Automark magazine dec 2014 by Mustafa Hanif

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Contents

December-2014

Reviews/Reports

Exclusives Articles 12 14 16 32 41

Decades-old cars, bikes still in production in Pakistan by Ali Hassan Lack of interest causing delay in new auto policy by Owais Khan Underground Coal Gasification (UCG) – Thar Project by Engr. Asif Masood Managing Millennial Customers by Muhammad Shahzad

18 20 24 34 42

Genuine buyers to wait up to next year for Toyota Corolla by Owais Khan

Price List 38 Motorcycle Price LIst 39 Car/Light commercial vehicle price list

automark magazine

www.automark.pk

Inside

Will CCP report on auto sector help car buyers? by AM research team EICMA 2014, Milan Italy by Imtiaz Rastgar The optimal time to replace your forklift China Vs. Japan Motorcycle Rivalry – Best of Enemies by David McMullan An introduction to auto 'Parts Management’ - Part II by S.M.Ahsan

News Update 26 31

Car makers fear new auto policy could open up imports Import of used cars jumps 63% over 3-month period

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December-2014 edition Volume 07, Issue 12

Pakistan’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 Abdul Khaliq

Graphic Designer Salman Hanif

Web Master Murtaza Hanif

CONTRIBUTING IN THIS ISSUE Imtiaz Rasgar Engr. Aisf Masood S.M. Ahsan Ali Hassan M. Owais Khan David McMullan from International Desk

Engr. IHT Farooqui Senior Automotive Engineer Karachi Muhammad Yousuf Shaikh Founder & Chairman Pakistan China Motorcycle Industry Council Karachi Syed Mansoor Rizvi Principal Officer M/s. CNH Services (Pvt) Ltd. Karachi Mr. Ashfaq Memon Senior Manager Marketing Memon Motors (Pvt) Ltd. Maker of Super Star Motorcycles Hyderabad

Active Communications 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

CCP and commercial import of used cars In order to improve the competitiveness of auto industry, the Competition Commission of Pakistan (CCP) recommended in a report to the legislators to open commercial import of used cars for customers. The report said that the commission suggested opening of auto import policy on the basis of auto tariff regime that had been stagnant since 2007 in Pakistan, and therefore it is the need of the hour to end the excessive protection provided to the domestic automobile manufacturers. Keeping in view the upcoming Auto Industry Policy (AIDP) II, which is expected to be announced by the end of next month, the watchdog suggested vital proposals to the government through its Competition Impact Assessment study of the automobile sector in Pakistan. As CCP is mandated to carry out research to improve the understanding of competition issues facing the economy of Pakistan, the watchdog carried out a detailed research in which it found that the prevalent scheme of allowing used car imports under the ‘gift and personal and baggage schemes’ adds to transactional costs in the form of extralegal formalities, in addition to high import duties. This practice should be replaced with an open commercial import of used cars, the report said. The report added that Pakistan should benchmark its auto policies against other major automotive manufacturing countries like India, Thailand and Turkey, and through implementation of TradeRelated Investment Measures (TRlMs) agreement in true letter and spirit. This would entail removing the current Tariff Based System (TBS) for regulating imports, and result in the auto sector receiving the same treatment as other engineering industries. CCP said that the shaping of auto policy through Statutory Regulatory Orders (SROs) should end; the three SROs that manage the import of autos should be revoked and any tariff protection should be levied through the customs tariff. The reduction of age limit for import of cars from 5 to 3 years makes the import of cars unfeasible owing to limited depreciation allowance and therefore will eliminate competition. It limits availability of foreign brands of cars compared with local brands, the report added.

