest information, but exemplify an innovative model in exhibition management and service. We believe the Auto Shanghai 2013 will deliver a new miracle as well as huge contribution to the automotive and exhibition industries, where the public can appreciate on-site the innovative concepts of auto manufacturing, the upgrading of auto technologies, the amazing auto designs, and the intelligent auto control system. We hereby sincerely invite automotive enterprises domestic and abroad to participate in Auto Shanghai, to display their strengths, to share the latest development and to explore the industry development. We also welcome the national and international media to report the exhibition and the latest development of global automotive industry. We are grateful to the attention and support given to this great auto event from all our relevant parties.
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Automotive Sector - Update
Industries ministry key entities Contracts of all CEOs to be reviewed CEO, EDB, Qazi Ibad is brother in law of just transferred Secretary Industries (now Secretary Capital Administration and Development Shafqat Naghmi), Managing Director USC, Major General Muhammad Farooq (Retd) is close to Malik Riaz of Bahria Town and according to former Minister for Production CEO PSM, Major General Muhammad Javed (Retd) is the nominee of GHQ, and Chairman National Fertiliser Marketing Limited is close to Chaudhry Pervez Elahi. Caretaker Fed eral Mi nister for Industries and Production, Shahzada Ahsan Ashraf Sheikh announced a review of contracts of all politicallyappointed Chief Executive Officers (CEOs) of organisations that fall under the ambit of Ministries of Industries and Production. The key organisations that fall under the Ministries of Industries and P ro d uct i on a re Ut i li t y St o re s Corporation (USC), National Fertiliser Corporation (NFC), Engineering Development Board (EDB), National Productivity Organisation (NPO), Department of Explosives, Pakistan Steel Mills (PSM), State Engineering Corporation and Heavy Electrical Complex (HEC). The sources revealed that most of the CEOs of these entities were appointed on the basis of influence either in politics or bureaucracy. CEO, EDB, Qazi Ibad is brother in law of just transferred Secretary Industries (now Secretary Capital Administration and Development Shafqat Naghmi), Managing Director USC, Major General Muhammad Farooq (Retd) is close to Malik Riaz of Bahria Town and according to former Minister for Production CEO PSM, Major General Muhammad Javed (Retd) is the nominee of GHQ, and Chairman National Fertiliser Marketing Limited is close to Chaudhry Pervez Elahi. Thousands of employees have been inducted in different corporations under Ministries of Industries and Production - a long-term PPP policy that has continued. Election Commission of Pakistan (ECP has already allowed the federal and provincial governments to cancel contracts of politically backed heads of corporations who may be in a position to influence the elections. The
ministry since long. "We will try to clear backlog of policies including new industrial policy, Auto Industry Plan (AIP) left by the previous government," Sheikh maintained. The EDB had convened meetings this week to discuss AIP with the representatives of auto sector which have been cancelled.
minister said that during his tenure he would promote merit in the ministry and it s at tached d epart ments. "I have sought the contract details of all the CEOs so that we could review them as per the law," the minister who is a textile tycoon said while talking to journalists after being briefed by different officials. New Secretary Industries, Zafar Mahmood, was also present in the briefing. According to an official statement, Shahzada Ahsan Ashraf Sheikh, assumed the charge of his new responsibilities and received an introductory briefing about the working, issues and functions of the ministry. The Caretaker Minister for Industries and Production further said that strict action would be taken against those involved in malpractice in the ministry and at tached depart ments and organisations. Replying to a question, he said that his top priority is to clear the backlog of issues piled in the
Replying to a question, he said that every ministry has been directed to clear the backlog of policies that have been pending with their respective ministries. In reply to another question, he said that ministry of industries will approach the appropriate level to get back the assignment to inspect Compressed Natural Gas (CNG) stations as these stations are near localities and industrial plazas which means that these are like gas bombs. Inspection of CNG stations was the responsibility of Explosives Department of Ministry of Industries but due to massive corruption, the ECC shifted it to Ogra. When the ministry of industries officials briefed the caretaker minister about this issue, he promised to take it up with the ECC or Cabinet. Sheikh assured journalists that after 10 days, he would again invite them for a detailed briefing and inform them about the policies of the ministry and the decisions taken regarding clearance of backlog and implementation of policies. Asked who nominated him for this slot, Sheikh smiled and said he has been inducted in the Cabinet entirely as a technocrat. "No one recommended my name for minister. If I had ''Sifarish'' I would have been in the Cabinet since long," he added. Answering another question, he said he is minister till general elections and probably will go two to three days before elections.
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Indian Automotive Industry - Update
Monthly AutoMark Magazine
World's cheapest motorcycle Yamaha to develop USD 500 bike in India for global markets Without sharing any timeframe of launch, the company is developing the bike with an engine capacity of 100 cc or more as "smaller bikes with smaller engine do not have good balance". Japanese two-wheeler giant Yamaha on last week said it is working on to roll out a motorcycle priced at around USD 500 from India with the setting up of its fifth global research and development centre. Claiming that the bike will be 'the world's cheapest motorcycle', the company said India will become the global hub for development of low-cost bikes, which will be exported to other countries in Africa and Latin America. The company's new entity Yamaha Motor Research and Development India Pvt Ltd (YMRI), which was established at Surajpur in Uttar Pradesh in February this year, has already started its work to develop the product that will be first launched in India. In order to enhance its position in the Indian market, the company will launch a new scooter model each year till 2016, apart from setting up its second R&D centre by 2015 at its upcoming Chennai facility. "Our objective is to develop the lowest cost model in the world and lowest cost parts. Our target is to develop the cheapest bike at around USD 500 for both India and export markets," YMRI Managing Director Toshikazu Kobayashi told reporters here. Without sharing any timeframe of launch, he said the company is developing the bike with an engine capacity of 100 cc or more as "smaller bikes with smaller engine do not have good balance". "We will first launch the bike in India. There are also other markets like Africa and Latin America where such bike can be sold. We will export the product to such locations in future," Kobayashi said. As per the plan, the first step will be to develop the world's cheapest bike,
followed by an India-specific model. This will be followed by a global model in future, he added. Yamaha's move is part of strategy to expand presence in the commuter segment, specially in the Indian market. "We have been focussing on sporty, stylish and performance bikes in India so far. Now we are looking to increase our presence in the commuter segment. Developing the product in India will give us a substantial cost advantage and enable us to price it competitively," India Yamaha Motor (IYM) Chief Executive Officer and MD Hiroyuki Suzuki said. He said the company is looking to sell 7.1 lakh units of motorcycles and scooters this year, including 2.1 lakh of exports. IYM had sold a total of 4.9 lakh in 2012. "Our long-term target is to sell a total of 28 lakh units by 2018. We are aiming to sell 10 lakh units in 2015 that will include exports," he added. Suzuki said the Indian two-wheeler market is expected to touch 25 million units by 2020. In the mid term, the company is eyeing a market share of 10 per cent by 2016, when the market is pegged to be around 18 million units. "By 2020 we expect scooters to be half of the two-wheeler market in India. Our
aim is to introduce a scooter model each year to help us achieve overall 10 per cent market share by 2016," he said, adding the IYM would launch scooters targetted at men and for family usage. At present the company has a lone scooter model, Ray, which is targetted at women customers. On motorcycles, Suzuki said the company will continue to offer new models both in performance and commuter segments without specifying details. Commenting on the new R&D centre, Kobayashi said: "We have around 80 engineers at the Surajpur centre. We will set up another R&D centre by 2015 at our upcoming Chennai facility. The Indian centres will be used for developing low-cost models, while the high-end bikes will continue to be developed in Japan." The Chennai facility will be used for exporting its products to other parts of the world, he added. Besides India, Yamaha Motor Co currently has four R&D centres in Italy, Taiwan, China and Thailand. The Surajpur unit is the second integrated development centre after the Thailand one. Last year, Yamaha had announced to invest Rs 1,500 crore to set up its third facility in India. The production of the new plant near Chennai will start by 2014 with an initial annual capacity of 4 lakh units, which will be expanded to 18 lakh units by 2018. IYM has two manufacturing units at Surajpur in Uttar Pradesh and Faridabad in Haryana. While the Surajpur plant produces motorcycles for both domestic and export markets, the Faridabad unit makes two-wheeler parts.
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Middle East Automotive Sector - Update
Monthly AutoMark Magazine
Consumption in GCC Automotive Aftermarket Reached BD 2.83 billion in 2012 Automechanika Dubai 2013 will be held from June 11 to 13, at the Dubai International Convention and Exhibition Centre. The countries of the Middle East continue to be an extremely attractive market for the automobile sector, thanks to strong ongoing economic growth and a flourishing aftermarket trade. In a recent report, research firm and Knowledge Partner of Automechanika Dubai, Frost & Sullivan, estimated that the total consumption within the automotive aftermarket in the GCC countries reached as much as BD 2.83 billion (US $7.54 billion) in 2012. With consumption worth BD 63.7 million (US $169 million) last year, Bahrain is a significant contributor in the GCC.* Ahmed Pauwels, CEO of Epoc Messe Frankfurt, organiser of Automechanika Dubai, the region’s largest trade platform for the automotive aftermarket, said: “Thanks to its superior transport and logistics infrastructure, the region serves as a key import and transshipment hub for the aftermarket trade that reaches across the wider hinterland in the MENA region, Iran and Central Asia, South Asia and Eastern Africa.” “Automechanika Dubai will highlight the vast potential of the regional market that is still untapped and show-case new trade and business development opportunities that exist for key industrial players,” Pauwels added. According to the Frost & Sullivan report, Parts and Accessories make up the lion’s share of the consumption, totaling BD 1.7 billion (US $4.51 billion). Tyres and Inner Tubes were the next most significant category of the aftermarket consumption pie, being worth BD 562 million (US $1.49 billion) in 2012. Lubricants and Batteries made up the next biggest sectors, being worth BD 307.6 million (US $816 million) and BD 269.5 million (US $715 million) respectively last year.
