Automark magazine jan2016 by Mustafa Hanif

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Contents

News / Event

Article / Review 14 21

22 24

Inside

January-2016

50 Year Of Motorcycles In Pakistan Exclusive Review by AM Our Vulnerable Automotive Industry At The Backdrop Of Open-door Wto Policy Exclusive Article by Imran Saeed AllahWala Exide Batteries Technical Information Qingdao Choho Industrial Co. Ltd. Fine blanking sprockets new program in 2016 Company Profile

Innovation in Luxury Hinopak celebrates the booking of first 100 KAZAY Buses Exclusive Event Coverage

Auto industry expects up to $5 billion investment Tractor industry stops production temporarily

Local Automotive news

International automotive news

44 46 47

Innovation in Luxury Hinopak celebrates the booking of first 100 KAZAY Buses Press Briefing

Master Motors Corporation inaugurates Yutong Bus Plant in Karachi Exclusive event coverage by AM Pakistan Auto Show-2016 Review Adventure Always Helps You Learn Exclusive Report by Zahid Malik Heavy vehicles sector gears up investment

Price List 38

Vehicle price list

Motorcycle Price LIst

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January-2016 edition Volume 09, Issue 01

Pakistanâ&#x20AC;&#x2122;s premier magazine on automotive, engineering & energy sector

Monthly

AUTOMARK International Editor-in-chief Muhammed Hanif Memon Technical Editor

Advisors

Muhammad Shahzad

Imtiaz Rastgar CEO, Rastgar Group & CBI External Expert, Ex-chairman EDB Islamabad

Advertising Manager Tahir Siddiqui

Circulation Manager Shahzad Raza

Graphic Designer Mustafa Hanif Salman Hanif

Web Master Murtaza Hanif

CONTRIBUTING IN THIS ISSUE Zahid Malik Imran Saeed Allah Wala M. Hanif Memon Mohammad Laman Abdul Rauf Sami-ul-Haq

Engr. IHT Farooqui Chief Operating Officer Karakoram Motors (pvt) Ltd. Karachi Muhammad Yousuf Shaikh Founder & Chairman Pakistan China Motorcycle Industry Council Karachi Syed Mansoor Rizvi Principal Officer M/s. CNH Services (Pvt) Ltd. Karachi Nadeem Ahmed Salmi Executive Director Operations M/s. Al-Haj Faw Motors (Pvt) Ltd. Karachi

Active Communications Mailling Address: D-68, Block-9, Clifton, Karachi Tel : 021-32603371 Mobile: 0321-2203815 E-mail: automarkpk@gmail.com website: www.automark.pk

AutoMark Canada Office Managing Editor Mohammad Shahzad S.A.E. D.M.P. 41 Jordana Drive Markham (Toronto) Canada L3S 3N8 Phone: 905-472-8282 Email: automarkcanada@gmail.com AutoMark REGD: MC-1330 Published every month by M. Hanif Memon The views expressed by contributing writers and comments do not necessarily reflect the views and policies of the Monthly AutoMark magazine's management

Tax rules worsen business climate in Pakistan The World Bank says tax regulations in Pakistan are frequently altered, and unpredictable tax rules worsen the business climate and may deter potential investment. The report `Towards a more friendly tax regime: Key challenges in South Asia,` points out that South Asia`s tax regulations are complex and difficult to administer and comply with. Complexity stems from availability of special schemes, reduced rates and exemptions for different sectors, locations, types of firms or products. Furthermore, tax laws are often written in vague language, which makes it difficult for a typical small and medium enterprise (SME) to understand its tax liabilities and provide room for multiple interpretations by both firms and tax administrators, creating opportunities for leakages and corruption ,according to the report. The report cites Pakistan and Bangladesh among the South Asian governments who make changes in tax regulations much more frequently. The changes were even more frequent in Pakistan. `Such frequent changes mean that taxpayers should continuously follow tax notifications published in the official gazette to stay informed about their tax obligations,` report says. The report says the administrative burden of tax compliance is hardest in Pakistan where firm shave to make 47 payments and spend 594 hours or 74 man days per year dealing with tax regulations versus 12 payments and 175 hours in high income OECD countries. Eighty seven per cent of time spent on dealing with taxes or 514 hours per year in Pakistan is spent on VAT compliance...

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Exclusive Review by AutoMark

50 YEARS OF MOTORCYCLES IN PAKISTAN Last 15 Years Changed the scenario of Bike assembly and marketing Ministry of Industry Government of Pakistan

% Capacity Utilization Rate

Source: EDB,2015

he motorcycle segment in Pakistan has seen rapid change in last fifteen (1999 to 2015) years, the most important of which has been the increase in volume. From a volume of merely 63,000 in 1999-2000, production has grown to around 1.65 million units in 2013-14 - an increase of almost three fold in 15 years. Industry sources claim that the volume is even higher now (in 2015), with estimates ranging from 1.7 to 1.8 million units a year, expected to go up further to 2 million by 2020. The impact of this increase in volume has been to potentially allow the assemblers and suppliers in their vending chain to achieve economies of scale, and consequently high levels of localization and low prices. These lower

Installed Capacity

prices have in turn fueled demand further. Currently the market is characterized by a large number of assemblers competing on price, with low barriers to entry. The motorcycle industry began with Suzuki, Honda and Yamaha’s import of motorcycles under the PACO and Private sector in 1963 and the assembly in 1976. The industry was initially dominated with just three Japanese brands: Suzuki, Yamaha and Honda. Up to 1988 Yamaha and Suzuki was market

Units Produced

key players after that Honda made service network of 4-stroke 70 cc all over Pakistan, this efforts made Honda the dominant player with approximately 70 per cent market share. In the late 1990s three non-Japanese OEMs namely Fateh HERO, KMW Qingqi and Shorab began to make forays into the market and by the early 2000s, five sindh province based local companies had started local assembly, which encludes Memon Super Star, Dewan Star, Guangta Sitara, Jinan and Khalid Rocket. The first sharp growth period started in 2002, driven by this increase in the number of players, a low exchange rate, and low duties and taxes. A defining feature of this growth was the introduction of the “Chinese bike” or

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Monthly AutoMark International

Honda, Suzuki and Yamaha Have set the industry benchmark by offering “5S” exclusive dealerships, offering sales, service, spare parts, second hand exchange and safety under one roof. The remaining “clone” assemblers typically have non-exclusive dealers that offer at most three of these.

The PSQCA has so far set industry standards for 2 and 3 wheelers, yet implementation remains a serious issue. There are no labs available in Pakistan that can check compliance with Euro II standards (for example to check if vehicles are within permissible limits for smoke, carbon monoxide and noise)

The local tax and tariff structure along with high raw material costs render Pakistani motorcycles uncompetitive internationally. Regionally, motorcycle costs US$65 and US$94 more in Pakistan than in India and Thailand respectively.

Pakistan should focus on the markets of Bangladesh, Afghanistan, Sri Lanka, and Central Asian Republics as well as those of East African countries such as Eritrea, Somalia, Ethiopia, Djibouti, Kenya, and Uganda

This is particularly surprising given the trends in the global motorcycle market. The 70cc engine is apparently not produced anywhere else in the world and industry sources claim that the parts that are imported for the 70cc model from China are made only for Pakistan, and are not exported by China to other countries

Industry stakeholders suggest that Association of Pakistan Motorcycle Assembler – APMA, estimates that approximately 50 per cent of the motorcycles are sold on installments.

many of the smaller motorcycle assemblers cater only to regional markets rather than national markets. In their local area they have an advantage over national brands as they are able to provide credit to consumers, with their strong local links ensuring low monitoring and enforcement costs.

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Exclusive Review by AutoMark “Honda clone” - both popular blanket terms for the type of motorcycle manufactured by the dozens of local assemblers. The clone motorcycle, is a replica of the classic Honda CD-70, assembled out of local and Chinese parts, and available at about two-thirds of the price of the Honda original. That despite the financial crisis, which registers as a dip in the period 2007-09, the industry quickly picked up volumes as it entered the sharpest incline since its inception. Demand was fueled by lower prices, coupled with an expansion in informal credit made available by local dealers by the newly entered assemblers in the market. Large segments of buyers who were previously priced out could now own a motorcycle on easy monthly installments, typically paying Rs. 2500 to 3000 a month. Muhammad Sabir Shaikh, Chairman Association of Pakistan Motorcycle Assembler – APMA, estimates that approximately 50 per cent of the

also to low barriers to entry on the supply side. The vending chain is now well developed and non-exclusive, so motorcycle parts are readily available to new entrants. In addition, standard practice in the motorcycle industry (as in dee d in o ther small scal e manufacturing in Pakistan) is to fund operations through market credit. Under this system, inputs are purchased on the understanding that payments to vendors will be made after the final product is sold, a credit period of anywhere between 30 and 90 days. What this means is that the start-up costs of opening an assembly plant is not much more than the rent for a shed and wages for the assembly labor. However, under this structure of low barriers to entry and cutthroat competition on price, the real challenge has been to survive in the long term. Although there are over a hundred total players in the market since 2011, the number of active players, who have had

benchmark that qualifies an industry as highly concentrated. While there are many assemblers, stable and significant market share is shared between just a few. A stable market presence is not easy to establish, and a high market exit rate is therefore as much a regular feature of the motorcycle industry as the high entry rate. When these firms exit, they typically leave behind a string of debt, which has a domino effect throughout the vending chain. Market credit, the system that guarantees low entry costs, also generates exits that are painful for the survi vi ng player s. It run s precariously on interlinked debt, where a single default could upset the books of multiple suppliers, which become unable to provide the raw material or parts required by the assemblers. Stakeholders suggest that the stable market size would be around 15-20 players once the market has settled into long run equilibrium. Consolidation and

Top 10 motorcycle assemblers for year-2014-15

motorcycles are sold on installments. These low cost motorcycles have now become an affordable necessity, as Pakistan’s public transport system is underdeveloped, particularly in the rural areas. The two and three wheelers made up the largest shares of registered vehicles in Pakistan in 2006. Th e i nc rea se i n v o lu me s wa s accompanied by a parallel increase in number of players operating in the market. The number of registered assemblers has increased from just 3+3, 1997-98 and 5+3+3 in 1999-2000 to 104 in 2012-13, currently number of approved assemblers is 124 out of them 80 assemblers are active. The rapid increase testifies not just to the demand factors discussed earlier but

a stable presence over time, has been closer to 70. From two active market players, Honda and Sohrab, in 1999, the market has expanded to incorporate more than 80 active players. The units are not split homogenously amongst the players. 33 players in the market did not register any production at all in 2013-14, and the large majority of the remaining players produced fewer than 5,000 units that year. Looked at it from this angle, the market appears rather more concentrated than it superficially appears to be. In fact the HHI Index, a measure of market concentration, calculated using the 2013-14 market shares is 1780, which classifies the industry as moderately concentrated, but closer to the 1800

mergers are expected not just in the Pakistani industry, but also in the Chinese industry itself. This would also help support a move towards original R&D rather that an imitation based model. Industry stakeholders suggest that many of the smaller motorcycle assemblers cater only to regional markets rather than national markets. In their local area they have an advantage over national brands as they are able to provide credit to consumers, with their strong local links ensuring low monitoring and enforcement costs. Capacity utilization currently averages around 64 percent. It can be seen that the top few brands have a higher capacity utilization (an

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Monthly AutoMark International average of just over 70 per cent for the nine highest volume assemblers) as compared to the next ten (with an average of 33 per cent). In the data for the remaining 50 players or so, there are only two instances of capacity rates in excess of 55 per cent (Treet and Rohi, both shown above in the top 25 producers above). Capacity utilization in the range of 15-30% is far more co mmo n amo ng st t he smal l er assemblers, with capacity utilization in single digit figures or zero also not unusual. This could be seen as an indication of economies of scale – although volumes are not critical for assembly itself, assemblers are increasingly competing on after-sales services, for which scale is more important. Honda, Suzuki and Yamaha have set the industry benchmark by offering “5S” exclusive dealerships, offering sales, service, spare parts, second hand exchange and safety under one roof. The remaining “clone” assemblers typically have non-exclusive dealers that offer at most three of these.