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Exclusive Article by Ali Hassan

Decades-old cars, bikes still in production in Pakistan Traders and manufacturers of goods including food items always determine domestic prices based on international prices. Consumers use internet to find out the right price they are paying in Pakistan or at least at par with foreign brands based on exchange rate parity. The advertisements of various goods and commodities on Ind ian entertainment channels also provide a clear price comparison. Almost everything like grocery items is being produced by the local assemblers in Pakistan under joint venture agreement with the foreign companies. It is easy to compare the prices of commodities being produced in the world especially in India with the products being manufactured in Pakistan. The internet facility proves futile in the case of auto sector as some hot selling locally assembled two and four wheelers cannot be searched on worldwide web for their counter price check as they exist only in Pakistan. This is perhaps because of non-existence of any model phase out policy adopted by the car and bike assemblers and complete ignorance by the government. Consumers have been buying more two to three decades old models. Pakistanâ&#x20AC;&#x2122;s auto industry should have now been well-established and fully matured in the last 50 years but this has not happened because of the cartel under which these assemblers operate.

Around 20-25 years back, India and China were far behind than Pakistan. Because of mediocre policies, greedy political rulers and their governments, bureaucratic hurdles and hollow vision of policy makers, Pakistan looks now 100 years back than India and China especially in auto sector. Can one imagine that Patta Leaf Spring (Kamani) in 800cc Suzuki Mehran, Ravi van and Bolan pickup is still being utilized successfully which is certainly not being used in small cars especially by the car assemblers in other countries. Even the 660cc cars does not have Kamani type thing in any part of the world. In Pakistan everything is possible. The mechanics of Kamani in the world must have found new work after suspending of this tool in small vehicles but in Pakisan mechanics feel satisfied as their work has expanded and are also certain there is no sign of suspending this tool in Suzuki vehicles as long as Mehran, Ravi and Bolan will exist for more decades. These mechanics have also got tremendous support since the production of Qinggi rickshaws and other three wheelers CNG rickshaws has been showing positive trends for the last few years. This is the true story of vendor development in Pakistan. Many brand names still exist but their models, body shapes and engines

hav e been comp let ely changed decades back by manufacturers in Japan to beat competition, match technological leaps and meet emission standards. In auto sector, internet search results for Honda CD 70cc bike, Honda CG-125 bike, Suzuki Mehran 800cc, Suzuki Cultus 1,000cc, Su zu ki Bolan van, Suzuki Ravi pickup etc prove futile. There is no Honda CD-70cc in the world as Pakistan is the sole assembler. More than 100 assemblers are rolling out the same 70cc model with their own brand names. The government of Pakistan introduced tariff based system (TBS) in 2006 for introduction of new bike models but all the assemblers have literally failed in bringing new models. Indi a is produci ng over 100cc bikes of Euro III and Euro IV fuel efficient engines while in Pakistan the manufacture of Honda 70cc had introduced Euro II bike in 2012. The price of CD 70cc produced by Atlas Honda Pakistan is about Rs70,000, while CG-125 sells at Rs102,500. Honda CD-70 model had inspired Chinese bike assemblers to introduce the same model at a price of Rs37,000-40,000. It is not clear why the Japanese bike assembler chooses to keep redundant

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Monthly AutoMark International 70cc model in Pakistan and which formula is being used to determine its price. The assembler claims to have achieved over 94 per cent indigenisation including engine parts in CD-70cc bike. Same is the case with a particular model of Honda CG-125cc. By 2002, the deletion level reached 87 and 80pc in CD-70 and CG-125.

Honda CD-70cc bike has been in production since 1973. The company made overall change in model in 1993. MSS chairman APMA said that actually Cd 70 is not original CD 70 but actually it is CD 90 or HJ 90 of Japan and china. Atlas Honda then introduced its Euro II model in 2012. The local production of CG-125 got underway in 1981-1982 followed by a big engine change in same model in 1993 and then it was transformed into Euro II in 2012. In over 20 years this bike should have been “Made in Pakistan bike” but this has not happened as its price is jacked up when yen gains value nullifying the claim of higher localisation. Atlas Honda produced overall 68,637 bikes in 19961997 and its production swelled to 639,066 units in 2013-14. Honda Japan has given exclusive rights to Atlas Honda for manufacturing of CD-70cc and CG-125 in Pakistan and also for their exports to various countries like Sri Lanka, Bangladesh, and Afghanistan etc. An authorized dealer of Honda Atlas did not agree that the company had kept the model unchanged. The company now offers six models ¬— two 70cc models, three 125cc models and one 100cc model as compared to only two models few years back. There was no formula to phase out the model. “As long as there is demand we do not feel the need for change in the model,” An official in Honda Atlas said. Sabir sheikh said 70cc and 125cc bikes from China can be imported at $250 and $350, respectively. But they cost dearly here after paying duties and taxes. Due to delay in AIP, smuggling of auto parts is thriving for the industry and after market and many assemblers have put on hold their local investment plans. Sabir said the customers are eagerly awaiting for new models of two wheelers especially in more than 150cc as people are tired of plying 70cc bikes.