Going forward, the aftermarket is expected to maintain a healthy rate of growth, with Frost & Sullivan estimating that the Parts and Accessories, Lubricants and Batteries would growth at a CAGR of around 13% between 2012 and 2017, while consumption of Tyres and Inner tubes would keep pace with a CAGR of 12% over the same period.** Mr. Jean-Michel Selles, Managing Director of KYB Middle East, said: “Automechanika Dubai is a very significant part of our business development strategy in the Middle East thanks to its wide footprint in the region. We expect favourable results from our participation this year.” Mr. Nantha Kumar, Senior Division Manager of Dynatrade, said: “We have been a part of Automechanika Dubai for quite a while now and have seen the exhibition grow into a notable international event. The regional
automotive aftermarket trade will benefit from such an authentic parts exhibition.” With more than 1,324 exhibitors and over 20,700 trade visitors in 2012, Automechanika Dubai serves as a vital trading link to markets difficult to reach. The trade fair is widely reputed as a great platform to learn more about new products, find new suppliers and co mpa re p ro d uc t al t ern at i v es. Automechanika Dubai spotlights the latest products and solutions in the fields of parts, systems, tuning, workshop equipment, bodywork & paintwork, car wash, IT & management and the latest automobile services. Automechanika Dubai 2013 will be held from June 11 to 13, at the Dubai International Convention and Exhibition Centre.
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Monthly AutoMark Magazine
Automotive Sector - Update
The Future Of China's Luxury Auto Market There are over 100 automakers in China compared to only two major American car companies today: General Motors and Ford. Shanghai Automotive is the country’s biggest by revenue: $33.6 billion in 2010. Geely Automotive is another major. It’s best known for the London taxi cabs it produces, and of Volvo from Ford. Within seven years, China will outstrip the United States to become the world’s leading market for premium cars. It already beat the U.S. for top auto market in general in 2009. The Organisation for Economic Development and Cooperation said last week that China would overtake the U.S. As the world’s leading economy by 2016. No doubt about it, when it comes to being big: China is fast becoming the new biggest. Niche auto markets are no different. On the luxury end, China drivers are going to be starting soon from the pole position. “In the U.S. auto market, the American version of luxury is a little different than the Chinese,” says Hans Werner Kaas, a 22 year veteran of McKinsey & Company. He leads their U.S. auto practice in Detroit. ”If you have a fully equipped Ford Explorer with all the bells and whistles, you’ve got a luxury vehicle.” Around 14% of the cars sold in the U.S. are considered to be premium vehicles. In China last year it was around 9%. “The luxury segment in China is dominated by the traditional German high-end car makers. It’s Mercedes Benz, BMW and Audi on the roads in Shanghai,” says McKinsey partner Sha Sha in Shanghai. Where’s this market heading? With under 10% penetration, it has at least 40% upside before it comes close to the U.S. today. By 2020, China will be selling around three million luxury cars while the U.S. will be selling around 2.3 million, according to a McKinsey report published last month. In the 16 page report, written by Sha Sha and two colleagues, their Asian automotive practice forecast China’s
premium car market to grow at an annual rate of 12% over the next seven, compared with 8% for the overall passenger car market there. China’s total luxury auto market will equal that of all of Western Europe by then. In fact, if all goes swimmingly well with China’s 12th Five Year Plan — no hard landings, no economic turmoil pulling the rug out from under China in Europe and U.S. — then China could just as well overtake the United States as the largest premium car market in three years.
Trading Up China’s young professionals are earning more than their parents ever dreamed of. They grew up frugal, mainly out of necessity. But now they have extra money to spend. The one child policy means Chinese families have more money to pass down to their young children. The roads they drive on may be crowded in cities like Beijing, and the roads full of potholes in second and third tier cities, but Chinese consumers are giving up their bikes for cars. As incomes rise, they are giving up their
Buicks — the most popular American vehicle sold in the country — for Land Rovers, Jags and German luxury. Premium cars accounted for just 24,000 units in 2000 and over a million in 2012. At a time when the luxury vehicle market is stalling in the U.S. and Europe, China is becoming an extraordinary life line for the majors from Tokyo to Detroit. Writing in “The $10 Trillion Prize”, author and one of the founders of Boston Consulting Group’s global consumer practice, Michael J. Silverstein, estimates that over 100 million Chinese will enter the premium markets in the next 10 years. “In their own way, they’re going to take over where the U.S. and Europe have left off,” Silverstein says. “They’re going to upgrade and trade in their Camry’s for BMWs.” The older generation of premium car owners purchased vehicles mainly to reflect their social status, but the increasingly sop histi cat ed new generation of buyers is expressing other reasons for buying premium autos. When asked by McKinsey what they thought about car shopping, over 60% of survey respondents told Sha Sha that “buying a car” as much a priority as “buying an apartment” and “paying for
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Monthly AutoMark Magazine
Automotive Sector - Update
children’s education”. The people that think that way are growing in population. Not too far into the future, there will be more people who think like this in China — and act on it with their hard earned yuans — than there are people in the U.K. According to McKinsey, around 80% of Chinese premium car owners have annual disposable household income of more than 200,000 yuan (around $33,300). However, the weighted average of annual household disposable income of all surveyed luxury vehicle loving families was 450,000 yuan ($75,000). McKinsey expects this affluent segment to grow at a compound annual rate of 16% between now and 2020, offering underlying support for the global premium car market. By 2020, they’ve forecast that there will be 23 million affluent urban households in China – 7% of the total population and roughly equal to the total number of households in the U.K. today. Imagine the U.K. all driving Beamers. The difference is, even if that perfectly affluent world view were to happen in a small country like the U.K., it would quickly reach market saturation. There are only so many people on that island. China has hundreds of millions of drivers. Moreover, McKinsey says it expects that the new middle class among them will not only be living in Shanghai and Beijing. They estimate them to be in around 300 cities; that’s 300 Chinese urban centers with consumers who have sufficient household income to buy premium vehicles by 2020. For car makers, dealership expansion should be high on their agendas says
McKinsey if those companies want to maintain double digit growth. For leading premium car makers, this implies improving their consumer insight capabilities as well as ramping up dealerships to capture demand in the 300 tier three and four cities where consumers are expected to reach the threshold for household income that will enable them to buy premium vehicles. Automakers that aspire to tap into the coming wave of new premium car buyers from smaller cities will need to innovate their dealer formats and sharpen their digital marketing skills, the report says.
What do Chinese drivers like? Affordable status. They are not interested so much in the luxury SUVs like Americans are. They might even be more C class than E class, when thinking of the Mercedes Benz line of vehicles. If the price tag works, they are after powerful, high-tech sedans and coupes with advanced powertrain systems and good looking exteriors.
A Luxury Car Made in China? There are over 100 automakers in China compared to only two major American car companies today: General Motors and Ford. Shanghai Automotive is the country’s biggest by revenue: $33.6
billion in 2010. Geely Automotive is another major. It’s best known for the London taxi cabs it produces, andits 2010 acquisition of Volvo from Ford. Still, China’s cars are far from winning the hearts and minds of the locals. “We asked people about that: whether they would be open to buy a Chinese made luxury car instead of a foreign premium and forty percent said they were open to it,” says Sha Sha. “This is a market that’s five to 10 years away yet. China is very much an open market for the big global auto makers,” she says. “The bar for the locals is very high.” In the world of passenger cars, China’s auto companies are where the Japanese were in the 1970s, or Korea in the late 1980s. Today, Toyota is the best selling car again in the U.S. It’s Lexus brand is one of the best selling luxury cars in the U.S. Hyundai’s Equus gets compared all the time to Lexusand Mercedes Benz in auto magazines. “It’s going to take a lot of talent and a lot of really good management to bring China’s car companies on par with Japanese and Korean automakers,” says Kaas. The recent news that the government is saying it will buy cars from China original equipment makers (read: local brands) is a sign that Beijing is pushing for more global players to partner with the locals. GM, for instance,partners with Shanghai A ut o m o t i v e . T h e r e , S h a n g h a i Automotive Group can copy a little bit there. Tweak a little bit here, for their home grown models. “Not all Chinese automakers are going to go after the luxury segment,” says Sha Sha, citing Great Wall Motors as an example. They’ve got SUVs, sedans, pick-ups and minis. Passenger cars or luxury, China is the powertrain for global auto makers now. They’re the powertrain now because the majors are looking into the future now, and the future for premium and standard passenger vehicles is in China. “China is impacting investment decisions of these major car companies,” says Kaas. “The country matters a lot for corporate strategy. The industry has finite resources. Where do you want to invest it? Where do you want to focus your advertising?” he asks. Though he thinks he has the answer: China.
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Exclusive Article by David McMullan
Monthly AutoMark Magazine
Developing countries transformed by Chinese motorcycles It’s not just the developing nations that have benefitted from budget Chinese 2 wheelers. Some years ago the British government installed a ‘congestion charge’ on drivers in London with the purpose of cutting down on traffic in the centre of the busy capital. Motorcycles are exempt from this charge With agricultural income increasing in recent years, an increasing amount of Ch i ne se f ar mer s ha v e bo u g ht motorcycles of their own. And because of this fundamental changes have taken place in their life style. Xiang Dong, an ordinary farmer of Fengjie County, in South-West China’s Chongqing municipality is not among the wealthy, but has been a motortricycle rider for many years. He described the present-day life of his fellow villagers as "riding a motorcycle to visit relatives and friends, driving a tricycle to transport farm produce and goods for crops growing and cropland plowing." In the past, horses, oxen and mules were invaluable for rural households in China. These animals played a key role in plowing farmland, fetching water and transporting crops from fields to the threshing floor. Carriages and oxcarts were the major transportation vehicles in the rural areas. With the number of motor vehicles on the increase, horses, cattle and donkeys have become "rare animals" in Fengjie County nowadays.