network offers a variety of after-sales services. Honda’s motorcycle is therefore considered a superior product on several fronts, which explains Honda’s ability to maintain healthy volumes despite a higher price. In fact, the price premium is so much higher that the clone and original Honda motorcycle can be considered to be catering to two distinct clienteles: the quality conscious Honda consumer and the price conscious clone consumer. This view is supported by the fact that the increase in demand has been new demand, and Honda’s pre-existing demand has not only continued undisrupted with the advent of competition, but has in fact shown a healthy increase. The new demand is clearly from those consumers that, as mentioned earlier, were priced out earlier. The quality and brand conscious consumer is still loyal to the “branded” Honda and Honda is able to price at a comfortable premium knowing that there is no effective competition in this segment.

in localized parts is that the assemblers importi ng sub assemblies, sub components and components under SRO 655/2006 are also including these parts in localized parts, because if they import raw materials @ 0% custom duty then it is good enough that they are importing raw material but sub assemblies, components and sub components are not a assembly. Honda is able to localize further as they are able to manufactu re more sophisticated engine parts, such as pistons, in house. These high levels of localization indicate that engines have also been largely localized. In general, engines for 70 to 125 cc are made locally with a small proportion of imported parts (such as carburetors), while the 150 cc and 250 cc engines are imported. Market sources confirms that all assemblers including Honda importing more than 60% parts which are shown as localized parts through different channels. Industry insiders suggest though that these localization numbers cannot be

For example, Honda’s main competitor, United Motorcycles, has their (nonexclusive) dealers offer sales, service, spare parts. Many smaller assemblers including big brand of Chinese bikes from Sindh also offer no additional services at all. Honda’s price is lower than the other Japanese brands in the categories they chose to manufacture in Pakistan, but still much higher than any top local brand. Industry stakeholders view Honda’s ability to maintain high volumes despite the price difference as an indicator of quality and service. Even within Pakistan’s highly price conscious environment, Honda is able to command a higher price because of a higher resale value and longer product life. As mentioned earlier Honda’s extensive and exclusive dealership

Changes in production volume for the top six motorcycle manufacturers over time. Non-Honda manufacturers are seen competing with each other for second to sixth place, with United steadily gaining market share at the expense of Unique and to some extent Super Star in recent years. Yet Honda’s comfortable position as market leader is unchallenged. Data from EDB suggests that localization in the motorcycle industry varies from 77 to 83 per cent, with industry sources claiming even higher levels than this. According to industry sources, Honda has achieved the highest localization with the 70 cc motorcycle 95 per cent localized, and the 100 - 125 cc models 90 per cent localized. In comparison, the clone motorcycles are 80 – 85 per cent localized. The more important point

interpreted at face value. True localization is far lower than this, they caution, as smuggled parts are repackaged as locally produced parts. Although the volume of the industry can now sustain local production as economies of scale can be achieved, the required technology transfer and local manufacturing activity has not taken place. Smuggled Chinese parts are available at such low prices that local venders struggle compete and develop in-house capacity. Furthermore, the equilibrium has settled into a low quality one, with little incentive to engage in higher quality production and R&D. A unique feature of the Pakistani motorcycle market has been the ubi q ui t o us p re sen ce of 70 cc motorcycles. The 70 cc motorcycle has

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Exclusive Review by AutoMark a steady market share of over 80 per cent. This is particularly surprising given the trends in the global motorcycle market. The 70 cc engine is apparently not produced anywhere else in the world and industry sources claim that the parts that are imported for the 70 cc model from China are made only for Pakistan, and are not exported by China to other countries. Certainly, Honda currently only manufactures this motorcycle in Pakistan. Honda maintains that the success of their 70 cc motorcycle in Pakistan is due to the fact that it is an economy bike, low maintenance and one of the Honda’s best-engineered products. These features make it attractive to sell to Afghanistan too. However, in other low-income countries like China, India and in African markets, the 70cc motorcycle has a small or negligible market share, which is puzzling if, as Honda has suggested, the 70 cc is so universally suitable for low i nc ome co n sume rs . I n C hi n a, approximately two-thirds of the market share belongs to motorcycles with engine capacities of over 110cc. The puzzle that remains is why the 70 cc is so hugely popular in Pakistan, but not in other low-income countries. It might have to do with a combination of poor implementation of standards (the 70cc is a 40 year old technology), and an institutional framework that allows an entire industry to be built on a backbone of smuggling – conditions that might not be available elsewhere. On a positive note there may be labor cost advantages of assembly in Pakistan. Whatever the answer to the puzzle may be, the dynamic in Pakistan too is changing, and there is a move towards higher engine size motorcycles. In 2013, Honda claimed that sales of 100 cc and 125 cc are increasing at rates of 34 per cent and 20 per cent respectively, while 70 cc has seen a decline of 10 per cent. United Motorcycles, the second largest assembler, has also declared that while the 70 cc market is now appearing saturated, sales of their 100 cc mo t o rc y cl e , wh i ch w e re 50 0 600/month, have now (in 2015) increased to 6000/month. There is also a move towards the 125 cc motorcycle. Yamaha’s re-entry into the Pakistani market with the launch of their 125 cc motorcycle in April 2015 was so

popular that they were over-subscribed. From a start with 200 employees and an expected volume of 30,000 units in the first year, Yamaha Pakistan is looking to expand to 400,000 units by 2020. This is expected to cater to local demand and export to regional markets. Like Honda, they are looking to enter the high-end market with a network of exclusive dealers. In the motorcycle segment, tariffs remain at the levels of 2009-10 for new CBUs. The same is true for both localized and non-localized components, which may be imported at 15 per cent if the part is non-localized. The RD on localized parts is 32.5 per cent, which makes the overall duty 47.5 percent. However, tariffs did change in 2012-13, under SRO 655 that was issued for just one year. For that year, in order to incentivize the sector, tariffs were lowered on CBUs, non-localized knocked-down units, as well as on assembly. The RD on localized parts was decreased to 28.75 per cent as per SRO 693/2006 The simple average MFN applied duty on motorcycle imports (HS 8711) is 65 per cent, and tariffs remain unbound. The effective rate of protection is equally high, at 77.5 per cent, as may be seen from the extensive protection given on processing margins due to high levels of localization, and a cascading tariff structure. However, as discussed earlier, the effective protection that is practically delivered to assemblers is much higher, due to the zero-tariff smuggled market for inputs. Two main institutions implement standards for the motorcycle industry, PSQCA and EPA. However, there seems to be a lack of clarity on whether EPA or PSQCA is now responsible for monitoring and implementing the 2 and 3 wheeler standards, after devolution un d er t he 18 th co nst i t uti o nal amendment. The PSQCA has so far set industry standards for 2 and 3 wheelers, yet implementation remains a serious issue. There are no labs available in Pakistan that can check compliance with Euro II standards (for example to check if vehicles are within permissible limits for smoke, carbon monoxide and noise). In the absence of the requisite labs, it was decided that assemblers were to get a certificate from the importer stating

that the engine was Euro II compliant. In practice this has led to a proliferation of non-authentic certificates, either copied, or provided by labs that are not ISO-17025 certified. This current system is therefore not effective and needs reform and investment, such that the facilities and resources are matched with the duties and responsibilities that have been assigned to the appropriate government department. Investment in labs is essential, as is investment in the skill level and capacity of auditors and inspectors. Yet there seem to be no solid steps taken in this direction. It is therefore no surprise that the industry opinion of PSQCA’s work is poor. The predominant impression is that any success story of the industry is based on self-initiative and there is no noteworthy facilitative role of the governing body in enforcement of standards within the country. This is detrimental for several reasons. Firstly, it does not offer consumers the required protection for which it is intended. Secondly, it opens the domestic market to the influx of low quality, low price imported products and makes it much harder to establish a higher quality equilibrium market. Unregulated imported goods are therefore extremely disruptive for the vending chain. Finally, the gap between announcing a policy and implementing it creates uncertainty and wasted investments by the industry. For example it was anticipated that the Euro II standard would be implemented in 2009. Forward thinking firms made the investments required to meet the standard. However, the required investment in domestic certification facilities were not made by the government, and, as described earlier, the system was modified to one in which there is no effective implementation. The efforts and investments of firms that were eager to move to a higher quality product were wasted. The global motorcycle market is dominated by Asian producers (90 per cent), with China and India sharing more than 60 per cent of this market between them. Pakistan ranks within the top 10 in volume terms. The main regional competitors are China, Thailand, and India, with China exporting almost half of its production. Pakistan currently exports only 1.4 per cent of its total production due to single

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Monthly AutoMark International 70 cc model available in Pakistan, mar ket s ources i nf or me d t hat introduction of new models are difficult because of policy hurdles by the govt. of Pakistan. Regional competitors such as China, India and Thailand have moved out of the 70cc market, so Pakistan can export in this niche market. However, as discussed earlier, the standards to which the motorcycle industry currently complies may not have a market, and once standards have improved, price advantages will have to be re-evaluated. Thailand, one of the biggest threats to Pakistani exports, is focussed more on the ASEAN countries, so Pakistan could potentially focus on other markets. However, global demand is in the 100cc and 125cc segments and Pakistani motorcycles need to become competitive in these categories. Pakistan should focus on the markets of Bangladesh, Afghanistan, Sri Lanka, and Central Asian Republics as well as those of East African countries such as Eritrea, Somalia, Ethiopia, Djibouti, Kenya, and Uganda. Exports to Afghanistan have fallen due to technical non-tariff barrier (i.e. absence of customs certification), and this can easily be rectified. Indeed, Atlas Honda has obtained world-wide export rights for the 70cc market and regional rights for the 125cc market. As Honda has previously exported to Afghanistan and Bangladesh, the removal of TBTs is crucial to regain market share. The Honda plant was set up in Lahore by Honda Japan in 1995-96 following India’s granting of MFN status to Pakistan to take advantage of the expected increase in demand from India. However, that never happened. The view from the industry is that India has set up non-tariff barriers (NTBs) that prevent Pakistan and other countries from exporting to India. It is worth noting that the motorcycle market in India has moved beyond the 70cc category and it remains to be seen if market demand patterns in India would be such that export from Pakistan to India would be possible if trade were to open up. Much of the export potential in Pakistan would depend on the business environment provided to manufacturers. China and India both have policies that facilitate firms to manufacture locally.

For example, production costs in China are low because of state subsidies for land and utilities, and availability of raw materials locally. Demand for 10 million units also allow scale economies, further lowering costs, and making motorcycles cheaper. India also benefits from local demand of 7.2 million motorcycles, with its strong manufacturing foundation based on a technologically advanced component industry and JVs with Japanese companies. Japan not only uses India as an export base for other countries, but is also cooperating with local Indian companies to form JVs in other countries. Thailand, or the Detroit of Asia, is poised to become the regional assembly hub through government support for skill training, auto parts development and auto clusters. Vietnam is also looking towards African markets, where it has been known to dump motorcycles to clear stocks. Prices are very competitive as its local demand of 1.9 million units and Japanese FDI allow it to compete favorably in the region. However, like Thailand, it is focusing mostly on the ASEAN market. In comparison, Pakistan’s motorcycle industry is at an early stage of development. The local tax and tariff structure along with high raw material costs render Pakistani motorcycles uncompetitive internationally. Regionally, motorcycle costs US$65 and US$94 more in Pakistan than in India and Thailand respectively. As motorcycle and parts exporters are often refused entry on the nonacceptability of their quality certificates in India, the EU, and the USA, the PSQCA must ensure that its standards have the backing of an accredited international certification body. This will allow Pakistan to diversify its export markets from Afghanistan and Africa, where quality is less of a concern, to other markets, especially for parts. For two-wheelers, in addition to the import duties outlined above, there are added restrictions such as port clearance permissions, standards certifications and approvals that need to be obtained before exports can begin. Motorcycle exports to India are very expensive, with freight costs of 34 per cent. Port and clearance costs (3 per cent and 2 per cent of CIF values) add up to 25 per cent, excluding customs duties. Negotiation on removing re-tape and

other unnecessary impediments to trade would be essential in order to tap regional markets. Smuggling is the single most important impediment to the development of the motorcycle vending industry. Although motorcycle volumes are now at levels that can easily allow for economies of scale, significant technology transfer between Chinese principals and P a k i st an i a ss e mb l e rs o r p a r t manufacturers has not occurred. Auto parts are instead smuggled across the Pakistan-China border (at Sust, for example) and through the Afghan transit trade route. This has two major costs. Firstly, this leads to a loss of revenue to the exchequer. Secondly, as discussed earlier, the market is inundated with low quality parts at low prices, which the local vendors struggle to compete with, and consequently domestic industrial development is impaired. Smuggling overrules any formal protection provided to the vending industry whether through tariffs or through negative/sensitive lists, as the effective tariff at which these goods enter Pakistan is zero. In fact, the protection provided by negative/sensitive lists or high tariffs is, in this case, completely counter-productive as this incentivizes smuggling even further. Smuggling is apparently so easy and widely accepted that a minor incentive is sufficient for traders to choose this route instead of a legal one. When valuation is on weight, for example, the heavier items are simply smuggled in. Auto parts that have high duties or valuation rates in excess of their actual rates are also smuggled in. Market sources informed that there are smugglers operating in every major city, delivering at least one million auto parts per annum at Rs. 100/kg to the doorstep of assemblers. Many of the “locally produced” parts are actually re-packaged imported Chinese parts With motorcycle volumes expected to grow to 2 million by 2020, it is imperative to curb this smuggling to ensure that the backward linkages and industrial development typically associated with the auto industry does not bypass Pakistan. In Pakistan, customs duty on imported auto parts is based on weight, with a rate/kg fixed for each category of parts. Furthermore the rates differ by country of origin, with Japanese parts valued at higher rates compared to parts