He said new models can only be brought in the market when the government will make industry friendly policies by giving relief in local taxes and customs duty on import of spare parts.

He said for the last two years, sales of Honda 125cc, Suzuki 150cc and few Chinese 100cc and 125cc models have been showing positive growth. Regular users of 70cc are shifting their focus on high engine power bikes as they are also fuel efficient. In case petrol prices come down in future the sale of high engine power bikes will swell sharply, Sabir said. In car sector, the production of India’s iconic Maruti Suzuki 800cc was suspended this year. More than two million Marutis had been sold in India since 1983. In Pakistan, however, Suzuki Mehran 800cc still rules the roads. With no major change in its exterior and interior, the company made some cosmetic changes which is called higher localization achieved in Pakistan. Pak Suzuki Motor Company Limited (PSMCL) must have also recovered its investment but does not feel pressure to introduce new models. Vendors of Mehran must be praised for making its parts for almost 25 years with same designs and specifications. They must have become mi llionaire. Two different models of Suzuki Mehran are sold at Rs625,000-678,000 but buyers cannot compare price as it is not in production outside Pakistan. Suzuki Cultus is also over a decade old model that sells for Rs1,034,000 in Pakistan so there is no scope for price comparison. Auto assemblers blame low production volumes for lack of investment in new models. What is the benchmark of volume that would make investment viable has not been mentioned. Despite the fact that the local assembly of many models of cars and bikes started in the 1980s, the website of Pakistan Automotive Manufacturers (PAMA) provides archive data starting from 1995-1996. For some reason no government over the past three decades took assemblers to task for taking car/bike buyers for a ride. “How assemblers managed this? Your guess is as good as mine,” a market watcher commented. “It is an open secret that auto makers do not provide fair value for the price

they charge,” he added. It is the duty of the government to defend people’s interest and force special interest through greater competition to improve their products and keep price within fare range. “In the UAE cars are tax-free, therefore they are cheaper. If you deduct taxes on an apple-to-apple basis, cars in Pakistan are cheaper than the UAE. Similarly in I nd i a an d T hail and , a l ocall y manufactured variant is more expensive as compared to those made in Pakistan, he claimed.

An official in Pak Suzuki admitted that Ravi, Bolan, Mehran and Cultus are not produced outside Pakistan and informed that the company has no plan to change models that sell well. “When sale is brisk there is no logic to replace or introduce costly versions.” Another problem is low volume. In Pakistan the ratio is one car per 1,000 people. At this ratio no business will risk investing in new jigs, fixtures, tooling etc. Besides arrival of used cars haunts investors, he said. For bringing the cost down, the company has asked the government to allow import of six items, by removing them from the negative list of items importable from India. It could facilitate low costs of CKD, introduction of new models, technology transfer/joint ventures in parts manufacturing and possibility for exports, he added.