According to CAAM (China Association of Automobile Manufacturers) the number of registered motor vehicles bought by farmers reached 59,700 in the region last year, bringing the total number of such vehicles to 577,000 or one for every two farming families. Statistics available show that China had about 29 million motor vehicles in the rural areas in 2011 and
its output of motor vehicles designed for farm use was 5.27 million. The price of a motorcycle is 4,0005,000 Yuan, and a tricycle cost 6,000 to 7,000 Yuan, at these prices it is possible to eventually machanise every Chinese farmer. But it’s not just for agricultural reasons that young Chinese country dwellers are turning to motorcycles. Xiang Dong reports, “In the past, none of the young girls in this village had married men who lived far away. However a friend who got married recently said her husband's home is 50 kilometers from her home in Fengping Village. It's the motorcycles and highways that have changed our life." A road leading to her then fiancée’s village was completed last year allowing them (with the aid of a motorcycle) their courtship time. Currently, 99 percent of China's townships and 96 percent of its villages have access to highways. The total length of highways open to traffic in China has reached 2.6 million kilometres. Vehicles also help enhance communication among local farmers and enrich their leisure time as in Baofeng Town in Pingluo County where the residents have set up more than 30 basketball teams and built over 20 basketball courts. Su Shaoyun, head of the cultural station of Baofeng town said that many farmers ride their motorcycles to the town to take part in basketball competitions in the quiet season for farming. Huang Hui an official with the regional agriculture and animal husbandry bureau said “wide use of motorcycles is a symbol of the improvement in the living standard of Chinese farmers and
these modern vehicles also helped improve agricultural o ut p ut a n d t he quality of farmers' lives” but it’s not just the Chinese who are ben efit ti ng from China’s motorcycle David McMullan manufacturers. In the wilds of Bolivia getting their prized agricultural produce to market meant that someone had to carry a giant basket on a back-breaking, daylong trek through narrow mountain trails. That is now changing, thanks in large part to China. Villagers ride their cheap Chinese motorcycles, which sell for as little as $440, down a rutted dirt road to the markets. The trip takes one and half hours. "No one had a motorcycle before," said Diego Torres, 43, a teacher in the local school whose extended family now has three Chinese motorcycles. "The only motorcycles that used to be available were Japanese and poor people couldn't afford them." Cheap Chinese moto products are flooding Latin American countries like Bolivia, Colombia, Ecuador and Venezuela and these products are transforming the lives of some of the poorest people in South America whose worldly possessions a few years ago typically consisted of not much more than a set or two of clothes, cooking utensils and a thatch-roofed house built by hand.
The concerns in the West about the quality of Chinese motorcycles are largely moot for the people living in the remote villages here. As the first
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Monthly AutoMark Magazine
Automotive Sector - Update
Pakistan can be major source of raw material for Malaysian industry Acting High Commissioner to Malaysia Mohammad Nadeem Khan said that bilateral trade between Pakistan and Malaysia continues to increase with twoway trade touching $2.8 billion last year. In a statement, Nadeem Khan said that due to a huge trade gap, Pakistan hopes to increase export of its non-traditional items to Malaysia. “Pakistan can be a
major source of raw material for Malaysian industry. We also hope to strengthen our cooperation in Islamic finance and banking sectors,” he said. He said the government was encouraged that our people to people interaction is growing. There are now more than 3,000 Pakistani students in Malaysian educational institutions.
introduction to global capitalism, Chinese products are met with deep appreciation.
get a hire-purchase agreement with the bank when opting to buy a Chinese motorcycle. The ones I sell have to be especially reinforced because of the tendency of Mongolian farmers crashing them when drunk. David McMullan of CMM finds this hilarious and has said that I have invented a new breed of bike called the ‘drunk farmer bike,’ But comedy aside it has been a revolution for these guys who can now trade at much further distances than before. Mongolia is the most unpopulated country on earth per square mile so travelling for trade has always been a difficult business. Not so now due to the drunken farmer’s bikes.” It’s not just the developing nations that have benefitted from budget Chinese 2 wheelers. Some years ago the British government installed a ‘congestion charge’ on drivers in London with the purpose of cutting down on traffic in the centre of the busy capital. Motorcycles are exempt from this charge. Electrician Micky Humphries lives in a London dormitory town and has this to say. “I used to drive my van into town every day. Parking was expensive enough but when the congestion charge was inst alled i t became financially impossible to drive in. I decided to get a scooter and had a good look round, now because I’m not an enthusiast I don’t have any allegiance to Honda, Yamaha or anyone and decided to get a Chinese scooter from someone I had heard was a reputable dealer. That was 4 years ago and my trusty scooter is still getting me cheaply in to the centre of London every day. I’ve saved a fortune!” On the whole, it’s been great to say something good about the Chinese motorcycle industry!
In China’s neighbour Laos in the village of Long Lao Mai a similar story can be heard. The motor scooters, which typically have small but adequate 110cc engines, literally save lives, says Saidoa Wu, the 43-year-old village headman of Long Lao Mai, a village nestled in a valley at the end of the dirt road, adjacent to Long Lao Gao. "Now when we have a sick person we can get to the hospital in time," Mr. Wu said. Improvised bamboo stretchers that villagers here used as recently as a decade ago to carry the gravely ill on foot are now history. In a village of 150 families, Mr. Wu counts a total of 44 Chinese motorcycles; there were none 10 years ago.
Chinese motorbikes fill the streets of Hanoi, Vientiane, Mandalay and other large cities in Indochina. Thirtynine percent of the two million motorcycles sold annually in Vietnam are Chinese brands, according to Honda, which has a 34 percent market share. Chinese exports to Vietnam, Myanmar and Laos amounted to $8.3 billion in the first eight months of the year. In Mongolia which has a legendry history of horse travel Chinese motorcycles have replaced the steed. Motorcycle importer Erdene Jagar of Ulan Bator commented “you can now
Nadeem Khan said that about a dozen MoUs have been signed establishing links between various universities of both the countries. He said that more than 70,000 Pakistanis visited Malaysia last year, adding that Pakistan International Airlines has increased its flights to five per week, reflecting greater movement of people between the two countries. Nadeem said that during last year, Malaysia was Pakistan’s 25th largest export destination and fifth largest import source. “Bilateral trade saw a decline of about 24.81 percent last year and stood at $2.11 billion with exports from Pakistan amounting to $252.89 million and imports from Malaysia standing at around $1.86 billion and the trade is heavily skewed in favor of Malaysia,” he added. He said that Pakistan’s major exports to Malaysia include fish, potatoes, onion, rice, maize, cotton yarn, woven fabrics of synthetic staple fibre, bed linen, electrical apparatus for line telephones and parts and accessories. He said that major exports to Pakistan include palm oil, electrical and electronic equipment, machinery, chemicals, rubber, wood, synthetic filament yarn, automatic data processing machine, parts and accessories. He said that Malaysian investments in Pakistan have been mainly channelled into financial business, telecom and oil and gas exploration. Nadeem Khan said that since 2008, Malaysia’s investment in Pakistan has been worth about $898 million. He said on the other hand, Pakistan’s investment in Malaysia has been concentrated mainly in wood and wood products, food manufacturing, furniture and fixtures and chemical and chemical products. Nadeem Khan said that from 1980 to 2010, Pakistan’s investment in Malaysia has been worth about $291 million. Nadeem said that tourism in Pakistan has been stated by the Lonely Planet Magazine as being the tourism industry’s “next big thing.”...