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Exclusive Review by AutoMark or igin at ing from China. C lone motorcycle assemblers had been protesting that the rate/kg set for auto parts imported for motorcycles from China was much higher than market value. They claimed that under Valuation advice/Ruling U/S 25-A, the import valuation of Chinese parts was up to 4 times higher than the real value, even though Chinese parts typically cost 200 percent less than comparable Japanese parts. In fact they believed that motorcycle parts made from the same material as parts used in the rest of the auto sector are valued at higher rates for motorcycles. For example, aluminum alloy, which is used for alloy wheels and alloy rims in cars, was valued lower than the aluminum crank cases and covers used for motorcycles. Once these rates were revised, the Japanese OEMs now complain that the imports of Chinese parts are valued too low, and this is seriously impairing the vending industry. What is clear from this example is that it is imperative to have a correct valuation system that is transparent and fair. This is crucial to proving a level playing field for all manufacturers. Smaller assemblers feel that their ability to import under the SROs is limited due to the excessive administrative requirements. Firms need to apply for manufacturing certificates, on the basis of which importable quotas are granted. These can be used to import inputs for

manufacturing at concessionary rates. APMA claim that these certificates and quotas are valid for as little as a few weeks, which makes it difficult to plan and also increases administration costs for small assemblers. EDB, on the other hand, feel that the SROs have the potential to be misused for â&#x20AC;&#x153;illegal activities and smugglingâ&#x20AC;? by those who do not comply with the requirements. The administrative costs of importing under SROs discourage legal imports, which are diverted to smuggling so either way it is a lose-lose situation for the government and the industry. Assemblers report administrative difficulties in getting export clearances, especially for Afghanistan, which is a very important export destination for Pakistani motorcycles. Previously motorcycle exporters could claim a refund on duty drawback of 9 to 13 per cent upon production of a receipt issued by Afghanistan Customs Afghanistan. (This receipt also known as Gurmik, the Afghan Customs Clearance Document). Afghanistan has now computerized customs at Torkham and Chaman and the Gurmik is no longer issued. Rather than modify the system of refunds to continue to facilitate motorcycle exports, FBR has refused to refund the duty drawback without the Gurmik. As a result, Honda Atlas, for example, claim that their exports to Afghanistan have fallen to just 10 per cent of their peak of 12,000 units. Interestingly, the Gurmik

Monthly AutoMark International was an Afghanistan specific requirement and no such document is required to process refunds to neighboring Iran and India. Computerizing their records has made Afghanistan like any other country now, which should make matters easier, not harder. Chairman Association of Pakistan Motorcycle Assemblers, Muhammad Sabir Shaikh said the alarming feature in the lack of resolution of this apparently straightforward problem is the length of time that the problem has been pending, having been under discussion since 2007. This is similar to many other policy decisions that we have investigated in the auto sector: the AIDP, the valuation issue, smuggling, standards and export clearances have all been under discussion for years, with an inability of the government to take swift, decisive action. Some of this has to do with coordination between government departments, in this case the Ministry of Commerce and FBR. Other times it has to do with the limited capacity of the government, which comes under pressure from various interest groups who have an incentive to maintain the status quo. These include not just industry stakeholders but also customs and clearance officials. Developing a capacity to set and implement standards is crucial both for consumer protection and for industrial development.

Chinese delegation invited to talk business On the directives of Prime Minister Nawaz Sharif, the China-Pakistan Friendship Association (CPFA) will bring more than 100-strong delegation of Chinese businessmen comprising private-sector entrepreneurs and investors to Pakistan next month to explore business and investment opportunities. The delegation will stay in Pakistan from January 18 to 22, 2016. The CPFA, under the umbrella of the Ministry of Commerce, will organise events in Islamabad, Lahore and Karachi. An official in the Ministry of Commerce said around 100 prominent businesspersons of China will arrivein order to ex pl or e t rad e and i nv es tm ent oppo rtunities in the energy,

infrastructure, textile, agriculture, e n g i n e er i n g , i n f o r ma t i o n an d communication technology and mining sectors. The Ministry of Commerce, Lahore Chamber of Commerce and Industry ( LCC I) an d Paki stan Busin ess Council (PBC) will invite 100 to 120 eminent Pakistani businesspersons in the corresponding fields to attend events in Islamabad, Lahore and Karachi, the official added. According to the schedule, the Chinese delegation would kick-start the trip with a two-day Business Opportunities Conference on January 18 in Islamabad. The conference will be organised by the Ministry of Commerce with the support of Board of Investment, Trade Development

A ut ho ri ty of Paki st an ( T DA P) and World Bank. The delegation will then travel to Lahore to have business-to-business (B2B) sessions with prominent CEOs and senior executives of top companies headquartered in Punjab. These sessions will be held on January 20 and will be organised by the LCCI. The Government of Punjab will arrange field visits for the delegation to major industrial areas on January 21. At the last leg of the visit, the delegation will proceed to Karachi, where the Pakistan Business Council, with the support of Sindh government and TDAP, would host an event, which would include B2B sessions with premier Karachi-based businesses on January 22.

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Exclusive Article by Imran Saeed Allahwala

Monthly AutoMark International

OUR VULNERABLE AUTOMOTIVE INDUSTRY AT THE BACKDROP OF OPEN-DOOR WTO POLICY

Pakistan’s automotive industry’s deletion program kick started in 1980s with a firm commitment to see local industry get on its feet without getting hurt from foreign competitors. Okay so that was a good, honest-move to create jobs as well as see local setup developed. Now, the question is, have we achieved what had been envisioned? In all honesty, the simple answer is no – there is not one, but many reasons to justify my observations; the first thing that comes to my mind when I think of A PRODUCT; its COMPETITIVENESS in t erms of und erstandi ng target audiences, their ability to buy, replacement price with equally competitive product(s), quality, durability, value for money, safety s t an d ard s , mak i ng mon e y f or shareholders and employees. There is no need to name one company; everyone contributed viciously to make money, not by producing quality vehicles, but by manipulating import policies, restricting import of used vehicles, very high duty and taxes on same cat egory of high qualit y international products available at much lower costs - Pakistan, being an emerging economy with 95% population falling under low-medium income consumers who, naturally look to get affordable means of transportation – public buses, over the years have been

on extinction journey leaving consumers to look for other budget alternatives in the name of bikes rickshaws or sitting on roofs of handful of buses while endangering their lives. Our automotive industry in all fairness should have been declared as a UTILITY INDUSTRY, but today, as I write this article, locally assembled cars have gone out of reach of middle income families, because majori ty of my fellow countrymen earn less than Rs 25,000 per month leaving them out of race to even afford our very own, sorry looking Suzuki Mehran at Rs 7 lacs –and when we know, only 1.2 million people manage to buy motorcycles which amounts to less than 1% of our population. The above sorry state of affairs has brought our auto industry to a very critical breaking point, it is no secret that we are going to witness complete OPEN-DOOR TRADING in coming years, even China had to yes to WTO by way of making way to international companies to enter its domestic market, it is therefore inevitable that imports will get completely rationalized and local industry will have to face true competition. In my opinion, we are up against a much bigger threat or challenge because imports come from much bigger factories, and we cannot start to match their economies of scale, and with this huge shortcoming, our

products don’t stand any chance if there is no realization of improving quality and providing value for money to customers. On a very serious note, Pakistan is being looked at as a huge window of opportunity by international companies because we offer a very strong low-mid income consumer segment with strong buying power which is even much stronger than India because of fewer mouths to feed. Assuming CHANGE is just round the corner, our industry’s future is nothing short of being scary, it’s not about one person’s change of mindset, but it’s a matter of total conversion of business perception, which is to accept fair competition, stop manipu lating government departments, see customers with respect, give them products comparable with international brands, give them more choice in terms of metallic colors, regular introduction of fresh designs, make safety equipment such as airbags as mandatory rather than reserving it to elite class - and bring back small cars price to realistic levels – it’s no longer possible to get away with never ending customer victimization – apologies for being honest – wishing you all a very happy new year IMRAN SAEED ALLAHWALA DKAKU PVT LTD.

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Exclusive Review by Arshad Gulraiz Butt

Monthly AutoMark International

EXIDE Pakistan Limited (Company Introduction) Exide battery is Pakistan’s first ISO 9001-2008 manufacturer, and in 2009 won the Brand of the Year award sixth time in a row, it is the only company which produces Japanese original F.B and Tokyo brand, and is ultra-low maintenance, Exide have also started producing Hybrid batteries Exide Pakistan Battery is using the technology of UK Chloride which is being used worldwide for the past 150 years, and it is the leading brand since the past 100 years in the subcontinent. Exide started making batteries in Pakistan since 1953. Exide introduced the PP Technology during the 80s and started making “starting batteries” for railway engines nationwide, they also started making Industrial Cells that resulted in great savings of the precious foreign exchange. Keeping in mind the demand of batteries in the country, Exide started making batteries from the range of 12V-24AH to 12V-250AH to be used in cars with an annual demand of 2.5 million and 1.2 million 12V-4AH batteries to be used in motorcycles. For Railway batteries and Industrial Cells 10 to 15 thousand units are produced approximately. The production of battery is a complex process, which requires rigorous Quality checks and Inspection for each part. The core part of the battery that is the negative and positiveplate requires Lead Antimonial Alloywhich requires testing on anAA Spectrometermachine so that the alloy should be pure from any contamination. The grids that are used in the batteries are made from wirtz that are imported from America and later casted on machines imported from ot her countries. Pure lead is imported from Australia and UK which is used to make 60-70 tons daily Lead Oxide powder which is then stored in silos which are protected from moisture, it is then curedto be used in the making of Negative and Positive plates. Before the powder is converted into a paste it is tested thoroughly in the lab to maintain the standards of quality. Imported machines from America are used to create the paste and then apply

the paste on the N&P plates; during the pasting process the moisture levels and other parameters are continuously monitored. After the pasting process the plates are stored in a curing chamber where they are stored for 24 to 30 hours so that the quality is maintained. In the next phase the cured plates are kept in a Formation tank for 20 to 24 hours where they are charged by DC current, and they are not brought into the formation tank unless they have been approved by Quality Control. The positive charged plates are dried inside a normal Tunnel while the negative plates are dried inside an Inner Glass Oven so that the standard of Dry Charge is maintained. The charged plates are then sent for cutting and cleaning process by machines which are imported from USA and then sent to the battery assembly line. To protect the battery from short-circuit the quality of the separator is very important, the separator used in Exide battery is made by paper and glass mat which imported from Japan and tested for quality prior to use, for some special batteries PE Envelope Separator is used. The container of battery, the Lid Cover and V. Plugs are made locally by imported PP Material according to market need and tested its quality prior to use, so that no broken part is not used in the battery making process. Keeping in view the market demand for 30 thousand batteries monthly Exide has

installed a new plant on i nter nati onal standards for charging the batteries, s o t ha t a ci d i s r ep l ac ed i n t he battery and charged Arshad Gulraiz Butt to be supplied to the Director Marketing market. Exide created battery plate separator, container and other parts are introduced on the assembly line where imported COS machines from the UK create elements where each battery is tested by automatic short circuits machines. Broken batteries are automatically removed from the assembly line. Automatic welding machines weld the cells, after that the lid is added and terminals are made, vent plugs are added after cleaning, leaky batteries are also tested by automated machines. Passed batteries are packed in boxes with warranty cards and sent to battery stores where they processed further by trucks. The whole process from grid casting to battery making is tested by qualified by professional engineers at each process; all raw materials are tested for their quality. The batteries that are created under the supervision of engineers are used in the common market as well as government and military institutions and OEM manufacturers are also provided batteries as needed, Exide battery is Pakistan’s first ISO 9001-2008 manufacturer, and in 2009 won the Brand of the Year award sixth time in a row, it is the only company which produces Japanese original F.B and Tokyo brand, and is ultra- low maintenance, Exide have also started producing Hybrid batteries. by Arshad Gulraiz Butt Director Marketing