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Exclusive Article on Auto Sector by Owais Khan

Lack of interest

causing delay in new auto policy The new auto industry development policy (AIDP) still hangs in the balance for various reasons causing anxiety among the local assemblers. Around 1.5 years has gone by since the new PML-N government took initiative to start interaction with the local assemblers for the formuation of ADIP. So far the entire industry has been waiting for the policy amid some reservations. Some auto sector people appears disappointed over the slow pace of efforts on the AIDP in view of war of words between the PML-N government and the Pakistan Tehrik-e-Insaff in the capital. They fear that in case the political turmoil deepens then the policy and its implemenation may become an uphill task in case new government comes in power next year. They added that the government after coming into power in middle of last year had taken least interest in the finalizaiton of new auto policy as it gives secondary importance to the auto sector as compared to other hot issues like energy and political crisis. A committee headed by Minister for Water and Power Khawaja Asif had finalised the draft AIDP 2014-19 in March 2014 without taking the views of stakeholders on board. However, the draft appeared in local media on which the local auto sector raised hue and cry and after which it was decided to take the private sector into confidence. Ultimately, the then Secretary Industries and Production, Shafqat Naghmi arranged a meeting between the auto sector including importers with the Minister for Water and Power. The meeting lasted for only a few minutes and the stakeholders were asked to send their suggestions in writing. PAMA, PAAPAM, APMA and APMDA had

already submitted their proposals to the government. Some segments of the auto sector approached the deputy convenor of the committee, Muhammad Zubai r, Chairman Privatisation Commission and conveyed their viewpoint. But no meaningful discussion was held between the auto sector and the government''s team prior to finalisation of the AIDP.

Chairman Associaiton of Pakistan Motorcycle Assemblers (APMA) Mohammad Sabir Shaikh looks pretty sure that the new AIDP will change the bike market scenario because currently only one model of 70cc rules the country. After new policy, all assemblers are likely to introduce over 100cc bikes which has been the hottest demand of people. In China and Japan many above 100cc bikes models are available but due to strict policy of introducing new models, assemblers find it a difficult task to unv eil new models, he add ed. According a local print media, the Federal government is reported to have revised tariff structure for auto sector in the much delayed draft AIDP 2014 which is ready for consideration of the Economic Co-ordination Committee (ECC) of the Cabinet. Some of the officials attempted to table the draft AIDP 2014-19 in the last month’s ECC meeting but the Finance Minister Ishaq Dar r ej e- ct e d t h e s umma ry wh i ch lacked other ministeries’ formal comments. A comparison of the draft AIDP 201419 tailored in March 2014 and revised recently indicates that zero duty on raw material of auto parts will remain.

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Presently, duty rate on sub components and components is 5 and 10 per cent respectively. In March, proposed tariff on sub components and components was 12.5 per cent for five years. However, in the revised draft policy, 10 per cent duty has been proposed for five years. Duty on sub assembly will remain unchanged at 20 per cent. Presently, duty on CKD on cars is 32.5

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Monthly AutoMark International

per cent while duty on CKD of bikes is 15 per cent. In March 2014, the government proposed to lower it to 30 per cent but now it has been decided to fix it at 25 per cent for five years. Duty on A-Max localized parts is 50 per cent in cars and motorcycles both. In March 2014 draft policy, the government wanted to revise it to 35 per cent however it has been decided to fix it at 45 per cent in 2014-15, 40 per cent in 2015-16, 35 per cent in 2016-17, 201718 and 2018-19 respectively. According to the summary, the CBU rates have been retained on all categories of passenger cars to provide a level playing field to indigenous industry visa-vis regional countries. The EDB claims that this will also encourage new investors to decide to invest in a country where his vehicle is adequately protected against imports. The import duty rate on non-localized parts has been lowered to improve indigenous competitiveness. The import duty rate on non localised parts is gradually being lowered so as to provide the industry a predictable road map for doing away with SRO 693(1)/2006 by upgrading technologies and attaining competitiveness. The duty structure under 655(1)/2006(IOR) pertaining to concessionary inputs available to auto p a rt s ma n ufa ct ur e rs i s be i n g rationalised to eliminate mis-declaration among sub c ompone nts a nd components.

A uniform CBU rate of 50 per cent has been fixed for the two and three wheeler automotive segments to rationalise the tariff structure. On two and three wheelers, a higher CBU duty was imposed since 2006 while up to 1300cc cars, the customs dutyis lower than two and three wheelers. The import duty rate on non-localised components for the assembly of 2&3 wheelers has also been rationalised for the entire segment and fixed at 15 per cent. New descriptions with regard to technology-Euro II and above and below Euro II have been defined in the tariff system for tractors. Presently, tractors manufactured in Pakistan are not Euro II compliant and must graduate to Euro II and above technological level to become exportable to various countries.