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Monthly AutoMark Magazine
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MAN Diesel and Turbo Pakistan expands service in Lahore “Pakistan is among the D-8 countries with an annual growth rate of 7.5 percent gross domestic product for 2000-2007. This led to high demand of power in the country and MAN Diesel and Turbo decided to have its representation in Pakistan which has proved to be the right decision reflected by profitable growth in the last four years,” says MAN Pakistan Managing Director Imran Ghani. With a launch event, MAN Diesel and Turbo Pakistan announced the expansion of its premises in Lahore. At the same time the company joins hands with its sister company MAN Truck and Bus for the launch of the commercial vehicles division in Pakistan and its latest product, the TGS WW. The MAN location in Lahore will be the first where the two sister companies reside under one roof. The event was attended by the Lahore Chamber of Commerce and Industries President Farooq Iftikhar and many high esteemed VIP guests from the local trade business. Ambassador of Austria Axel Wech represented together with the Counsel of the German Embassy Anees Ur Rehman, the two home bases of MAN. “MAN Diesel and Turbo Pakistan’s e x ce p t i o n al p e r f o r m a n c e a n d impeccable credentials were key factors when MAN Truck and Bus decided to choose its representative in Pakistan. We see Pakistan as an important market with a lot of potential,” said Head of MAN Centre Middle East and Vice President Sales and Marketing David van Graan. “I am confident that we can deliver a world class value proposition through MAN Diesel and Turbo Pakistan backed by a MAN trained service team, customer oriented mind-set, and our innovative brand heritage to emerge as the leading player in Pakistan’s co mmer ci al v eh i cl e i n d u st r y. ” MAN Diesel and Turbo Pakistan started in Lahore in 2008 and currently offers its customers after sales services for large bore diesel engines and turbo machinery, including workshops and
field service activities. Pakistan is a significant market for both marine and power applications of MAN Diesel and Turbo. The 225 megawatts (MW) Atlas Power Plant in Lahore with 11 MAN 18V48/60 engines and a 10-year operation and maintenance contract along with 225 MW Hubco Power Plant in Narowal with same number of engines and a six-year long term service agreement are important reference for the power generation business, for instance. The expansion of the premises of MAN Diesel and Turbo Pakistan is owing to the increase of capacities to realise the sizeable maintenance contracts the company has undertaken. Furthermore, the premises are extended and customized in such way that MAN Truck and Bus can start its business in Pakistan and develop its sales and after sales services for the region, showcasing trucks, buses and high-speed engines in Lahore. “Pakistan is an important market for all our business areas,” says Dr Stephan Timmermann responsible for the Strategic Business Units Marine Systems and the After Sales Division PrimeServ in the MAN Diesel and Turbo Executive Board. “Further opportunities arise from the infrastructure projects starting in the near future coupled with the trade
corridor opening from India to Central Asian countries.” “Pakistan is among the D-8 countries with an annual growth rate of 7.5 percent gross domestic product for 2000-2007. This led to high demand of power in the country and MAN Diesel and Turbo decided to have its representation in Pakistan which has proved to be the right decision reflected by profitable growth in the last four years,” says MAN Pakistan Managing Director Imran Ghani. “In context of this growth, MAN Diesel and Turbo Pakistan finds it the right combination to grow the business in the field of commercial vehicles.” MAN Diesel and Turbo SE, based in Augsburg, Germany, is the world’s leading provider of large-bore diesel engines and turbo machinery for marine and stationary applications. It designs two-stroke and four-stroke engines that are manufactured both by the company and by its licensees. The engines have power outputs ranging from 450 kW to 87 MW. MAN Diesel and Turbo also designs and manufactures gas turbines of up to 50 MW, steam turbines of up to 150 MW and compressors with volume flows of up to 1.5 million m³/h and pressures of up to 1,000 bar. The product range is rounded off by turbochargers, propellers, gas engines and chemical reactors. MAN Diesel and Turbo’s range of goods includes complete marine propulsion systems, turbo machinery units for the oil and gas as well as the process industries and turnkey power plants. staff report
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Internationa Automotive Industry - Update
Monthly AutoMark Magazine
Japan automakers' China sales struggle drags into 2013 Japanese car makers' sales in China in the first three months of the year have yet to recover fully from last year's slump, and foreign rivals are capitalizing in a market which expects 7 percent growth in 2013. Mazda Motor Corp said that it and its partners' sales in China, the world's biggest car market, dropped 21.5 percent in the three months to March from the same period a year ago. The figures suggest Japanese car companies are likely to struggle in China for some time to come, and early optimism of a fast recovery - Mazda said in November it hoped to be back to normal by the end of March - was misplaced. Earlier this week, Nissan Motor Cosaid its sales were down 15.1 percent yearon-year in the three months to March, while Toyota Motor Corp's fell 12.7 percent and Honda Motor Co decreased 5.2 percent. "While the year-on-year percentage drop of China sales by Japanese automakers is shrinking, sales are still down by around 10 percent, which shows that they are still struggling in the overall market. We think this will continue this year and into the next year and the following year," said Masatoshi
FAW-Xiali N7 hits the Chinese car market The FAW-Xiali N7 has been launched on the China car market, price starts at 45.900 yuan and ends at 53.900 yuan. The Xiali N7 is the production version of the FAW R008 concept that debuted on the 2011 Shanghai Auto Show. The funky lines of the N7 are a bold move for conservative FAW-Xiali where design is usually rather boring. Power comes from a 1.3 with 90hp and 120nm, mated to a 5-speed manual. The Xiali N7 is made by Tianjin-FAW-Xiali, an FAW subsidiary that also makes the Xiali N3 and the Xiali N5. Design is bit of a mix between a hatchback, a crossthing and a mini-SUV. Hip folk down country will love it.
Ni shimot o, an analyst at I HS Automotive in Tokyo. Though the figures have improved since last September, when sales plunged by around 50 percent after violent antiJapan protests broke out in China in response to a diplomatic spat between the countries, Japanese firms continue to struggle against rivals including Volkswagen AG and General Motors Co. Japanese automakers' collective share of China's passenger vehicle market fell to 12.5 percent at the end of February from 16.4 percent at the end of last year, according to data from the China Associatio n of Automobi le Manufacturers. German brands in particular have taken advantage and claim 19.3 percent of the market, up from 18.4 percent. Data for March was not yet available. GM's sales in the first three months rose 9.6 percent from the same period last year, it said on Wednesday. HONDA RESILIENCE Of the Japanese brands, Honda is proving the most resilient this year, partly as a result of the CR-V crossover SUV it launched in 2012. In the two months to February, overall SUV sales surged 50.2 percent year-onyear, more than doubling the gain of
sedan sales, according to CAAM data. "The new CR-V has been a big help for Honda when many consumers are turning to German, Korean and American brands," said John Zeng, Asia Pacific director of consultancy LMC Automotive. In the three months to March, CR-V's China sales rose 7 percent to 36,657 vehicles, accounting for a quarter of Honda's overall sales there. Nissan relies more heavily on China than do its compatriots. It and its partners sold 1.18 million vehicles there in 2012, accounting for 24 percent of its global sales. Japan's second biggest automaker by global sales has pushed back by one year to 2017 its plan to win 10 percent of the Chinese market, Chief Executive Carlos Ghosn told Reuters last week. It currently has around 7 percent of that market. The January-March sales results will be reflected in the first quarter of the Japanese companies' financial year that started on April 1, because the business year for their joint ventures with Chinese partners starts in January. They are expected to announce fourth quarter earnings in late April and early May.
Lifan Looks to Fiat and Lexus for Inspiration
Lifan are a plucky Chongqing based automaker that was one of the first Chinese car companies to export in any serious numbers, their models have already found strong sales in developing nations in the Middle East and South America but they haven’t found too much success in the home Chinese market. At this years Shanghai Auto ShowLifan will launch a new 320 mini car and a revised version of the 630 compact sedan, both of which seem to
have been inspired by existing designs. When the 320 was first introduced Chinese and foreign media alike referred to the new car as the Chinese MINI,Lifan were resolute that the car was not at all inspired by any German designed, British built vehicles but the latest incarnation has further pushed MINI into the interior and seems to channeling the Fiat 500L on the exterior with its bloated chunky looks. The 620 is not going to go bare either, the new model will be channeling Lexus style looks around the front grill to give it that Japanese Predator style: Both will be on show at the Shanghai Auto Show this year, with launches coming later in the year. Lifan’s product range is in much need of a makeover, their SUV seems to be the biggest seller so far but hopefully the new 320 will bring younger buyers to the brand.
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Internationa Automotive Industry - Update
Mahindra to put its money on an all-new engine family Mahindra’s research department received a much needed shot in the arm after the state of the art Mahindra Research Valley (MRV) came in to existence last year. The sprawling technical facility which is located on the outskirts of Chennai is now in charge of the company’s R&D operations. Numerous development and testing projects across all the domains are being carried out at MRV. Autocarindia.com reports that Mahindra is developing a completely new family of compact petrol and diesel engines which could power the future range of compact SUVs and other passenger cars from both Mahindra and Ssangyong. It is reported that the investment in the project could be to the tune of around $800 million (Rs. 4,335 crore). The engines are expected to have capacities ranging from 1.2 litres to 1.6 litres. The 1.2 litre engines (with different power ratings) are expected to be three cylinder units while the bigger 1.5L and 1.6L engines would have four cylinders.
China Motorcycle production decrease 21.28% in February 2013 According to the China Association of Automobile Manufacturers (CAAM),in February, Motorcycle production decrease 21.28 percent year on year to 1,431,600 units, and decrease 26.25 percent compared with that in the last mon th. T wo- Whe el mot orcy cle production decrease 20.58 percent year on year to 1,298,900 units, and decrease 26.05 percent compared with that in the last month. Three-Wheel motorcycle production decrease 27.58 percent year on year to 132,800 units. From January to February, Chinese Motorcycle production exceeded 3,371,400 units, decrease 2.08 percent from a year earlier. Two-Wheel motorcycle production decrease 2.11 percent year on year to about 3,053,700 u nits; T hree- Wheel motorcycle production exceeded 317,700 units, decrease 1.76 percent compared with a year earlier.
The engine project is spearheaded by Mahindra and could have a helping hand from Ssangyong. Autocarindia.com also reports that powertrain experts AVL of Austria could be the consultants. Apart from the new family of engines, Mahindra is also developing new 5speed and 6-speed transmissions along with a transaxle for front wheel drive applications. Mahindra’s ambitious project is expected to see the light of day in late 2014 or early 2015. The new family of engines would give the Indian automaker a wide range of choices to cater to markets with varying requirements. Interestingly Volkswagen India has a similar powertrain range – the threecylinder 1.2L motor goes into cars like the Polo, while the four-cylinder 1.6L motor powers the Rapid and Vento. C and D segment models use 6-speed manual and automatic transmissions, while the 5-speed unit is used on more common products.