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Automotive News - Update

Monthly AutoMark International

Ghandhara Nissan Riggings Up For Comeback Ghandhara Nissan, which used to collect Nissan Sunny in Pakistan, is forcefully pushing ahead to enter the business sector with a games utility vehicle (SUV) allegedly in the 1,600cc motor classification. Despite the fact that organization authorities recognize they are taking a shot at a re-dispatch, they were not exactly anticipated with points of interest over the model under thought. They included that the get together will start in late 2016 after the system of parts’ suppliers and dealerships has been set up. The earnestness does not, be that as it may, originate from a need to tap the business sector commanded by three players and a surge of imports. Ghandhara Nissan Limited (GHNL) is particularly rushed into using the current auto mechanical production system at its Port Qasim processing plant after its agreement to make Land Rover’s Defender closures in around a month. Ghandhara, controlled by the Kuli Khan Khattak family that likewise possesses General Tires, created 2,573 Nissan Sunny autos somewhere around 1996 and 2004. Then again, overall, it remained a minor player regardless of beginning swells its entrance made in the business sector. It soon kept running into money related inconveniences on account of its high presentation to renting organizations, which were exorbitant moneylenders contrasted with business banks and requested rentals on a month to month premise.’ GHNL’s ride consequently stayed rough and the organization kept on booking misfortunes for quite a long time. “We are in converses with Nissan and taking a gander at different open doors,” said Saleem Baig, the organization’s CFO. “In any case, let me stress here that nothing has been solidified so far.” He said the arrangement to begin amassing would take no less than a year to appear. Be that as it may, its offer cost has rushed to bounce. From opening at Rs52.46 on January 1, 2015, the offer shut at

Rs190.23 on November 26, an increment of 263% in under a year. The comparing increment in the benchmark100 record has added up to only 2.95%. CEO Ahmad Kuli Khan, alongside other senior administration, has been occupied in meeting Nissan and Renault officials as of late. French organization Renault and Japanese Nissan have been worldwide accomplices since 1999, frequently entering new markets together. Industry authorities who identifies with The Express Tribune say Ghandhara may likewise consider turning out with Datsun Go, which has been presented in India. Dewan Farooque Motors Limited (DFML), a grieved auto constructing agent, which used to make Hyundai and KIA autos in Pakistan, has likewise been in chats with Renault for over a year, industry individuals say. “Ghandhara is really attempting to exceed Dewan, which was in really propel phases of arrangements with Renault,” said an authority. “Be that as it may, Dewan has been hindered by its obligation issues and uncooperative conduct of investors.” Numbers diversion Ghandara’s gathering has ability to create 6,000 vehicles yet since stopping the get together of Nissan Sunny, it has depended on different variations to meet the altered expense. The mechanical production system had

been contracted out to Sigma Motors, an endeavor of Hascol Petroleum Chairman Mumtaz Hasan Khan. Sigma Motors was utilizing it to collect Land Rover’s Defender. “Our agreement has finished,” said Khan. “We were making Defenders for the Pakistan Army and a couple of vehicles for different clients. Presently the last clump is falling off the line in around a month’s chance.” He didn’t share numerous explanations behind closure the nearby get together of Defender, yet lauded Ghandhara’s administration. “They are extremely decent individuals to work with.” Lately, Ghandhara has generally depended on a backup, which makes Dongfeng trucks, to shore up its incomes. While conclusions vary on the purposes behind Nissan’s inability to infiltrate the Pakistani market, numerous individuals point at Ghandhara’s dreary way to deal with making an appropriate dealership. “No carmaker is going to make due without a dealership that doesn’t offer legitimate after deals administration. Nissan won’t do well if clients don’t discover its parts,” said an authority of Pakwheels.com. Requested that remark on Ghandhara’s clear disappointment on dealership front, its CFO Baig said: “No reason for talking about the past. What is done will be finished. We will accompany complete arranging.”

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Choho - Company Products Introduction

CHOHO Fine blanking sprockets new program in 2016 I

n recent years, more and more motorcycle manufacturers are installing fine blanking sprockets. Comparing with hobbing sprockets, the fine blanking sprocketshave the following main advantages:

Choho Machinery Display

1) All th e sets keep high consistency without unevenness. 2) With high accuracy, the tolerance of finished products c an be c o nt ro l l ed wit h in 0.05mm. 3) The teeth can work with ch ainâ&#x20AC;&#x2122;s ro ll er t ight ly and completely without noise and chain-jumping. So the life of kits will become longer.

Since 2014, CHOHO has invested 5 million US dollars in the facility of fine blanking sprockets. All necessary modern equipment and machines from Korea, Taiwan, etc. have already been installed and run into production now.

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Monthly AutoMark International

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Automotive News - Update

Monthly AutoMark International

EDB prepares auto draft policy 2015-20 The Engineering Department Board (EDB) has finalised the draft for new automotive development policy for the next five years, 2015–2020, in which it proposed to the government to restrain car manufacturers and assemblers from getting 100 per cent amount in advance at the time of booking and in case of failure to deliver car in two months’ period, customers be given discount. In the draft for automotive policy, the EDB said, “Amount of advance payment shall be limited up to 50 per cent of the total price, while the price and delivery schedule, not exceeding two months, shall be firmed at the time of booking. Any delay over two months shall result in discount at KIBOR+2 per cent, prevailing on the date of final delivery/settlement from the final payment. This will help shorten delivery lead time.” The draft made recommendations for the development of introducing brand, development a market niche and share, for creation of distribution and aftersales service networks and development parts manufacturer base. It proposed that all incentives, facilities and tax exemptions available under the special economic zone act shall be available to all category-A investors, including 100 per cent exemption from custom duties and taxes on the import of plant, machinery, equipment and tooling such as dies, moulds, while investors shall be entitled to import of non-localised parts at 10 per cent rate of customs duty and localised parts at 25 per cent duty for a period of four years in respect of passenger cars and LCVs from 800 cc and above. For the motorcycle industry, the EDB said, existing policy as approved by the ECC and notified by the FBR vide SRO 939(I)/2013 and SRO 940(I)/2013 shall continue. However it proposed that a new investor shall be required to submit a detailed business plan and relevant documents for manufacturing of vehicles to the EDB for assessment. The EDB shall then determine eligibility of the

applicant under the defined criteria to be declared as an investor in any of the three categories. The Ministry of Industries and Production on the recommendation of the EDB would approve the investor under the relevant category. The AIDC and EDB would review results of the investment policy once every two years and shall recommend modification(s). Proposed Tariff Roadmap for Auto Sector: “CKD rate of duty of both localised and non-localised shall be unified into a single rate of duty after five years of policy period and kept as prevailing rate of duty of localised CKD at that time. However, present duty structure shall continue for seven years for new investor and five years for existing players who opt t o come under category-A investment”. The proposed tariff

structure for five years policy period is as: The CBU duty rates have been retained on all categories of passenger cars to provide a level-playing field to indigenous industry vis-à-vis regional countries. This will also encourage new investors making decision to invest in a country where their vehicles are adequately protected against imports. The import duty rates on localised and non-localised parts have been lowered to improve indigenous competitiveness. A uniform rate of 20 per cent on CBU of prime movers of all categories ie, up to 280 HP and above has been fixed to rationalise the tariff structure and avoid ambiguities and mis-declaration. On the same analogy, a uniform import duty of 5 per cent on components for assembly of prime movers has been fixed so as to facilitate low-cost assembly of

vehicles. A CBU rate of 20 per cent has been maintained on regular buses to provide manufacturers of these vehicles adequate protection against imports. The CNG category of buses has been supplemented with LPG/LNG/HEVs to promote such vehicles because of en v i r o nm en t a l co n si d er at i o n s. A uniform CBU rate of 50 per cent has been fixed for the two and three-wheel automotive segments to rationalise the tariff structure. The import duty rate on localised parts is gradually being lowered so as to provide the industry a predictable roadmap for upgrading technologies and at tain ing compet it iven ess. Import policy for used vehicles: The draft policy said, “Pakistan’s Import Policy Order, 2012-15, does not allow import of used cars into the country by individuals or businesses.” It does, however, allow expatriate Pakistanis to bring cars up to three years old to Pakistan on reduced duty under the following schemes, which are meant for individual benefit rather than a commercial activity. The used-car can be imported under personal baggage once in two years per family on transfer of residence from another country, or as a gift to a family member residing in Pakistan once in two years. These schemes are meant to facilitate overseas returning Pakistanis who are entitled to avail the benefit of reduced duty on import of cars which have remained under their personal use. These schemes, however, have been misused by unscrupulous elements that transformed them into a commercial activity. According to the draft policy, import of all types of vehicles shall be regulated through the used vehicles import policy (2015-20) under which the used vehicles shall only be imported into Pakistan through the personal baggage scheme, transfer of residence scheme, gift Scheme.

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United Auto Industries - Review

Monthly AutoMark International

United Motorcycle – Becomes a Strong competitor for Karachi market Pakistan’s 2nd Largest Selling Brand United Auto Industry is the 2nd largest brand in the market, are becoming a strong competitor for Karachi market. In presence of already established brands in local market United has launched its special modified model of 70cc which is getting popular in dealer and buyers. With an increase in local production and subsequent drop in prices, two-wheelers are becoming a preferred mode of transportation for people who have suffered the most amid the fast deteriorating public transport system. What’s special attached to the Karachi buyers is that the company gives a one year warranty on every motorcycle

regardless of the mileage of the bike. United Auto Industry had already started to win this page, dealers and customers have shown very high interest in the bike and offers. In a very short span of time, since launching of the bike last month in Karachi, they have sold a very good number of motorcycles with customer’s confidence. Company has already established 30 service centers to facilitate and provide u t mo s t c us t o me r s er v i c e an d satisfaction. United Auto Industry understands the needs of the market and they work accordingly. Keeping prices lower along with making parts available everywhere will make them

win the market. Not to forget the quality should not be compromised as scrap material is not preferred by anyone. United Auto Industry currently has production capacity of 360,000 units per annum and is planning to increase its production too. With a deep range of product offering the company has seen good response. Currently the company has an offering of in total 8 products which include 150cc auto cargo loader, US 125cc, united US 100cc, united US 70cc, 70cc motorcycle for disable person, 100cc motorcycle loader, 200cc auto rickshaw and last but not the least 100cc motorcycle rickshaw.

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Automotive News - Update

Monthly AutoMark International

Auto industry expects up to $5 billion investment Pakistan can attract investments of $45 billion over the next three to four years in the automobile industry, says Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam). “Economic indicators suggest that the automobile industry is about to take off. Local and foreign investors are ready to inject billions but they are waiting for announcement of the new auto policy,” former Paapam chairman Aamir Allawala said while speaking to reporters on last month. When asked about his optimism, he said

automobile demand in the country had reached 2006-07 levels when it crossed 254,000 vehicles for the first time. The auto industry, after a gap of seven years, is all set to grow significantly like that in Indonesia, Thailand and other countries. Allawala was of the view that the ChinaPakistan Economic Corridor (CPEC) was going to boost automobile demand, including heavy vehicles. That was also a reason why a lot of new players, carmakers and makers of heavy vehicles were ready to enter the Pakistan market, he said.