A CBU rate of 20 per cent has been maintained on regular buses to provide manufacturers of these vehicles adequate protection against imports. CNG category of buses has been eliminated from the tariff system for buses and zero percent import duty has been fixed on CBU of buses operating on LNG/ CNG as well as HEVs and EVs to promote such vehicles because of environmental considerations and in the wake of non availability of CNG in future. Import of all types of vehicles will be

regulated by the following used vehicles import policy 2014-19: (i) no used vehicles older than three years will be imported into Pakistan; (ii) no used vehicles shall be imported into Pakistan except through personal baggage scheme, transfer of residence scheme and gifts scheme; (iii) one per cent depreciation per month will be allowed to a maximum of 36 per cent irrespective of the country of origin; (iv) duty for imported vehicles will be paid in dollars by the expatriate importer through banking channel; (v) Federal Board of Revenue (FBR) will issue yearly schedule of import duties of all type of vehicles in dollar terms on June 30, of each year, applicable at least for next six months; and (vii) no special relaxation regarding age and applicable duty shall be granted under any circumstances The AIDP envisages two categories of new investment with different incentives according to which category A investors whether an existing OEM or a new entrant in auto sector will be allowed to import 100 per cent parts whether or not locally manufactured, at 10 per cent rate of customs duty for a period of five years from the start of assembly/manufacturing operations in respect of passenger cars and LCV subject to progressive manufacturing of 25 per cent every year starting from end of year 2 based on indigenization level of industry as per SRO 693. For Motorcycle Industry "existing policy as approved by the ECC and notified by FBR vide SRO 931 (I)/2013 shall continue". Category -B investors will be allowed to import 100 per cent parts, whether or not locally manufactured, at 10 per cent

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Exclusive Article on Auto Sector by Owais Khan

Some segments of the auto sector approached the deputy convenor of the committee, Muhammad Zubair, Chairman Privatisation Commission and conveyed their viewpoint. But no meaningful discussion was held between the auto sector and the government''s team prior to finalisation of the AIDP. rate of customs duty for a period of two years from the start of assembly/manufacturing operations in respect of passenger cars and LCV. The incentives shall not continue after the second year and prevailing tariffs shall apply. They can import 100 per cent p ar t s w h et he r o r n ot l o ca ll y manufactured at prevailing custom duty applicable to non localised parts for a period of two years from the start of assembly/manufacturing operations in respect of buses, tractors and prime movers. 100 per cent exemption from customs duties will be allowed on import of tooling, such as dies, molds, jigs and fixtures for production, inspection and testing of vehicles to the extent of new variants only not produced before. According to a print media report, work on new AIDP began after the ECC constituted the committee on the complaint of Khawaja Asif about onmoney being charged on cars by the local assemblers. Presently, the hot issue is on-money on new models of Toyota cars. According to local assemblers, investors are making money not the assemblers. A print media reported that Chairman Indus Motors Company (IMC), Ali Habib telephoned Minister for Industries and Production, Ghulam Murtaza Jatoi and clarified the company''s position with regard to onmoney. Auto industry had already clamouring in the press that the government has planned to unveil new policy without the advice of stakeholders which has been the main concern of industry. Almost all the issues were discussed and resolved including CKD, parts, assembly and other important tariffs but the policy regarding new entrant and used cars, have become a bone of contention. The industry has accused EDB of moving forward with AIDP on these two subjects without consensus and the deviation from original policy has already proven to be a failure. PAMA had appealed to the Federal Minister for Industries Ghulam Murtaza Jatoi to immediately start consultation