FAW to invest $5.7 billion in R&D Chinese media are reporting on a huge investment plan by First Auto Works, or FAW. Total investment in research and development over the next 5 years is 35.5 billion yuan or 5.7 billion USD. The ailing Hongqi (Red Flag) brand is the biggest benefactor with 10.5 billion yuan, showing that FAW is serious about resurrecting the once-famous brand. Articles also say that Hongqi is planning to release nine (9) new vehicles over the coming five years. a long shot. At this moment Hongqi has exactly zero cars on the general market. The new Hongqi H7 seems destined forgovernment only and the Bentley-beating Hongqi L7 is still far from production. Nevertheless, the investment is good news for the brand. Where all the other money goes isn’t exactly clear at the moment, media furthermore mention 3 billion yuan for research on electric cars and 5.5 billion on building passenger car research labs. That adds up to only 19 billion yuan.
Monthly AutoMark Magazine
Patent Applied: Lifan working new 8-Series sedan for the China car market The biggest Lifan money can buy is the 720, which is only 4.7 meters long. That, will change. Lifan has applied for patent on a much bigger car, which will be called the ’8-Series’ when it hits the Chinese car market in 2014. The design isn’t finalized yet, so Lifan has patented four different styles. The base points and basic lines are all the same, but the front and back differ on each design. The 8-Series sedan will be just over five meters long, price will start around 100.000 yuan. Power will come from an updated version of Lifan’s 1.8, which delivers 128hp in the 720. Lifan is also working on a new family of engines, including a 1.2 turbo and a 2.0, with the British automotive engineering firm Ricardo. The 2.0 will likely become available for the 8-Series as well.
Malaysian motorcycle firm to make Sri Lanka its second hub Malaysian based DNC Asiatic Holdings Sdn Bhd, a motorcycle manufacturer is planning to develop Sri Lanka as its second hub, a media report said. The Malaysia – China joint venture firm has said the decision was prompted by its belief that the Sri Lankan market provides a huge potential for motorcycle sales in the future. The Company has sold 2,000 units of motorcycles in the Island nation during the last year and is planning to increase this up to 15,000 to 20,000 units during this year. DNC Asiatic is planning to introduce five new models to the Lankan market during this year with two each for the street bike and the scooter and also a scrambler. This is on top of the three models; the firm already marketing in the local market. Sri Lanka is the first overseas market of the firm. According to certain media reports, the company has got a BOI license in 2010 to set up a production facility in Sri Lanka.
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Car / Light Vehicle Price List
SUZUKI
HONDA Price Price Rs. 595,000 Rs. 652,000 Rs. 1,171,000 Rs. 1,386,000 Rs. 1,366,000 Rs. 1,005,000 Rs. 1,452,000 Rs. 1,531,000 Rs. 674,000 Rs. 650,000 Rs. 2,199,000 Rs. 2,274,000 Rs. 2,124,000 Rs. 2,273,000
Model Model 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 VXRI Euro II LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) BOLAN VAN VX Petrol Euro II SUZUKI VAN CARGO Euro II APV 1.5L GLX MT (Petrol) APV 1.5L GLX MT (CNG) JIMNY CBU JL SX MT JIMNY CBU JL DX MT
Karakoram Motors Model Chery Standard Petrol Chery Standard CNG Chery Deluxe Petrol Chery Deluxe CNG Gonow Victor Gonow Troy Standard Gonow Troy Deluxe Gilgit (Double Cabin) Pet. Gilgit (Double Cabin) CNG Kaghan XL Petrol Kaghan XL CNG
Price Rs. 7,20,000 Rs. 7,70,000 Rs. 7,70,000 Rs. 8,20,000 Rs. 1,499,000 Rs. 9,99,000 Rs. 1,049,000 Rs. 3,85,000 Rs. 4,20,000 Rs. 1,285,000 Rs. 1,375,000
MASTER MOTORS DAIHATSU Model Model
Price
Master Highland M-260 Master Forland M-330 SUP Master Grand M-410 SUP
Price
Honda Honda Honda Honda Honda Honda Honda Honda
Model CRV Automatic 2400cc Japan Accord Automatic 2400cc Japan City Manual 1300cc HYUNDAI City Prosmatec 1300cc Civic VTI Manual 1800cc Civic VTI Manual SR (Oriel) Civic VTI Prosmatec 1800cc Civic VTI Prosmatec SR (Oriel)
Price Rs. 7,517,000 Rs. 7,017,000 Rs. 1,507,000 Rs. 1,648,000 Rs. 1,982,000 Rs. 2,212,000 Rs. 2,102,000 Rs. 2,332,000
TOYOTA COROLLA Model Model XLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.6 A/T 1599cc Petrol XLI VVT-i 1299cc ECOTEC GLI VVT-i 1299cc ECOTEC 2.OD STD 2000cc 2.OD SALOON MT 2.OD SALOON SUNROOF ALTIS 1.6L Dual VVT-i MT ALTIS 1.6L Dual VVT-i MT SUNROOF ALTIS 1.6L Dual VVT-i AT Cruisetronic ALTIS 1.6L Dual VVT-i AT SUNROOF Toyota Avanza (Standard)
Price Price Rs. 1,537,500 Rs. 1,672,500 Rs. 1,827,500 Rs. 1,602,500 Rs. 1,732,500 Rs. 1,607,500 Rs. 1,809,000 Rs. 1,914,000 Rs. 1,902,500 Rs. 1,997,500 Rs. 1,997,500 Rs. 2,087,500 Rs. 1,960,000
Toyota Avanza (Up Specfication)
Rs. 2,160,000
Hilux Pickup 4x sc Model
Price
Brand New Toyota Hilux Pickup, 4x2, Single Cabin, (Local Assembled)
Rs. 1,763,500
Hilux Pickup 4x4 D/C Model Toyota HILUX 2494cc, Diesel Turbo Charger Common Rail Engine, 4x4 Double Cabin - Standard Model
Price Rs. 2,878,500
Rs. 1,188,000 TOYOTA VIGO Rs. 1,235,000 LAND ROVER Rs. 1,720,000 Model Price Price Model Price Model Master Grande Bus Chassis YL41B Rs. 1,625,000 Vigo Champ M/T Rs. 3,178,500 DEFENDER Fuso canter (Japan) Bus Chassis Rs. 2,950,000 (WHITE ,BLACK,STRONG BLUE & SILVER ) STATION WAGON 90 Rs. 3,560,000 Fuso canter (Japan) Rs. 3,025,000 Vigo Champ A/T Rs. 3,378,500 STATION WAGON 110 Rs. 4,260,000 Fuso Prime Mover (Japan) Rs. 9,450,000 (N/A)
DAIHATSU
Unit Price without Deck (WHITE ,BLACK,STRONG BLUE & SILVER )
Price updated Feb- 2013
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By Mohammad Shahzad S.A.E; D.M.P
Monthly AutoMark Magazine
The Customer The Most Important Commodity As Sam Walton, founder of Wal-Mart once noted: “There is only one boss. The Customer! And he can fire everybody in the company from the chairman on down, simply by spending his money elsewhere.” The customer who enters your service shop is a peculiar guest. He is full of whims and fancies. And he is full of worries and fears about his car. And for good reason: he’s painfully ignorant about his car’s innards. But when it comes to you and your service shop, the customer is a vital resource and the very foundation of your business. Put another way, you’d dearly miss him if he didn’t come in. After all, at the end of the day, he’s the one signing your paycheque. As Sam Walton, founder of Wal-Mart once noted: “There is only one boss. The Customer! And he can fire everybody in the company from the chairman on down, simply by spending his money elsewhere.” Service shops are especially prone to harsh criticisms from their customers. The reason is apparent when we examine what it is we sell. Service is intangible. You can’t see it. You can’t take it home in a bag. It’s something that’s sold by trust alone. A perfect example is selling brake pads over the parts counter and servicing brake pads in the shop. If a customer isn’t satisfied with the pads, the parts advisor can take the pads back. But service performed on brake pads cannot be returned; labour cannot be retrieved.
Of course, you may point under the hood. But that doesn’t prove anything to a person who lacks automotive knowledge. Performance, however, will prove you’re telling the truth. Therefore, your main task as a service tech/advisor is to satisfy the customer with the integrity of your service shop. The customer, lacking a true knowledge and understanding of his car, realizes his disadvantage. He is, therefore, a little suspicious. For example, you may tell him that you have tuned his engine; but you can’t prove it. He has to take your word for it.
You want him to feel that you know: 1. What is wrong with his car; 2. What will be needed to correct his troubles; 3. How much the repairs will cost; 4. When the car will be ready. Likewise, you want to feel that you have completed the repairs as promised. When you have accomplished this task, your other duty of selling service won’t be so difficult. Notice my emphasis on the word, “feel.” The customer has no way of knowing that you will (or are able to) repair his car trouble as promised. But if you’ve given him the impression that you are trustworthy, he will have no doubts. Thus the entire relationship between you and your customer is ultimately built upon trust. The customer formulates his opinion of the shop through you. Your
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Exclusive Article M. Yousuf Shaikh
Monthly AutoMark Magazine
Pakistan is
land of opportunity for Chinese Auto Industry to Produce and market new technology Motorcycles, engines & Small Cars as there are big gap between demand & supply due high prices of global brands.