Tractor industry stops production temporarily The tractor industry has announced to stop its productions temporarily mainly due to steep decline in sales. Pakistan Association of Automobile Parts & Accessories Manufacturers (PAAPAM) chairman Mumshad Ali said that Millat Tractor had already announced the closure of their plant from December 12th, while other key manufacturer Al-Ghazi has also shut down the plant this week. He said that the future of the industry with huge employment base is in danger, adding that farmers’ community will be affected while farm mechanisation will come to a stand still. “The situation for the tractor industry has not been positive this year so far as the provincial governments did not initiate their tractor schemes and then imposed new taxes,” he said. He added that this affected the industry badly and the manufacturers faced steep decline in their sales in the first four months of the current financial year. Now the situation has brought the industry to the edge of closure and perhaps layoffs as well, he added. “On the face of it, manufacturers are saying that this step is being taken to go for annual maintenance and stocktaking, the fact remains that we cannot afford to pile up further inventory of CBU’s entailing huge cost of inventory,’ said an official of PAMA. While industry was in turmoil the govt

of Sindh is mulling to enforce another tax of 10% on dealers of the tractors which will further burden the consumers as well as the manufacturers. Similarly, he added, Punjab government is demanding details on transportation as t he y w i sh t o i mp o se t ax o n transportation of tractors. Meanwhile, PAAPAM delegation lead by its chairman Mumshad Ali met with minister Industries Ghulam Murtaza Khan Jataoi and upraised him of the crises the tractor sector is facing due to the financial constraints. Chairman informed the minister that the tractor sales have collapsed resulting in the closure of Millat Tractors, AGTL and 300+ vending industry located in the Lahore and Karachi vicinity and associated with this industry. Currently 10% GST is levied on tractors which amounts to Rs 60,000 – Rs 160,000 and is collected by the government by the farmer on the sale of each tractor. This highly localized industry is the back bone of the Pakistani auto engineering base and contributes towards creating employments ( 300,000) and contributing Rs7 - 8 billion in taxes per annum. Tractor volumes have almost halved compared to last year due to the erosion of the buying power of the farmer because of the decline of the commodity prices. No money has been allocated for tractors in the Rs300 billion farmers package.

“The government is desperately looking for foreign direct investment (FDI), revenue generation and creation of new jobs. The auto industry has the potential to meet all these requirements.” Replying to a question, he said the government supported the auto part manufacturers but they could not grow unless more cars were produced in the country. “We believe the government is ready to announce the new auto policy, but the Federal Board of Revenue (FBR) has some reservations. We would request the FBR to move forward and help the auto part makers.” He expressed the hope that when the local automakers started investing in Pakistan, it would give a strong signal to the companies that were ready to enter and invest in the country. “Foreign companies that want to enter Pakistan can go to those countries that have strong potential in the auto sector,” he said. “This is why we want the government to announce the new policy so that they come to Pakistan instead of going to markets of Eastern Europe or Africa.” The first auto policy ended in June 2012 and the industry had been waiting for over three years for the new policy prior to pushing ahead with its investment p lans, Paap am Vi ce Chai rman Meh moo d Al am Sh er ani sai d . “The government should announce the auto policy without further delay as it will give a clear signal to the original equipment manufacturers (OEMs) and vendors who are ready to make longterm investments,” he said. This is an opportune moment for the government to encourage existing auto assemblers as well as 1,600 auto part manufacturing companies to make fresh investments and set up new plants to create additional capacity and meet the rising demand. Former Paapam chairman Munir K Bana believes the new policy will trigger growth in the auto sector and help address key challenges such as stimulating foreign and domestic investment, increasing tax revenues through higher production of cars and employment generation through localisation of 50% of vehicle parts.

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Exclusive Event Coverage

Innovation in Luxury Hinopak celebrates the booking of first 100 KAZAY Buses

he largest manufacturer and assembler of buses in Pakistan, Hinopak has a product range which offers comfort and safety. The automaker has gained 50% of the market share in Pakistan which has been proved by the figure of on road vehicles they have which accounts for 60,000. Hinopak celebrated the booking of their first 100 KAZAY on Friday, December 4th 2015 at Royal Palm Silver bells Marquee, Lahore. The event was followed by the press conference. The celebration showed great signs of growth for Pakistani transport system and

Hinopak itself. The idea behind building KAZAY was to provide comfort to the passengers, cost less for the driver in terms of economy and also provide safety to both the operator and passengers. KAZAY is a 21st century bus which has every possible feature for the passengers. The bus has been designed to give maximum leg space to passengers and at the same time not suffocating the passengers around. KAZAY has luxurious and comfortable reclining passenger seats which is a great feature to provide. The bus has proper and educated curves which gives it a good shape overall. KAZAY has its engine at the back which

is again a benefit as the growling of the engine is not heard by the passengers. Also the J08C series engine is designed to provide more power and less damage to the environment and therefore the Euro-2 technology has been used along with turbocharged and intercooler. It is also noted that the bus costs less on fuel compared to other local busses being run on same routes. The suspension system of the bus is such that the vehicle can face any challenging road conditions whereas the passengers still have a smooth sit. This is proved by the double action shock absorbers and stabilizers. Hinopak takes every point and situation

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Monthly AutoMark International

into account, the usual hot and humid weather of Pakistan turns out to be irritating sometimes and therefore roof mounted direct drive air conditioning system is installed which is also present in Hino Starliner. It is because of such reasons why the company has been able to hold the crown of best manufacturer since years. During the celebration ceremony speeches held by the speakers of Hino Japan were made in Japanese but translators were present which again shows how important audience is

for them and how important it is to deliver the message accurately to the customers. Mr.Naoki Takeuchi. Takeuchi, Executive Officer had his third visit to Pakistan but this one was special to him as he witnessed great response from the market. Mr. Takeuchi also talked that there is great demand of their product in the Pakistani market and people need comfortable journeys. Local transporters such as Niazi 99, Shahid Coach Service, Abdullah

Travels,Minhas Coach Chakwal,Rajput Travels and others have purchased their product KAZAY. The company has raised its performance by earning highest profit after tax of Rs 1073 million breaking the records and also revealed its healthy EPS of Rs 86.54 against 50.31 in last year. Mr. Shimo has stated Pakistani market as very important and the recent positive response has further diverted his attention towards the market...

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Monthly AutoMark International

Automotive News - Update

‘Tool’ of indirect taxes reused for additional revenue: PAMA The dilemma is that this levy is imposed on local assemblers of agricultural tractors, which has never been the case in the history. The tractor industry which is already passing through challenging times, because of inconsistent and unclear government policies, will be further burdened heavily. Auto makers’ sources believe that a governmen t claim that it will never allow the common man to suffer has been grossly challenged by the recent minibudget which could certainly have ramifications on farmers. In their in-depth critical analysis, the sources at the Pakistan Automotive Manufacturers Association claim, “The government has reused the tool of indirect taxes for additional revenue generation. Through introduction of SRO-1178(I) 2015 dated November 30, 2015, the government has revamped the custom duties structure resulting in imposing the customs duty at 1 percent on raw materials imported.” They add, “The dilemma is that this levy is imposed on local assemblers of agricultural tractors, which has never been the case in the history. The tractor industry which is already passing through challenging times, because of inconsistent and unclear government policies, will be further burdened heavily. “The farming community which is already depressed following the existing slump in the prices of farm commodities will ultimately get the additional hit. The government should immediately exempt the agricultural industry from the implications of aforesaid SRO in the interests of rundown farmers otherwise the tractor prices may increase by Rs. 5,000 to Rs. 10,000 which will hurt both the farmers and the industry.” Khalid Khokhar of the Kisan Ittehad, who too is critical of the mini-budget, believes the government’s

9,363 units during the same period last year.

Association Director General Abdul Waheed Khan has voiced his concerns over the negative impact of the government policies on the tractor industry, which in turn is affecting the wellbeing of the farmers’ community.

announcement of a subsidy of Rs. 500 on a DiAmmonium Phosphate bag but increased Rs. 200 on each of urea. This nullified the subsidy since four urea bags are consumed with any one of diammonium phosphate. “This means the government gave the subsidy of Rs. 500 on diammonium phosphate and earned Rs. 800 on urea bags, with a net profit of Rs. 300 on the consumption of one set of diammonium phosphate and urea bags. In case of tractors, the authorities have taken a decision without even considering repercussions on farm products and farmers. Let alone the promises of benefiting farmers, the government is not providing basic relief to the farmer. The government has never kept its promises to the farmers’ community.” Despite the anti-mini-budget qualms, it is understood that the sales of tractors have declined exponentially yearly, which clearly shows that the tractor industry has succumbed to the wrong policies of the government. For instance, the total tractor sales in the first quarter of the financial year 2015-16 stood at 6,745 units, down by 28 percent from

“The negative growth is not a good omen for the tractor industry that just came out of the General Sales Tax fiasco. This means it has to go through another crisis just because the policies of the government are not supportive to this industry,” he said. An official of a tractor manufacturer sounds grimmer. He says, “The main reason for the current sharp decline in the tractor sales is that the provincial governments of Sindh and the Punjab never initiated their tractor schemes they announced in July. This shows their lack of interest towards the wellbeing of both the farmer and the local tractor industry. “There are more than six assemblers in the industry including two major players, who are producing standard tractors with cheapest prices in the world, and no regional country including China and India can compete with them. First, the government imposed a heavy General Sales Tax which knocked down this industry, then they announced a scheme which was never to be launched and held back farmers from purchasing tractors, and now they launched the mini budget without realising that this strategic industry in our agricultural country cannot survive this kind of adventures.”

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Monthly AutoMark International

Press Briefing

Innovation in Luxury Hinopak celebrates the booking of first 100 KAZAY Buses

Hinopak Motors Limited assembles and manufactures worlds’ renowned Hino diesel trucks and buses in Pakistan. Having held top position for 17 consecutive years in the domestic market for medium and heavy duty vehicles, the crown surely indicates hard work and technological advancement with time. Pakistan’s no.1 commercial automobile company called up for a press conference of their product KAZAY on Friday, December 4th 2015 at Royal Palm, Summit hall Lahore. The press conference ended swiftly with great information shared with the audience. A major spokesperson of the conference was Mr. Yoshio Shimo, senior manager at Hino Motors Japan who specially paid a visit to Pakistan to attend the dedicated press conference. The media was briefed

about the functionality and technology of their new product. Mr. Shimo also shed some light on the need of such commercial vehicles for the roads of Pakistan. The newly introduced bus KAZAY is almost a complete package for a traveler, with proper entrance space along with comfortable reclining seats; the bus surely wins the heart of many. Towards the technical side, the double acting shock absorbers and stabilizers gives a smooth and bump free ride to the p assengers. A lso K AZAY takes responsibility for the environment to be healthy and therefore Euro-2 diesel, turbocharged and intercooled engine has been installed which gives more power and at the same time less carbon emissions.

Mr. Shimo while addressing the media placed great emphasis for customer care, as better customer service is directly proportional to sales of your product. Mr. Shimo stated KAZAY as a bus for Pakistani passengers and operators. “It is designed to carter the growing demand for luxurious and comfortable travel in Pakist an, ” he ad ded. He said, Hino place great emphasis on Total Support, this means ‘Caring for our Customers’ business, by aiming to contribute to business requirements and success throughout the lifetime of our products. Mr. N. Takeuchi, Executive Officer, Mr. K. Utsumi, Managing Director and Mr. Y. Kondo, Deputy Managing Director Hinopak, were also present in the conference and spoke out their experience. The press conference also leaned towards the current situation of Pakistan’s transport system where comfort is all you can dream of and safety is all what you can think of, KAZAY steps in here and provides both the features, in fact ads one more to the list, economy. The press conference in the end also informed about the sales trend of KAZAY which was 100 units in the first six months showing that the demand was already there and KAZAY has fulfilled the supply.