PAKISTAN CHINA MOTORCYCLE INDUSTRY CONCIL
by Muhammad Yousuf Shaikh
The Pakistan motorcycle industry has been around for more than 50 years, and today is considered an industry that is highly important to the Pakistan economy. The motorcycle industry employs an estimated 100,000 people. Over 2 million motorcycles are manufactured annually, with negligible quantity being exported. All motorcycle assemblers cum manufacturers at present are Pakistani. But all Pakistan motorcycle manufacturers still depend on foreign technology and the country is still unable to design and produce its own mo torcy cl e esp eci ally t he motorcycle engines and key parts. This makes it difficult for the industry to develop and enhance the export volume to compete in international market. Pakistan Government offer to Chinese automobile manufacturers to avail themselves of investment opportunities in Pakistan’s auto industrial sector. As a two-member Chinese diplomatic team led by Zhou Zhencheng, Economic and Commercial Counselor met former government official here on few months ago. Government official highlighted that opportunities exist in setting up a Complete Motorcycle engines, New Design & new technology motorcycle, low price small car unit, manufacturing car sub-assemblies components presently imported and the setting up of a tractor assembly plant. The council’s takes initiative on the briefing of government to two member delegation of Chinese commercial consulate commercial section Pakistan and talk about the possibility of Chinese
manufacturers to exploring the Pakistan Auto industry and taking forward the long term strategic agenda laid out in the reports that Pakistan must raise its game to compete for Chinese investment in automotive R&D and manufacturing. To do that, the Pakistan’s Chinese vehicle manufacturers need an ever more strategic, collaborative relationship to be working with the supply chain and other stakeholders to achieve long term goals. I want the Council to help make that happen.”
The Motorcycle Industry Council will be an opportunity for the industry & government to work together on the long term strategic development of the sector because the Chinese Motorcycle manufacturers are also manufacture of economical small cars and van in China such as Chongqing Lifan Industry (Group) Co., Ltd, Chongqing Yinxiang Motorcycle Group Co., Ltd, Chongqing Shineray Motorcycle Co., Chongqing Yuan Group - China supplier of Motorcycle, automobiles.
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Pakistan China Motorcycle Industry Council to assist C h i n e s e manufacturers in finding local partners for them, and the government was interested to promote competition in the auto sector; a detailed presentation on automobile sector of Pakistan was given to the visitors and informed that Japanese car manufacturers have 100 percent share in the local car market against 45 percent in motorcycle sector. He informed them that Chinese share in motorcycle is 55 percent Referring to new entrants’ policy of the government, it was also explained by him that any manufacturer can invest in Pakistan under Auto Industry Development Program (AIDP) or the Tariff Base System (TBS). The incentive under new AIDP to facilitate new entrants should require promoting in China in several auto shows & exhibitions. The government should make the existing policy regime more flexible for the new entrants in order to attract foreign investment as amended policy is expected soon. The Chinese diplomat invited CEO, EDB to participate in auto shows so that you could personally interact with Chinese manufacturers. However, they assured that Chinese manufacturers would be persuaded to explore the Pakistani market. Pakistan’s Chinese motorcycle industry continues to see strong growth in terms
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Monthly AutoMark Magazine
Article continued
Along with the sales of three-wheeled motorcycles in Pakistan, demands for their engines are also growing fast. The three-wheeled motorcycle manufacturers in Pakistan also don't have the ability to produce three-wheeled motorcycle engines. of production and marketing are forcing the industry and investors to explore alternative opportunities, including working with international partners and e xp an d i n g i n t o r e s ea r c h a n d development (R&D) services. Pakistan p r o d u ci n g m i l l i o n s o f s m al l displacement motorcycles on an annual basis but there is no localization of major key parts & Research & development done by any player due to the race of production number game to become large producer by some local assemblers through simple trading with their Chinese counter part instead of technology transfer. The majority of the motorcycles being manufactured in Pakistan are the 70CC motorcycles. Most of the parts used in the frame, suspension, engine etc are interchangeable, or can be used with minor adjustments. Motorcycle production has increased from 100,000 units at the start of the century, to around two million, almost two million motorcycle manufacturing coun try don’t have the true manufacturer of the key parts of motorcycles such as the complete engine, carburetor, Drive Chain, timing/cam chain, hundreds of engine separate components ( Cylinder Head, Ring Piston Set, ball Bearings, Bushes, Timing chain, crankshaft, and many other components ) and also the Handle switches, Lock Set, Wheels Hubs & Br ea ks , Co mp l e t e F r on t Rea r Shorkabsorbers in dismantle condition and speedometer movements are 90% imported through different channels as there is no true manufacture in Pakistan. The engine is a core part of the motorcycle, and the demands for motorcycle engines are highly related
to the demands for motorcycles. Motorcycle engine market has great potential as a result of the booming mot orc ycle de ma nd s. B et te r performance motorcycle engines are needed due to the demand should shift from ordinary two-wheeled motorcycles to leisure and recreational two-wheeled motorcycles. Motorcycle engines are in the process of upgrading to low emission, low vibration, low noise and low heat load e ngines with displacements over 125cc. Along with the sales of three-wheeled motorcycles in Pakistan, demands for their engines are also growing fast. The three-wheeled motorcycle manufacturers in Pakistan also don't have the ability to produce threewheeled motorcycle engines, and technologies to produce such engines are different from those of two-wheeled motorcycle engine due to their exclusive features, so international market demands will be satisfied by those manufacturers which have the R & D and abilities to manufacture the two, three-wheeled motorcycle engines. It is suggested that the EDB work together with PCMIC to identify these common parts for localization, based on production figures the total OEM market for these parts can be determined. In addition the replacement market demand can also be estimated at various price options. For those parts where critical volumes are available, the EDB & PCMIC should try and foster “embedded” linkages between the services cluster group, Assemblers, vendors, importers and banks as consortium that are willing to make the investment. Our motorcycle industry is divided into two markets. The mainstream market consists of manufacturers who are from overseas. The parts manufacturing companies that are Pakistani-owned or have major Pakistan shareholders are who depend on design and production technology from abroad. The other market is the niche market, consisting of SMEs producing Chinese motorcycles. In this market, most of the companies are Pakistani and products are sold
domestically, where there is little foreign competition. Most of the players have not been utilizing much technology in terms of design, manufacture and engineering. Due to the importance of the Pakistan motorcycle industry, the Pakistan China Motorcycle Industry Council (PCMIC) has planning to set up a support programmed for Motorcycles and parts research and development under the industrial and services cluster group. This will enable specialized industries to have the capability to design and produce motorcycle engines and other parts which are still not indigenized in Pakistan. It will also help strengthen the niche market in the future and provide technology for design, production and engineering for Pakistan parts-makers in order to raise their capabilities. The PCMIC seeks the Strategic Planning Alliance in public private partnership that should targeted at stand-alone parts design and manufacturing. The project would intended to create an automobile platform for Pakistan that would be relayed to the private sector. The second phase of the project would also initiate for automobile and parts manufacturers, and the PCMIC teamed up w i t h v a r i o u s Go v e r n me n t Departments like Military Vehicles Research & Development Establishment (MV RDE ), Mo ST , Eng i nee ri n g Development Board (EDB) etc. With such a coordinated approach it will be possible to include, niche areas of interest to specialist Government Organizations in the development effort.
Three areas would be targetable:a. The Motorcycle Engine market, as
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Monthly AutoMark Magazine
Article continued large number of the population use motorcycles for daily transport and motorcycles are assembled locally but engines are 100% imported. b. Larger Sized Engines (200 cc and above) c. After Sales parts market d. Small cars assembling
In this connection I am willing to offer my services as Social entrepreneur and Chairman PCMIC for Pakistan as I feel my experience could make an enormous difference in Pakistan Motorcycle Industry, and thus ensure the success of this venture. As a pioneer of the Chinese Motorcycle trade & industry businesses in Pakistan, I was the first one to introduce economical high quality Chinese motorcycle by top Chinese motorcycle manufacturer to Pakistan in 2002. I trained many Chinese motorcycle manufacturing companies in China to design the 70cc and 125cc motorcycle for the Pakistan market. In a short time, there were several motorcycle importers cum assemblers establishing the Chinese motorcycle assembling plants in Pakistan due to availability of suitable CKD parts by Chinese suppliers. As few years ago motorcycle assembling cum manufacturing was the dream of private ventures. But after the availability of good quality right parts in China and in Pakistan with the help of Allah Rabbulizzat this dream has come true. My years of experience in motorcycle t r a d e & i n d us t r y f l o u r i s h i n g development and launching of several new motorcycles in Pakistan, the Pakistan China Motorcycle Industry Council and their associates are committed to supporting entrepreneurs to develop emerging technologies that become the driving industries of the future. These efforts are supposed to facilitate the creation of numerous companies and thousands of jobs in Pakist an. I am looking f or an opportunity to set-up a facility for a Pakistan motorcycle industry. I come with extensive experience of setting-up facility for Pakistan companies on a global sourcing motorcycles and engine manufacturing in Pakistan. My experience includes senior roles in product development, marketing and business management. I am the Founder
and Chairman of Pakistan China Motorcycle Industry Council, a Pakistan & China Motorcycle trader & Industrial group network for Pakistanis, Chinese and their friends. In addition to being a Pakistan & China motorcycle trade & industry watcher, an investor, business consultant and avid follower of the Chinese Motorcycle Trade & Industry markets, I have more than 20 years experience in the Motorcycle trade & industry.
Being a Founder & Chairman PCMIC, I am working on to up an inventive research & development facility for Pakistan to Design & Manufacture Pakistan’s own motorcycles engines, small cars, vans and small trucks in public private partnership. I am known to all top Chinese motorcycle manufacturers with all aspects of, international sales & purchase, establishing new channels, selection of right design vehicles for specif ic market s, deali ng wit h import/export regulations, developing new models, finds real manufacturers as well as presenting at trade shows. It is with great optimism and interest that I take notice to promote the Pakistan Motorcycle industrial sector in China and to invite global Chinese manufacturers to established joint ventures in Pakistan. I believe there are several areas in which I could help Pakistan to strengthen Pakistani motorcycle Industry and Also help to export the made in Pakistan motorcycle in the international market.
council is able to provide a comprehensive development capability in these important and interlinked market sectors. Engineers at the centre should be able to deliver turn-key motorcycles projects including small engine programmed drawing and technology from across China. The proposed project has been carried o ut b y C h i n a b a s e d C hi n e se Manufactures and Pakistan’s Chinese Motorcycle Assemblers through PCMIC in cooperation with MVRDE, Local parts Vendors and financial institute. The project could be co-financed by the all stake holders and by the government of Pakistan. The government is being requested to interest free loans & allow tax holiday for five years to this project. To design the cleanest possible engine within reasonable cost and performance constraints will require a “Team Approach” and project requires intensive investment & huge financial resources. The support and guidance provided by the Government would be a great instrument for the phenomenal growth of this sector.