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Monthly AutoMark International

Automotive News - Update

Used cars’ import New taxation measures put auto industry in jeopardy The government has kept the import of up to 1000cc used cars away from new taxation measures, leaving local auto industry in an uncertain business environment; market sources said. According to market sources, the government had given immunity to the importers of used cars up to 1000cc in its recent taxation measures while the prices of locally manufactured lower segment cars would be escalated. They said that local car makers seemed to be in double jeopardy as if they passed on the impact of the increase in CKD duty to consumers, they would be blamed by the importer mafia and the government itself for increasing the prices, while the import of smaller segment cars would see increase due to exemption from recent duty increase. Meanwhile, an official from one of the car manufacturing companies, on condition of anonymity, said the government on one hand considered small segment car important for consumers and exempted it from duty increase while on the other it penalized local car manufacturers by imposing 1 per cent duty on CKD and parts of small segment cars produced locally. He further said that global emerging economies promote local production

whereas Pakistani government has strange logic of inviting investors from around the world and penalize those who have already invested billions in the country. As exemptions stated for 1 per cent custom duty does not cover SRO 655 or SRO 656, therefore, additional duty at 1 per cent will be applied on imported CKD value and IOR Value, raw materials, Tyres, Steel Sheets, etc, while no change in the Amax rate under SRO-693, as being exempted, he maintained. The new rates for CKD duty would be 33.5 per cent; Sub-component 11 per cent; IOR-components and other consumables 21 per cent. Also 1 per cent duty on raw materials-consumables was imposed, which was earlier 0 per cent 1 per cent increase in duty will also apply on all categories of new imported vehicles (CBU) and locally produced parts as well. The exemptions from this duty include: imports under SRO-693-(2006); import of goods under RD under SRO-568 (i.e. steel sheets and related products, packed food items); IORs under SRO-565(2006) available to local manufacturers of 25 sectors; agriculture machinery; r a w m a t e r i a l o f a g r i c ul t ur e , pharmaceuticals, textile, etc.; fertilizer,

seeds and spores for sowing; plant and machinery for manufacturing of goods falling under 5th Schedule; and telecom sector imports. The industry is already under pressure due to USD value against PKR which is already over 107 and set to reach 108 mark while this additional tax would increase issues for the industry, he added. Moreover, he said that the prices of metals used in manufacturing vehicles witnessed much increase in past many years. ‘The price of Aluminium was $1420/ton in April 2009 and now in it is close to $2000/ton. Similarly, the price of Copper was $4405/ton in April 2009 and it is now close to $7000/ton,’ he added. Similarly, the prices of Lead and Nickel escalated much. ‘The industry is already facing issues with increase in the input cost and this additional duty is adding to their woes. The environment for doing business is become unviable due to such measures of the government,’ he said. Regional comparison shows Pakistan still has lowest prices, and the prices of cars are even lower than India and as far as the quality is concerned, one of OEMs from Pakistan has won best quality award from the parent company.

Used cars import doubled in first four months

Imports of used cars have doubled in the first four months of the current financial year as compared to the same period last year, eating up hundreds of vending jobs, an official of PAMA said. The imports in the first fourth months of 2015/16 have jumped to 14,106 units, with 4,041 imported in the month of October. The imports were just 7,982 units with 1,886 in October in the first four months of 2014/15. The share of hybrid vehicles has also increased with the import of 3,200 units in the four months of the current

financial year, making it 23 percent of the total imports. In October, 850 hybrid units were imported. The import of hybrid cars was 1,347 units with 350 in October and 17 percent in the four initial months of 2014/15. Likewise, the import of up to 800cc segment stands at 2,302 units with 714 units imported in October, while above 800cc to 1290cc segment witnessed the import of 3,968 units with 1,027 imported in October. The import of 1300cc to 1800cc segment stood at 1,714 units with 519 in October, while in the van, pickup, minivan

segments (up to 800cc) the imports were 3,310 units with 984 only in October. The import of SUV segment was 2,342 units with 625 units in October. Similarly, the luxury segment (above 1800cc) imports were 144 units with 39 in October, while the import of buses and trucks segment stood at 326 units with 133 in October. "Though the import of used cars was allowed by the policymakers to facilitate consumers in buying cheaper cars, this purpose has been defeated, as all the used cars being imported in the country are retailed at much higher price than their equivalent local variant," he said.

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Monthly AutoMark International

Automotive News - Update

Additional customs duty imposed on auto industry; FBR issues SRO1189 The Federal Board of Revenue (FBR) has notified SRO 1189(I)/2015 to impose additional customs duty on auto industry specially for import of motorcycles parts the additional customs duty increased to 33.5 percent from 28.75 percent. For the purpose of this levy SRO 693(I)/2006 has been amended and customs duty of 15 percent is replaced with 16 percent. Section 18 of Customs Act, 1969 defines that customs duties shall be levied at such rates on goods imported into Pakistan or goods brought from any

foreign country to any customs stations, and without payment of duty there, transshipped for, or thence carried to, and imported at any other customs stations; and goods brought in bond from one customs station to another. The customs duty on tractors other agriculture has been increased to 26 percent from 25 percent. The rate of customs duty has been increased to 31 percent ad valorem on import of nonCNG buses, earlier it was 30 percent. The customs duty on import of autorickshaw – excluding four stroke – has been increased to 18.5 percent from 17.5

percent. However, the duty for fourstroke rickshaw has been increased to 31 percent from 30 percent. The duty at 26 percent from 25 percent has been imposed on import of vehicles exceeding gross weight 5 tons. On import of vehicles less than 5 tons of gross weight the duty rate has been increased to 31 percent from 30 percent. For import of motorcycles and parts, the duty rate has been increased to 33.5 percent from earlier 32.5 percent. The government had withdrawn the facility of 28.75 percent for motorcycles which was allowed for one year..

CHINESE DELEGATION VISIT PAAPAM SOUTH Another Chinese company is planning to make Automobile Sector Sales a huge investment in commercial vehicle sector Grows On Cumulative Basis

A two member chinese delegation lead by Mr.Zhang Hongwei from China North Industries Corporation (Norinco) visited PAAPAM South office, here they gave a detailed presentation about their intention of starting a commercial truck assembly plant with the collaboration of NLC. According to them they also want the auto parts that are required for the vehicles produced in their plant to be supplied by local vendors of Pakistan, and asked PAAPAM to help in finding and dealing with local vendors. PAAPAM ensure to facilitie them the maker of the highest quality parts with reasonable rates. After the presentation they had discussions with PAAPAM members

present on the occasion, the topic of the discussions were of mu tual understanding and future planning. During the briefing, the Chinese delegation informs that they already supply military vehicles and equipment to the Pakistan Army, they also supply similar products and commercial vehicles to many African countries. There are many Chinese vehicles manufactures had been invested in Pakistan with local joint ventures; this is yet another Chinese company that is planning to make a huge investment. This is a big opportunity for local auto parts industry to benefit from this upcoming investment.

According to the sales volume figures released by the Pakistan Automotive Manufacturers Association (PAMA) auto sales (excluding motorbikes) during 5MFY16 showed growth of 41% to 106k units compared to 76k units during the corresponding period last year. However the same experienced decline on monthly basis owing to year end effect. 5MFY16: Auto sales ascends by 41%YoY During 5MFY16 auto sales numbers barring motorbikes jumped to 106k units as against 76k during SPLY revealing growth of 41%YoY owing to surge in disposable individual income amid low inflation and improvement in economic indicators. Cars, Trucks, Buses and LCVs volumes soared by 54%YoY, 32%YoY, 78%YoY and 149%YoY respectively due to following factors i) Punjab Government taxi scheme order of Bolan and Mehran which is expected to complete by Feb’16, ii) Record low interest rates which is boosting car fi nancin g and ii i) Increase in government infrastructure projects that also requires trucks and LCVs. Depressed farmer economics eroded tractors sales however going forward tractors export sales are expected to surge amid recent MTL contract with AGCO which will explore AGCO global sales network.

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Car / Light Vehicle Price List

SUZUKI Model Model WAGON-R VX 1000cc Euro II WAGON-R VXR 1000cc Euro II WAGON-R VXL 1000cc Euro II MEHRAN VX 800cc Euro II MEHRAN VX 800cc CNG MEHRAN VXR 800cc CNG SUZUKI SWIFT 1.3L DX SUZUKI SWIFT 1.3L DLX SUZUKI SWIFT 1.3L Automatic CULTUS EFI VXR Euro II CULTUS EFI VXR CNG LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) BOLAN VAN VX 800cc E2 BOLAN VAN VX 800ccm (M)E2 SUZUKI VAN CARGO Euro II RAVI PICK-UP STD 800cc E2 RAVI PICK-UP STD 800cc (M) E2

APV 1.5L GLX MT (Petrol)

Price Price Rs. 919,000 Rs. 1074,000 Rs. 1114,000 Rs. 635,000 Rs. 700,000 Rs. 758,000 Rs. 1,321,000 Rs. 1,382,000 Rs. 1,518,000 Rs. 1,059,000 Rs. 1,134,000 Rs. 1,465,000 Rs. 1,544,000 Rs. 695,000 Rs. 700,000 Rs. 666,000 Rs. 637,000 Rs. 642,000 Rs. 2,418,000

TOYOTA COROLLA Model XLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 A/T 1299cc Petrol GLI VVT-i 1299cc LE ALTIS 1.6L Dual VVT-i M/T ALTIS 1.8L Dual VVT-i MT GRANDE 1.8L S.R. M/T GRANDE 1.8L S.R. A/T CVT-i FORTUNER 2.7L A/T Petrol

HONDA Model Honda Aspire Manual 1.3L Honda Aspire Prosmatec 1.3L Honda City Manual 1300cc Honda City Prosmatec 1300cc HYUNDAI Honda Civic VTI Manual 1800cc Honda Civic VTI Manual SR (Oriel) Honda Civic VTI Prosmatec 1800cc Honda Civic VTI Prosmatec SR (Oriel)

Price Rs. 1,687,000 Rs. 1,809,000 Rs. 1,537,000 Rs. 1,678,000 Rs. 2,053,000 Rs. 2,285,000 Rs. 2,174,000 Rs. 2,406,000

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

Price 1,627,500 1,752,500 1,827,500 1,712,500 1,952,500 2,027,500 2,152,500 2,302,500 5,748,500

Hilux Pickup 4x2 sc Model

Price

Brand New Toyota Hilux Pickup, 4x2, 2500cc Single Cabin, White only, Hilux STD

Rs. 1,859,000

Hilux Pickup 4x4 E Model

Price

Toyota HILUX 2494cc, Diesel Turbo Charger Common Rail Engine, 4x4 Double Cabin - Standard Model

TOYOTA VIGO DAIHATSU Model Model

Price Price

Rs. 3,129,500

AL-HAJ FAW MOTORS Price

Model

Vigo Champ-V MT Rs. 3,453,500 FAW Carrier 1000cc (WHITE ,BLACK,STRONG BLUE & SILVER) FAW X-PV 1000cc Std FAW X-PV 1000cc A/c Vigo Champ-G AT Rs. 3,653,500 Sirius S80 1300cc (WHITE ,BLACK,STRONG BLUE & SILVER) Sirius Grand 1500cc

Monthly AutoMark Magazine - International

Rs. Rs. Rs. Rs. Rs.

724,000 824,000 875,000 1705,000 1885,000

Price updated Jan- 2016

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International Automotive Industry - Update

India likely to be production hub for European brand Husqvarna Motorcycles in partnership with Bajaj Auto Husqvarna Motorcycles, the European brand known for its dirt-bikes, will likely use India as a production hub for onroad motorcycles. Its parent, Austrian KTM-Sportmotorcycle, is working on plans to develop such bikes for the global markets with partner Bajaj Auto at Chakan near Pune. KTM plans to initially source engines and components from India and assemble bikes at its facility in Austria for sale in Europe and the US starting 2017. Products would then be rolled out in emerging markets, including India. Production too could subsequently happen in India. "The focus was previously on offroaders. Now we are developing on-road models which are partly based on the engine platforms we are doing together with Bajaj," KTM chief executive Stefan Pierer told ET in an interview.

Yamaha Motor India announces voluntary recall of YZF-R1, YZF-R1M The campaign is following a global recall of the superbikes , manufactured in 2015, by the Japanese company over deformation of transmission gears and breakage. Two wheeler manufacturer Yamaha Motor India has announced a voluntary recall campaign of its motorcycles, YZFR1 and YZF-R1M. The company informed in a press statement that a total of 9 units, which include 7 units of YZF-R1 and 2 units of YZF-R1M, will be recalled. The campaign is following a global recall of the superbikes , manufactured in 2015, by the Japanese company over deformation of transmission gears and breakage. The company plans to begin the voluntary recall exercise through a factory modification campaign which will be run through the company's authorized superbike dealership network across the country.

Toyota to Display New Map Generation System at CES 2016 The map will use data from on-board cameras and GPS devices installed in production vehicles. It will gather road i mages an d v ehi cle p osi t io nal information. Japanese auto giant Toyota Motors said that it is developing a high-precision map generation system which it will showcase at Consumer Electronics Show 2016 in Las Vegas, which will be held between January 6 to 9. The map will use data from on-board cameras and GPS devices installed in production vehicles. It will gather road i mages an d v ehi cle p osi t io nal information. This information is sent to data centers, where it is automatically pieced together, corrected and updated to generate high precision road maps that cover a wide area. Toyota's newly developed system uses au to mat ed cloud -b ased spat ial information generation technology (developed by Toyota Central R&D Labs) to generate high precision road image data from the databanks and GPS devices of designated user vehicles. Although Toyota did admit that a system relying on cameras and GPS in this manner has a higher probability of error than a system using three-dimensional laser scanners., This restricts the system's margin error to a maximum of 5 cm on straight roads.

Monthly AutoMark

Tata Motors to hike prices by up to Rs 20,000 from January 2016 Tata Motors today said it will hike price of its entire passenger vehicle model range by up to Rs 20,000 from January. "Due to the impact of various macroeconomic factors, Tata Motors has decided to increase the prices of its passenger vehicles, with the maximum increase being upto Rs 20,000 on some models," Tata Motors said in a statement. The company sells various models from entry level Nano GenX to multi purpose vehicle Aria, priced between Rs 1.99 lakh and Rs 15.51 lakh (all ex-showroom Delhi). Already various car makers including Maruti Suzuki India, Hyundai Motor India, Toyota, General Motors India and German luxury car makers Mercedes Benz and BMW have announced a hike in prices of their vehicles across models from January to offset rising input costs. Experts say carmakers usually come up with such year-end announcements which help them clear inventories left after the heavy festival discounts on vehicles.

Made-in-India Maruti Baleno to be exported to Japan This is the first time that any of the Maruti Suzuki made cars will be exported to Japan. The first vehicle is the Maruti Baleno. The Baleno is manufactured in Maruti Suzukiâ&#x20AC;&#x2122;s Manesar plant and India is the first market where it got launched. The new Maruti Baleno is a premium hatchback that comes with a 1.2-litre petrol engine (K-Series) and a 1.3-litre diesel engine. These engines are available with a fivespeed manual transmission. The Baleno is the first Maruti that is offering dual airbags and ABS as a standard feature on all the variants. The Baleno will even be exported to European market and other markets from the Indian plant itself. Suzuki is

working on another new plant in Gujarat, which will be majorly utilised for exports. Maruti Suzuki will be adding more products to its list that will even be exported to Japan as well. Maruti Baleno is the first one and other new-generation platform vehicles will also be exported to Japan. Maruti has plans to introduce more new UVs in India, which are likely to be exported to Japan as well. There has been a hike in the labour pricing in Japan and Suzuki is making India its primary hub for exports to the world. As Maruti Suzuki has a strong hold on the Indian car market, they will want to take complete advantage of this.

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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.

Product & Model Name Crown CR-70 Hero RF-70 Model 2015 Hero Plus 90, 90cc Honda CD-70 Honda CD Dream Hi-Speed SR-70 Metro Premier+ 70cc Ravi Premium R1 Road Prince bullet Road Prince 70cc United US 70 United Extreme 70

Retail Price Rs. 42,000/= Rs. 46,000/= Rs. 48,000/= Rs. 63,500/= Rs. 67,500/= Rs. 43,000/= Rs. 45,600/= Rs. 46,950/= Rs. 45,000/= Rs. 39,000/= Rs. 42,000/= Rs. 44,500/=

125/150 cc Motorcycle No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Brand & Model Name Crown CR-125 Super Star SS-125 Super Star SS-125 DLX Honda CG-125 std Euro II Honda CG-125 DX Hero Prince 125 Metro MR-125 Regular Ravi Piaggio Storm 125 United US-125 Euro 2 Yamaha YBR-125cc

Retail Price Rs. 65,000/= Rs. 59,000/= Rs. 67,000/= Rs. 102,900/= Rs. 124,000/= Rs. 96,000/= Rs. 68,800/= Rs. 112,000/= Rs. 70,000/= Rs. 129,400/= Road Prince Twister 125cc Rs. 108,000/= Road Prince WEGO 150cc Rs. 180,000/=

Suzuki Motorcycle (Heavy Bikes) Sr./ No. 1. 2. 3. 4.

Product & Model Name Inazuma GW 250 Intruder M800 Hayasuba GSX1300R Bandit GSF650SA

Sr./ No. 9. 10. 11. 12. 13. 14. 15.

Product & Model Name Ravi Hamsafar-70 Sitara GT-70 Super Star SS-70 Super Power SP-70 Super Power Delux Unique UD-70 Bionic AS-70

Retail Price Rs. 45,450/= Rs. 40,000/= Rs. 44,000/= Rs. 44,700/= Rs. 48,200/= Rs. 43,500/= Rs. 44,500/=

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

Brand &Model Name Crown CR-100 Hero Splander Model 2015 Honda Pridor Super Star SS-100 Super Power SP-100 Road Price Jackpot 110cc United US-100 Euro 2

Retail Price Rs. 52,000/= Rs. 56,000/= Rs. 86,000/= Rs. 57,000/= Rs. 60,000/= Rs. 44,000/= Rs. 50,000/=

Suzuki Motorcycle Sr./ No. 1. 2. 3. 4. 5. 6.

Retail Price

Product & Model Name SD110 Sprinter ECO SD110 Sprinter ECO Del

SD110 Raider GS-150 Euro-II GD 110 Euro-II GD 110s Euro-II

Rs. 101,400/= Rs. 88,400/= Rs. 101,400/= Rs. 128,500/= Rs. 114,000/= Rs. 126,000/=

Retail Price Rs. 725,000/= Rs. 1,700,000/= Rs. 2,600,000/= Rs. 1,550,000/= Price update: Dec-2015

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International Automotive Industry - Update

Maruti Suzuki Ignis engine details emerge ahead of 2016 launch Maruti Suzuki, the country's largest car maker, is expected to add a new compact SUV Ignis to its India portfolio next year. Ahead of its market debut in 2016, a fresh round of rumours has hit the web about the new Ignis, this time throwing some light on the engine details of the model. MotorOctane reports that the under the bonnet, Ignis is likely to get a new 1.2 litre three cylinder diesel mill, which is expected to churn out about 100bhp of power. The engine is reportedly based on Maruti's 3-cylinder 800cc engine that does duty in the Celerio diesel of the company. Unveiled at the 44th Tokyo Motor Show, Suzuki Ignis compact SUV is expected to make its India debut in September 2016. From what we know, Ignis will measure 3,700mm in length, 1,660mm in width, 1,595mm in height with a wheelbase of 2,438mm and will be pinned to rival Renault Kwid hatchback and the upcoming Mahindra S101 (codename) in terms of pricing and dimensions. Rumours are also rife that Maruti Suzuki Ignis would make its debut in India at the upcoming Auto Expo, 2016. Maruti Ignis is expected to be sold through the company's new premium dealership chain Nexa in India. Previous reports had said that the engine line-up of Ignis will include a 1.2-litre petrol and 1.3-litre diesel SHVS engines and there will be both 4WD and 2WD versions on offer. Maruti Suzuki Ignis, which is expected to come to the Indian market with 95% localisation, is likely to get a price tag between Rs 4.8 lakh and Rs 6.8 lakh.

Monthly AutoMark

Honda planning to make in India a small car customised for the country roads Honda Motor Co is looking at the possibility of building a small car specifically for India, a top company official said on Tuesday, aiming to gain a bigger share in the world's fifth-largest car market. The car would be the first to be developed at Honda's local research centre and will be positioned above small, cheap entry-level models, such as Maruti Suzuki's Alto and Wagon R, Hironao Ito, senior vice president at Honda Genbetsu India, the R&D arm, said. "Some specific model for India is necessary," Ito told Reuters, though he refused to give details on the type of car the company envisaged or its likely

launch date. The study by Honda is likely to lead to the development of a small hatchback that will be produced in India and exported to other markets, according to consultant IHS Automotive associate director Puneet Gupta. IHS expects Honda to launch the vehicle around 2020 and sees production of 150,000 units a year, of which 50,000 will be for export. Honda already procures 80 per cent of its parts from suppliers based in India. "The market has also shifted to slightly bigger cars," Ito said. "Our strong point is that higher segment, and market growth is matching that."

Nissan-Leyland JV may have to pay Rs 200 crore over export failure The beleaguered joint venture between Japanese auto major Nissan and Hinduja group's Ashok Leyland has hit a tax bump over non-fulfillment of export obligations. The beleaguered joint venture between Japanese auto major Nissan and Hinduja group flagship Ashok Leyland for small trucks has hit a tax bump over non-fulfillment of export obligations. The directorate of customs and intelligence has slapped a Rs 202-crore tax demand on the venture and has threatened to seize factory machines of Renault-Nissan's plantwhich imported them for the JVin Oragadam. The customs department has sent out a demand notice to Renault Nissan Automotive India, which imported tools, robots and jigs for the joint venture. The import of these items were under Export Promotion Capital Goods (EPCG)a scheme which gives tax incentives for

exports. Since no vehicles were exported, the customs department issued the notice. It is learnt that the Renault-Nissan alliance has sought two months' time from the customs authorities to pay up. Attempts to get a response from Ashok Leyland turned futile. In 2008, Nissan Motor Co. of Japan and Ashok Leyland signed three joint ventures for small trucks or the light commercial vehicles business. Poor sales forced stoppage of production of the vehicles. Besides, mounting losses has forced JV companies to write off losses leading to rising tension between the partners. Already one of the three, the technology JV, has knocked the doors of the Bureau f o r I n d u s t r i a l a n d F i n a n ci a l Reconstruction (BIFR) after its accumulated losses swept away its net worth.

Mahindra launches android based diagnostic solution for workshops 'miniSMART' Mahindra & Mahindra, one of the leading UV manufacturers in India, on Tuesday announced the launch of miniSMART', a smart phone/android based cloud enabled diagnostic solution for workshops on.

Mahindra claimed that it is the first OEM in India to launch a technology for workshop diagnostics. Mahindra's miniSMART will enable its dealers to equip workshop technicians and supervisors with advanced tools

cheaper than traditional laptop based solutions. SMART in 'miniSMART' stands for System Monitoring And Reporting Tool.

www.automark.pk | January-2016 | Page 41

Corporate Event - Coverage by AM

Monthly AutoMark International

Master Motors Corporation inaugurates Yutong Bus Plant in Karachi Euro-III standard busses will be manufactured with the cooperation of Chinese company Daewoo Pakistan Express Bus Service signed MOU with Master Motor Corp. (Pvt.) Ltd. for purchasing 200 Yutong-Master Bus Fleet

Karachi (Automark.pk) Master group’s subsidiary Master Corp inaugurated a bus manufacturing plant with the latest technologies and standards at Port Qasim, busses with Euro-III standard engines which are comfortable and du rable will be manu factu red. During the inauguration, CEO Nadeem Malik said while addressing the ceremony that for the first time in Pakistan the investment by Master Motors for the manufacturing of luxury passenge r bus wit h the l at est technologies reflects the ambition of the company to provide the people of Pakistan the latest products for transportation. He also said that Master Group after doing business in Foam, T e xt i l e Ga r me n t s , C h em i c al s , Automotive has achieved tremendous success and now after creating a bus plant, this is a milestone not just for Master Motors but for the entire Pakistan Auto industry. He said that the motivation of Master Group is not just doing business but to also create maximum employment opportunities for Pakistan, that is why the group has always focused on manufacturing rather than trading. He said that these are being produced in collaboration with Zhengzhou Yutong Bus Co. Ltd. This company is famous for making busses; the company makes yearly 60 thousand busses. He said the Group is also investing in Alternative Energy business, and has recently started a project which develops electricity through wind through which they will produce 50 megawatts by

Daewoo Pakistan Express Bus Service signed MOU with Master Motor Corp. (Pvt) Ltd. for purchasing 200 Yutong-Master Bus Fleet. Mr. Nadeem Malik (CEO) Master Motor Corp. and Mr. Shaheryar Chishty (CEO) Daewoo Pakistan Express are seen in picture

September 2016. On this occasion he said that an agreement of buying 200 busses by Daewoo Express is also signed, this was signed by CEO Nadeem Malik and Daewoo Express’s CEO Shaheryar Chishty. 15 busses have already being given to Daewoo Express. CEO said that above mention Chinese company was selected considering the present conditions of Pakistan and their high quality products and good

performance. The busses will be made according to the international safety standards, during which they will pass a rigorous testing process. He also said that the busses have anti-lock braking system, and an automatic mechanism for the greasing of important parts, it also has on-board driving system through which 203 operations on the busses can be monitored automatically, OBD reports can report signals like bus speed, fuel usage and performance from across the world through GPS. On this occasion, the first buyers Chaudry Ameed, Khuaja Ahmed Shehzad, Chaudry Shafqat and Tariq mehmood were present who appreciated the performance and quality of the busses and declared these busses as the best for inter-city transportation...