About writer: Muhammad Yousuf Shaikh, the Founder & Chairman of Pakistan China Motorcycle Industry Council, offers his analysis of the motorcycle trade & industry trends from Pakistan & China. The chairman PCMIC working with motorcycle trade & industry for over two decades, Yousuf believe that Chinese investment could help Pakistan to design and produce its The PCMIC proposed plan to o w n a u t o m o b i l e s m a i n l y motorcycles engines as the Chinese setting up an inventive research & development and & Indian motorcycle manufactures design & produce their own production facility products. Motorcycle Industry motorcycles engines at Require intensive investment & Sunder Industrial Estate huge financial resources, PCMIC Lahore to ensures that the proposed plan to setting up an inventive research & development and production facility to produce motorcycles and small engines at Sunder Industrial Estate Lahore. The result of this development could have profound implications on the Pakistan’s motorcycle industry over the next decade. To reach him, email: pakchina.mic@gmail.com www.automark.pk | April-2013 | Page 42
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Monthly AutoMark Magazine
Exculsive Article - Continued understanding, your problem-resolution skills, the courtesy you display and the confident tone of your voice… these qualities will go a long way toward satisfying a customer. You want him to have the feeling that “here is a place to do business and come back next time without hesitation.”
Your First Sale Appearances count, so sell yourself to customers by your appearance. A tidy, organized shop and a clean, well-dressed service tech/advisor is the best invitation for a customer to come in and conduct business. A clean tech/advisor advertises a clean, careful shop ; a dirt y tech/advisor suggests the shop might be sloppy. Many customers have been known to hesitate when it comes to leaving their cars at a shop which otherwise has a reputation for excellent work simply because of the appearance of the shop. Keep your shop and reception area tidy and organized. This is the gateway to your business.
Attitude/Manners If the customer’s first impression is formed by your appearance, it is either destroyed or strengthened by your attitude and manners! All too frequently a customer drives into a shop to find no one there to help him. He may sit in his car or he may step out. But he waits! And as he waits, his i m p a t i e n c e m o u n t s . Wh e n a tech/advisor finally comes around, that customer isn’t in a good frame of mind to discuss his car problems. It’s even more irritating to a customer if he’s brushed aside by a tech/advisor who fails to recognize him. Or to be met with the greeting, “I’m busy now, back in a minute.” If a condition exists in which a customer cannot be waited on immediately he should at least be acknowledged – i.e., “I‘ll be with you in just a minute.” And please – say it with a smile. Doing so will completely satisfy the customer – provided, that is, you keep your promise. Also, offer him a coffee and a newspaper while he’s waiting. The point is, by recognizing him, you have indicated that you’re aware of his presence and that you intend to help him.
India car market
The party is over! March sales dropped 13% Toyota was last month's main winner with 19.452 sales and a share of 7.9%, up 2.0 points from the previous month. Year-to-date sales were 45.537 with a share of 6.5%, up 1.1 points from Q4 2012. The top selling model, the Innova, advanced in 8th position. Posting the 4th year-on-year decline in a row, India car market in March dropped 13.5% from last year, with the first quarter sales down 12.0%. Toyota and Honda improved sales and share, while Tata confirmed the deep crisis. Following the record fall reported in the previous month, Indian car market confirmed in March the negative outlook with total sales of 247.777 units, down 13.5% from last year, posting the 4th year-on-year drop in a row. First quarter 2013 ended with 699.861 sales, down 12.0%, losing around 100.000 units from year ago. The reasons behind this decline had been deeply explained in our previous report from India and they were enhanced by reduced showroom traffic in March, a month traditionally
Studies have shown that almost 70% of customers who “quit” do so because of an attitude of indifference by the company or a specific individual. The greeting of the customer is the most important sale of the day. That greeting will determine whether the customer feels that he was justified in bringing his car to your shop in the first place. If properly handled, the customer will not only feel satisfied but will also feel downright thankful. A friendly positive attitude inspires confidence, and confidence sells bigger repair orders. Finally, respect and treat your customers
very strong in sales, closing the Indian fiscal year. In this quite negative environment, Volvo, a marginal player so far in this market, launched its new V40 Cross Country, announcing aggressive strategies, to boost annual sales to 20.000 units by 2017. Indeed, so far Volvo success in India was arguable, considering the activities started in 2007 with resonant announcements and targets, while in 2012 sales landed at only 821 units, around one tenth of main luxury players. Volvo is excited about the opportunities in the luxury car market in India, which currently is just one per cent of the overall industry figure but has the p otential t o grow fantastically. We at focus2move have a different view. Just to surprise, considering the low mood spread in the Indian market field, the famous consulting firm JD Power announced in March that Indian car sales may boom at 9.3 million in 2020, more than 3 times the 2012 volume. Someone should advice these Experts that cars need roads to be driven and people need money to purchase. Indeed, focus2move.com 2020 forecast for India is at 5 million units.
as you would like to be respected and treated. Remember, it is the satisfied customers who collectively sign your paycheque. Treat your customers like kings and you’ll retain them for life..... This exclusive article on The Customer The Most Important Commodity has been written by Mohammad Shahzad S.A.E., D.M.P. specially for Monthly AutoMark Magazine. (Automotive Engineer/Doctor of Motors) He is a Senior Group Manager for Customer Management Operations with The Brimell Group, Brimell Toyota and Brimell Scion in Toronto, Canada. Free advice for Automark readers; please do not hesitate to contact him at shah@brimelltoyota.com or automarkpk@gmail.com
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Monthly AutoMark Magazine
Automotive Sector - Update
EDB begins preparing new five-year Auto Industry Plan The AIDP was formulated in 2007 to facilitate industry for smooth transition from deletion program to Tariff Based System (TBS). The AIDP envisaged policy interventions to ensure consistency and predictability of tariff and non tariff measures to encourage OEMs, vendors as well as new investors to make sound investment decisions without any fear of unforeseen change in policy framework. The five year tariff plan was also linked to localisation of high value added critical components. The Engineering Development Board (EDB), which blames Pakistan Auto Manufacturers Association (PAMA) and Federal Government for the failure of Auto Industry Development Programme (AIDP) 2007-12, has started preparing a new five-year Auto Industry Plan (AIP), sources close to CEO of EDB told media.
"We have discussed the reasons behind AIDP's failure to induce representatives of the auto industry last week to forget (about) unlimited protection and prepare themselves for competition as the government is considering lowering tariffs," the sources said. The AIDP was formulated in 2007 to facilitate industry for smooth transition from deletion program to Tariff Based System (TBS). The AIDP envisaged policy interventions to ensure consistency and predictability of tariff and non tariff measures to encourage OEMs, vendors as well as new investors to make sound investment decisions without any fear of unforeseen change in policy framework. The five year tariff plan was also linked to localisation of high value added critical components. The five-year tariff plan, the sources said, remained unimplemented during the previous three years because of PAMA and the federal government. For instance in 2009-10, AIDP was not
implemented at the behest of auto industry, in 2010-11 the plan was deferred by the government and in 201112 status quo was maintained by the government. Other factors which blocked progress on the AIDP were as follows: (i) Actual production remained at 156,000 against projected 500,000 cars by 2011-12; (ii) Lack of new investments in automotive sector; (iii) Critical components identified under AIDP not localised; (iv) Closure of few units and discontinuation of two high selling variants; (v) Weak implementation mechanism; (vi) Lack of funding provisions; (vi) Conditions laid down for new investors unfavourable and incentives inadequate; (vii) Unrealistic growth targets; and (viii) Consumer welfare not addressed.
The auto industry enjoyed unprecedented financial benefits announced in the AIDP but the plan was not implemented despite the fact that they were taken on board prior to finalisation of plan.