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Internationa Auto Exhibition - Preview

Monthly AutoMark International

4 - 6 March, 2016 Lahore International Expo Centre www.pakistanautoshow.com Organized by PAAPAM, the Pakistan Auto Show 2016 will be taking place from the 4th to 6th March 2016 at the prestigious Lahore International Expo Centre. Based on previous Auto Show estimates, the Pakistan Auto Show 2016 is expected to draw a crowd of more than 60,000 visitors from parts manufacturers, component suppliers, auto lovers and affluent auto mobile buyers to get a glimpse of the latest models from the world’s leading automakers in the motorcycle, three wheeler, car, tractor, trucks and buses segments.

IT’S ABOUT VEHICLES ALL THE WAY The Pakistan Auto Show 2016 features a w ide ar ray o f Co mpo nent Manufacturers from all technologies including Casting, Forging, Plastic & Rubber, Sheet Metal, Jigs & Fixtures and Electronics. You can also expect Tractors, Busses, Trucks, Passenger Cars, Leisure and 4x4 Vehicles Light Commercial Vehicles, Motorcycles, Three Wheelers, and exotic cars, all owi ng aut o ent hu siast s an d prosperous car purchasers to feast their eyes on leading-edge models from the world’s foremost auto manufacturers. Specialized services of leading banking,

finance and insurance companies will also present their most appealing financing deals and coverage schemes at the event. The Pakistan Auto Show brings together the whole motoring spectrum in a unique collaboration and celebration of the Truck, Tractor, Two Wheeler and Car. Along with huge displays, the show hosts the biggest single gathering of companies and traders in Pakistan, offering every conceivable product and service to current and future vehicle owners.

DRIVE YOUR BUSINESS FORWARD The Pakistan Auto Show came into being to provide the auto industry a platform for the country to showcase its capability and potential to the world. It is a three day event with the entire Auto Engineering Sector assembled under one roof. Government high ups, Local an d I nt er nat i on al Buy er s an d Manufacturers, Machinery Manufacturers, Raw Material Providers, Service Providers and many more are expected to attend this event.

SUPPLYING THE GROWING AUTOMOTIVE AFTERMARKET IN PAKISTAN

The Pakistan Auto Show 2016 is the pioneering trade exhibition for the r api dl y dev elo pi ng aut omot i ve aftermarket in Pakistan. The show is undisputedly the country’s largest gathering of leading auto parts suppliers and auto service providers from all over the country, covering the full range of motor vehicles parts as well as components for the drive, chassis, body, electrics and electronic groups, as well as equipment for vehicle service and repair, bodywork repair and painting, tyres & batteries. While introducing the automotive market’s most recent technology, services and solutions, the e x h i b i t i o n p r o v i d e s e x ce l l e n t opportunities for leading brands, automotive accessories and spare parts companies, and after-sales service providers to expand their sales network and strengthen their presence in the region’s fastest growing garage gear market. The country is already competitive in the casting and forging sector. With skilled economic labor and capacities to deal in low volumes, Pakistan is becoming the future manufacturing hub for auto parts especially in the case of tractors as we are producing the cheapest tractor in the world...

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Monthly AutoMark International

Corporate Corner - Update

GPTI invited PAAPAM to participate in BME Symposium in Germany Representatives of German Pakistan Trade and Investment Mr. Ayaz Thaver and Dr. Ing. Silvius Grobosch, Senior Vice President BME visited PAAPAM South office today. They invited PAAPAM members for the 51st Symposium of Procurement and Logistics organized by BME in Berlin, Germany in November 2016. The senior vice-chairman of PAAPAM Mashood Ali Khan was the chair of the meeting, in which PAPAAM members were present; he gave a presentation of the Pakistan Automotive Industry to GPTI, and also gave detailed information of tractor industry of Pakistan. During the meeting Dr. Grobosch had a long discussion with PAPAAM members about Pak-German trade in which they also asked several questions from him. The 50th Symposium was held this year, an d comp an ies fro m Paki st an participated in it for the first time ever, and they had a great response specially Thal Engineering in Automotive Sector. GPTI said that if Pakistani companies participate in this symposium regularly they will reap great benefits because

there is a huge demand for Pakistani auto-parts in Europe. BME has 2200 registered European member companies, and only their decision makers who are serious buyers p articipat e i n this symposium. GPTI (German Pakistan Trade and Investment) will lead a delegation from various business sectors of Pakistan such as Automotive to the symposium. Senior vice-chairman of PAAPAM Mashood Ali Khan said this is opportunity and PAAPAM members will be exhibit with

the Flag of Pakistan on 2016. BME is the Association Materials Management, Purchasing and Logistics (BME) has established itself as a professional association for buyers and logistics in Germany. They provide services for their members who join them from all industrial and service sectors, including distributive trade, banking, insurance and p ublic institutions.

Seminar on "Compressed Air for Economy and Efficiency" at Sahiwal Chamber of Commerce and Industry by Rastgar & Co.

www.automark.pk | January-2016 | Page 42

Exclusive Report by Zahid Malik

Monthly AutoMark International

Adventure Always Helps You Learn Although we throught it to be just another ordinary ride with lesser number of riders and not much excitement, yet, it turned out to be an adventurous experience full of joy and energy. The set was a combination of ages and a blend of bikes. The youngest member being 25 years and the oldest a 70 years old veteran. We had a GS 150cc and a Honda CD that is 70cc. We had simple street bikes along with a 125cc trail of Mr. Imran Bhatti. Many of the participants like Mr. Abdul Sattar, myself and Mr. Imran Bhatti were going for a tour after alteast a year. As the tour announcement was in a hurry, just after the invitation of Jaranwala Trekkers, so everyone had to manage family commitments and also plan for the tour. We gathered at Doctor's Hospital where all the riders had to arrive before we set forth. Riders were informed about rules and regulations for safety purposes and were assigned their position as they would ride. Mr. Talal Malik also joined to say adieu and rode along till we were cruising on Multan road. With all set for the journey and riding in a lane, with specific gaps and set positions we had travelled for about 30 minutes when we faced problem that a nail had hit the rear tire of one of the rider’s bike. Most of us stopped for a cup of tea and by the time we finished the tea the bike with repaired tire

reached at hotel. When we left the highway (Multan Road), the road was not good and it resulted in a problem. One of the bike had problem with the rear shock and although he told us to continue our ride we decided to manage things jointly. We stopped at a Fry Fish Hotel (Head Balloki) and had lunch while the rider had repaired the bike in the meanwhile and we were cruising again. It was almost dark when we reached Jaranwala, however the arrangements done by the Jaranwala Trekkers were good enough to suit the occasion. Now the next adventure there was spending night at camps. We called it adventure because some of the members were doing for the first time or doing after a long time. But still the patience and spirits made it possible. For next morning we had plan to leave at about 7:00am. So we got-up early and tried to leave at time. And yes, a small

adventure there was search of a free wash room early morning. Atlast we were able to leave at the right time. In order to have some more adventure we had decided to use other option for Jaranwala to Lahore route. So, we chose via Sharaqpur option to explore something new. Riding through rough track for about 10km we witnesses the vasy and beautiful green fields. In the end we want to announce Champ of this tour. Props to Mr. Mahmood Akhtar aged 70 but young at heart and full of energies who rode along us braving the mercurial drop showing no signs of fatigue. We would also like to appreciate Mr. Abdul Sattar wo did his best to manage 70cc bike and maintained the game well. By: Mr. Zahid Malik, Founder & Head of Safe Riding – Road Safety Dept. Pakistan Bikers Club

www.automark.pk | January-2016 | Page 46

Commercial Vehicles - Review

Monthly AutoMark International

Heavy vehicles sector gears up investment Heavy commercial vehicle (HCV) assemblers have geared up their investment plans, anticipating a surge in demand in wake of the China Pakistan Economic Corridor (CPEC). “Multiple projects under the CPEC, including the 3,000km long highway, will provide ample opportunities to local industries,” Naushad Riaz, Senior General Manager, Strategic Business Planning and Quality Assurance Division Hinopak Motors Limited (HPML) told press media. “In 2015-16, HPML is investing around Rs300 million to match new demand,” he said, hoping for similar investment in the years ahead. “Besides normal trucks, buses and coaches, the production of special purpose vehicles would also increase,” he said. HPML sold 598 trucks in July-October 2015 as compared to 365 units in the same period in 2014. Hino bus sales swelled to 251 units from 139 units. HPML in 2015 launched rear engine buses that were well received as indicated by the number of orders. “More new products are in the pipeline and would soon be launched,” Mr Riaz said. “We are well equipped to produce dumpers, crane mounted vehicles, concrete mixers, water and fuel bowsers, water sprinklers, etc required for construction activities under CPEC,” he said. Currently HPML has an annual installed capacity for 6,500 units of trucks and bus chassis. “We can produce 2,000 bus bodies at a separate Bus Body Plant,” he added. To meet growing demand, the company has extended working hours for the plants besides adding around 100 workers this year. He believed that the upcoming ‘Auto Policy’ and ‘Strategic Trade Policies’ would play a pivotal role in the sector’s progress.

Industries Limited (GIL), an official said that CPEC will generate more business and employment and “will be a game changer for the transport industry.” Sharing details, he said the company has launched two new heavy duty trucks

“The industry is concerned about availability of Euro-II grade diesel which denies masses the benefits even though most commercial vehicles in operation are equipped with Euro-II engines.” He urged the government for an early launch date for Euro II diesel along with the road map for Euro III diesel. GNL: Senior Executive Director Marketing and Sales, Ghandhara Nissan Limited (GNL) Muazzam Pervaiz Khan Said the company invested Rs40m in 2015 for procuring fixtures and improving its body shop and paint shop and another Rs20m in tooling costs. The company offered four products which included Captain C-125 HP- LCV, Realling M-100 HP- LCV, DFL3180210 HP-MCV and DFL4250-280 HPHCV besides “opening 100 jobs directly and 150 indirectly.” He said GNL in 2016 would invest Rs10m for the jigs and fixtures of new variant DFL-4251-340 HP – HCV and another Rs20m for dealers’ development. “Around 50 people would get jobs directly, followed by 100 indirect jobs,” he added. Khan said the bus market will also expand with the entry of new players. He ruled out any slowdown in sales during 2016, stressing that mass goods transit was increasing. GIL: Sharing future plans at Ghandhara

and prime movers this year, ISUZU FVR 240 and FVZ 280 Super Euro 2 models. Furthermore, the company has been conducting Road Show 2015 all over Pakistan and giving a price benefit in bookings at the road shows. “The company is working on developing more 3S dealers all across the country,” the official informed. GIL sold 1,020 units of ISUZU Trucks, Prime Movers and Buses in 2014-15, up by 56 per cent from the past year. Its overall heavy vehicle market grew by 40-50pc in 2014-15 due to low interest rates, rising financing and leasing trends, positive economic indications and improved law and order situation. In July-October 2015, Isuzu truck sales jumped to 354 units from 274 units in same period 2014 followed by rise in bus sales to 30 units from 17 units. GIL had signed a memorandum of understanding with National Bank of Pakistan (NBP) under the Prime Minister Youth Business Loan (PMYBL) Scheme to focus on development of small businesses for educated and unemployed youth. The applicants will procure GIL’s commercial vehicles to facilitate business activities and NBP would assist in financing the assets under the PMYBL Scheme.

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