The AIP provides a flexible investment policy for new investor with tax and tariff incentives as follows: (i) A new investor will be entitled to import 100 percent CKD, whether or not locally manufactured, at a rate of customs duty applicable to non-localised CKD, in the respective vehicle category for a period of five years from the start of assembly / manufacturing operations; (ii) A new investor will provide a fiveyear phase-wise localisation plan; (iii) Non adherence to the localisation plan shall result in withdrawal of tariff incentives for that particular year; (iv) A new investor setting up a green field project will be entitled to incentives as available to Special Economic Zone (SEZ) units ie tax holiday for a period of t en years from the date of comme nceme nt o f co mmerc ial operations and exemption from customs duties on import of capital goods (plant, machinery and equipment) for settingup of the project; (v) Encouraging exports through incentives; (vi) To enhance exports of CBU and parts the OEMs and Auto Parts manufacturers would be eligible for duty incentive on CKD parts as well as raw mat er i al , co mp on e n t s & s u b components and sub-assemblies as per following schemes; (vii) Export incentives for CBU defined under SRO 656(I)/2006 are being enhanced from existing 100 percent to 150 percent for import of duty free CKD; (viii) The export of auto parts will be exempted from duty on components,
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Railways plans to buy locomotives from Korea Pakistan Railways plans to buy diesel locomotives from South Korea for which a five-member delegation of the ministry is already in Seoul to negotiate the deal. The delegation is headed by Muhammad Junaid Qureshi, general manager operations, and comprises Mubeen ud Din, chief mechanical engineer (locomotives), Rahat Mirza, deputy chief mechanical engineer (diesel), Zulfiqar Sheikh, manager works, and Muhammad Yusuf, deputy chief planning of Pakistan Railways Karachi, an official told APP last week. He said that during their stay in South Korea, the railways official would visit locomotive manufacturing plants, inspect the proposed engines and hold necessary meetings to finalise the purchase.The official said that South Korea had upgraded their railways network from diesel to electrifying system to control the environment threats. The Koreans have a sufficient stock of locomotives and have shown their interests to sell diesel locomotives to Pakistan since these are useless for them after running of locomotives on electricity. The official said, on an experimental basis, South Korea may handover five locomotives to Pakistan Railways free-of-cost that would follow the finalisation of the deal. These locomotives were manufactured by General Electric Company and available on cheap rates as compared to the new ones available with the United States and China. The official said that after the successful deal, Pakistan Railways would be in a position to make operational all Korean locomotives after making necessary modification at Pakistan Railways Factory at Risalpur. The railways, is facing serious problems due to the shortage of locomotives and there are only 70 to 80 fully functional locomotives against the demand of around 400, he added.
Motorcyclists warned to replace number plates Sindh Inspector General of Police (IGP) Shahid Nadeem Baloch has given 15 more days to to motorcycle owners to replace the number plates on their vehicles, said a statement issued by the Central Police Office on last week. The previous deadline for replacing the number plates was 5th April which had now been extended to 20th April. The decision had been made in view of the problems being faced by the people in replacing the old number plates, it said. People were strictly advised to replace their number plates within the allotted time or else they would have to face legal action.
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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST
70cc Motorcycle
Sr./ No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
Product & Model Name Aan AI-70 Asia Hero AH-70 Bionic AS-70 Crown Lifan CRLF-70 Challenger BA-70 Diamond SD-70 Dhoom YD-70 Eagle DG-70 Ghani GI-70 Grace CT-70 Hero RF-70 Hero RF-70 Plus Habib HB-70 Honda CD-70 Hi-Speed SR-70 Jinan JN-70 Leader LD-70 King Hero KH-70 Moon Star MT-70 Master MD-70 Metro Dabang 70cc Metro Jeet 70cc New Asia NA-70
Retail Price Rs. 42,500/= Rs. 42,500/= Rs. 42,000/= Rs. 42,000/= Rs. 41,000/= Rs. 42,500/= Rs. 49,000/= Rs. 41,500/= Rs. 45,000/= Rs. 42,500/= Rs. 46,000/= Rs. 47,000/= Rs. 42,500/= Rs. 67,500/= Rs. 43,000/= Rs. 42,500/= Rs. 42,500/= Rs. 42,500/= Rs. 42,500/= Rs. 42,500/= Rs. 43,500/= Rs. 41,500/= Rs. 41,500/=
Sr./ No. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46.
Product & Model Name Pak Hero PH-70 Raftar KM-70 Ravi Premium R1 Ravi Hamsafar-70 Road Prince RP-70 Royal Star RS-70 Royal RL-70 Racer AS-70 Safari SD-70 Sakai SK-70 Sitara GT-70 Sohrab JS-70 Sonica SM-70 Super Asia SA-70 Super Star SS-70 Super Power SP-70 Super Power Delux Toyo TG-70 Target TT-70 Unique UD-70 Union Star US-70 United US-70 Zxmco ZX-70
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Retail Price Rs. 42,500/= Rs. 42,000/= Rs. 47,700/= Rs. 46,200/= Rs. 42,500/= Rs. 42,000/= Rs. 42,500/= Rs. 42,000/= Rs. 40,000/= Rs. 45,500/= Rs. 43,000/= Rs. 44,500/= Rs. 42,400/= Rs. 43,000/= Rs. 42,500/= Rs. 42,500/= Rs. 45,000/= Rs. 42,500/= Rs. 40,000/= Rs. 42,500/= Rs. 42,500/= Rs. 42,500/= Rs. 42,500/=
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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST
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. Metro MR-125
Retail Price Rs. 59,000/= Rs. 67,000/= Rs. 98,500/= Rs. 118,000/= Rs. 65,000/=
DYL Motorcycles Sr./ Product & No. Model Name 1. YD100 Mini 2. Janoon 100cc
Retail Price Rs. 64,900/= Rs. 78,600/=
100cc Motorcycle No. 1. 2. 3.
Brand &Model Name Honda Pridor Super Star SS-100 Super Power SP-100
Retail Price Rs. 84,000/= Rs. 57,000/= Rs. 60,000/=
Suzuki Motorcycle Sr./ No. 1. 2. 3. 4.
Product & Model Name Sprinter ECO 110cc Sprinter STD 110cc Suzuki GS-150 Suzuki Raider 110cc
www.automark.pk | April-2013 | Page 47
Retail Price Rs. 77,400/= Rs. 80,400/= Rs. 101,500/= Rs. 85,400/=
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Exclusive Article By Asif Masood
Monthly AutoMark Magazine
Another Case of Nepotism by the Ex Government There can be no national security without energy security, and there can be no energy security without planning and good governance. The gap between the demand of energy (especially peak demand) and its supply is phenomenal and is increasing with the passage of time. Pakistan is passing through the worst Energy Crisis, only because of poor policies and worst planning and gov ernan ce issues of p rev iou s government led by Former Prime Minister Raja Pervez Ashraf & president Zardari. This elite class controls the country’s biggest and most important businesses and holds most of the political power as well. All decisions are based on what serves their interest. For example, the Former Prime Minister who was also involved in Rental Power scam, was dare enough to issue 200 more CNG Stations licenses to 69 influential politicians and their relatives who had purchased provisional licenses from ordinary investors who had failed to complete CNG stations due to various reasons. Former prime minister Raja Pervez Ashraf approved these illegal licenses on last day of PPP government i.e on March 14, 2013 and the petroleum ministry conveyed this to the OGRA on March 16, 2013. There is chronic and persistent lack of commitment & planning in Pakistan or as they say “Poor Planning leads to Poor Performance”. The PPP government has broken all norms of rules and regulations of the authority. OGRA has well defined rules for consideration of license applications. The Authority shall have the exclusive power, to be exercised in the manner prescribed in the rules, to grant, issue, renew, extend, modify, amend, suspend, review, cancel and reissue, revoke or terminate, a license in respect of any regulated activity. In past few years CNG fuel based vehicles and CNG refueling stations has emerged in mushroom like growth due to low price and friendly policies of the previous government. Howev er, keepi ng in vi ew the mushroom growth of CNG stations in the country vis-a-vis depletion of natural gas reserves, Government has imposed a ban on establishment of new CNG
stations in the country w.e.f. 07.02.2008 except for province of Balochistan. OGRA had been informing t he government about gas shortage and advising it to formulate a policy regarding new CNG stations. As former adviser to the prime minister on petroleum Dr Asim Hussain was opposed to expansion in CNG sector, the petroleum ministry had earlier sought law ministry’s opinion over the legal status of provisional licenses that had expired many years ago but had been given extensions. The law ministry begs to be excused to be dragged into the controversy and advised the petroleum ministry to settle the issue through consultations with the OGRA, but the issue remained pending for more than three years. Since the people have invested millions of rupees and the government, gas companies and OGRA did not take any steps to stop them from going ahead with provisional licenses; now it has become obligation to issue them marketing licenses for CNG stations. The major cause of energy crisis is corruption and poor governance. Pakistan had 28 trillion cubic feet reserves of natural gas in 2006 but due to increase in its demand it is expected to be exhausted in next two decades.
The key of success is effective management, check and balance in whole of the system. Decision making has to rise above the narrow party political and regional interest and all decisions must be taken in national interest in a transparent and accountable way. Political interference to serve narrow and personal interests must be stopped immediately and for good. Gas Demand & Supply Situation Pakistan’s gas requirements are growing hastily, while the domestic gas production is not growing at the same pace. During the last 2-3 years on natural gas demand supply forecasted that the local supply resource shall be
insufficient to meet the country’s d e m an d an d a considerable supply shortfall of natural gas in the country is expected in coming years. Natural gas Asif Masood d em and sup p l y projections from FY 2010 to FY 2020 were updated based on the gas demand supply data provided by distribution companies. They forecast that even on the constrained demand scenario (demand based on long-term contracts in projection period), the country is to face a huge supply shortfall of 6.47 Billion Cubic Feet/day (Bcfd) by FY2020. The above gas supply shortfall of 6.47 Bcfd, if not mitigated, will seriously cripple industrial activity and severely limit economic growth. Transparency in Energy Sector The importance of energy security cannot be denied, it demands availability as well as affordability for the national economy’s growth. Pakistan never had a natural gas surplus to the extent that Pakistan would go all out to adopt an energy policy that would make natural gas as the prime energy source feeding into five highly critical sectors of national economy. Secondly the myth why the pricing of this precious indigenous resource was not based on the principle of scarcity and optimal utilization baffle experts. It was severely over allocated, underpriced and excessively misused. As a direct consequence of mismatched policies, Pakistan found itself in a severe energy crisis coupled with natural gas supply shortage which not only constrained present but future economic growth as well. Considering the objectives that are to be derived from it the public energy policy in essence needs to be simple, which should encourage national and international investors to bri ng i n t he co unt ry eff i cient technologies and investment and offer product mix in shape of indigenous fuels, renewable energy, hydropower and other power generation sources....
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