with all automotive producers and part makers while formulating new long term auto industry development policy. In a letter written to the minister PAMA had pointed out that it was reported that the draft for AIDP which was prepared before budget 2014-15 was held back so that the concerned stakeholders could be consulted in this regard before finalizing it. The Association had regretted that since then there has been no consultation and the ministry did not invite auto industry representatives for consultation. The industry and PAMA came to know through media reports which indicated that outlines of next AIDP have been given final shape but PAMA suggested that it would be more prudent to sen d t he d rafted AID P to the st ak ehold ers for co mmen ts as universally practiced in case of any sector specific policy. The auto sector analysts believe that Government’s indecision whether to promote the manufacturing base or trade is likely to petrify the potential investors. Moreover, the policy itself is confusing as on one hand it promotes investment and invite ne w manufacturers by offering undue duty reductions over the existing players while on the other it seems succumbing to the pressure of vested interest and hinting towards opening 5 years old used cars.

The analysts pointed out that world over governments protect their local industries from import as they know that the damage will be beyond repair as allowing imports before reaching threshold levels would culminate the growth of local manufacturing base and cut the employment opportunities which are very much needed in these times. For instance, the automobile industry

in Thailand is booming. The industry is now the world’s third-largest maker of commercial vehicles. Only the United States and China are ahead of it. Many foreign automakers are producing vehicles in Rayong for Southeast Asia’s growing middle class. Moreover, it has 12 percent of the country’s Gross Domestic Product and employs 400,000 workers. In other words, Thailand's automotive doing very well! and this has happened because of persistent support that concerned authorities has provided in the shape of long term consistent and prudent policies and restriction on imports in order to attain higher volumes. Analysts added that Pakistan is the unique case and it is amazing that despite knowing that these used cars are imported commercially by exploiting baggage and gift scheme, which is against the laws and conditions of the country, these importers are further facilitated instead of being punished. Moreover, passports and other documents of the overseas Pakistanis are used in illicit ways as the baggage/ gift scheme requires the person to be physically present to claim his/her car. In addition to this, same is done by the traders and agents who illegally pretend to be the owners. Furthermore the difference of duties between used imported cars and new locally made cars is also staggering, the economy suffered a double blow in shape of pilferage of foreign exchange which went out through illegal channels such as Hawala and Hundi and lower duty collection on used cars due to unjust fixation of duty levels. As per estimates in the year 2011 alone, the Government lost Rs 5 billion revenues due to lower assessment of import duties on used cars. The current negotiations had brought the industry and EDB closer to an agreement but the industry which contributes to GDP heavily is working without any Govt policy since 2012. The incumbent go vernment is al so responsible for further lapse of 1 1/2 years in this regard......

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Exclusive Article by Engr Asif Masood

Underground Coal

Gasification (UCG) – Thar Project Thar coal will be utilized to make Pakistan self-sufficient in power generation to strengthen economy and make this area as the hub of petrochemical industry. It is the candid opinion that approval of transmission network by the federal government was vital for the successful progress of Thar coal project.

One of the prime objectives of the Government has been to achieve self sufficiency in all its energy requirements so as to cease dependence on imports of crude oil and save valuable foreign exchange. This objective can only be achieved by exploring the potential resources including the substantial untapped energy resources. Recently, the author visited the Underground Coal Gasification project, near Vejihar village Tharparker, initiated by renowned scientist Dr Samar MubarakMand. The author was well received by Dr Manik and Engr Jahanzeb Khan Abro. Detail briefing was given by Engr Jahanzeb Abro about the project. The pilot phase project of 4MW will be completed before closure of FY 2014-15, in the second phase the project will produce 50 and 100 MW respectively, if funds released according to schedule. Presently, the Underground Coal Gasification (UCG) Project at Thar is seriously suffering because of the apathy of federal authorities, the funds are regularly being diverted towards unapproved projects.

but rather separates into the syngas. The syngas is then drawn out of the second well. Two different methods of UCG have evolved and are commercially available: • Vertical wells combined with methods for opening the pathway between the wells • Inseam boreholes using technology adapted from oil and gas production that can move the injection point during the process

Methodology Underground Coal Gasification (UCG) is a method of converting un-worked coal when coal still in the ground and

into a combustible gas which can be used for industrial heating, po wer generation or the manufacture of h y d r o g e n , synthetic natural gas or diesel fuel. Engr Asif Masood UCG technology allows countries that are endowed with coal to fully utilize their resource from otherwise un-recoverable coal deposits in an economically viable and environmentally safe way. UCG turns this resource into high value products:

UCG Process The basic UCG process involves drilling two wells into the coal, one for injection o f t he oxi d ant s ( w ate r/ air or water/oxygen mixtures) and another well some distance away to bring the product gas to the surface. The coal at the base of the first well is then heated to temperatures that would normally cause the coal to burn. However, through careful regulation of the oxidant flow, the coal does not burn

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Monthly AutoMark International

• Clean power • Liquid fuels • Syngas • Fertilizers and other chemical feed stocks UCG uses a similar process to surface gasification. The main difference between both gasification processes is that in UCG the cavity itself becomes the reactor so that the gasification of coal takes place underground instead of at the surface. UCG also presents the opportunity to reduce emissions as there are fewer surface emissions. UCG technology could also have synergies with CCS as the CO2 could be stored in the coal cavity after gasification. The Thar coal is ‘the best coal’ in the world for gasification that can produce ‘cheapest electricity’.

Project Economic & Development The general perception about the project among the mythical class is that, it is not a viable project whereas, most of the developed countries, had been producing electricity from underground coal gasification for more than 3 decades because of its low capital expenditure. The expenditure comes to $0.9 per watt compared to $1.6 per watt on coal power projects based on coal mining, $2.5 per watt on solar energy and $3 per watt on wind. The electricity produced through UGC at Thar would cost about Rs 4 only per unit (kwh) as compare to cost Rs18 per unit from thermal power stations. Whereas Nandipur power station is exceptional which is producing RS 50 per unit Kwh? The carbon content of Thar coal, commonly known as lignite, was 28pc. This is considered to be the best for power generation. The thickness of the Thar coal and its powdered form

is best for underground gasification and it had been confirmed by leading scientists from different part of the world after analyzing the project design and specifications. “One of the Chinese scientist has said that, “Pakistan can produce thousands and thousands of megawatts of electricity from Thar, It appears these reserves are meant for UCG with cheapest cost.” Apart from power production, the Thar coal through underground gasification could be utilized for conversion to naphtha, diesel, waxes, car fuel, fertilizers, town gasification, food preservatives, rayons and a number of other chemicals. Thar coal conversion into town gas would cost only half of the current cost of Sui gas. The Geological Survey of Pakistan (GSP) has carried out a detail study on coal gasification and found feasible where the gas has to travel less in pipeline. Exploration of Thar coal will supplement the existing energy output would give a boost to economy of Pakistan. Geological Survey Of Pakistan (GSP) has identified the coal resources by which the country has emerged as one of the leading country of the world after discovery of huge lignite coal resources in Sind province. The coal deposits of Pakistan are restricted to Paleocene & Eocene

rock sequences. Economists say that the energy demand over the next 5 years is expected to grow by 7-9%per annum to meet the future demand of power. Domestic exploration would have to be intensified to increase the share of coal from 1% to at least 30% by 2017. The Geological Survey of Pakistan (GSP) had evaluated coal reserves in four specific tracts/blocks of Thar coal field. The evaluation study consists of drilling 167 bores with a cumulative depth of 50,000 meters & chemical analysis of 2000 samples. The technological developments with respect to coal, exploration, extraction, handling and utilization would accelerate future development of Pakistan’s coal resources & would reduce dependence on its fast depleting supply of natural gas & reduce the burden on Oil import bill. Thar coal will be utilized to make Pakistan self-sufficient in power generation to strengthen economy and make t hi s area as t he hub of petrochemical industry. It is the candid opinion that approval of transmission network by the federal government was vital for the successful progress of Thar coal project. About 25,000 MW power can easily be generated from Thar coal in next 15 years, if all goes well. The reserve is larger than the oil reserves of Saudi Arabia and Iran and equal to 2000 trillion cubic feet (TCF) of gas reserves. Sindh has a total of 186 billion tons of coal, Punjab 235 billion tons, Balochistan 217 billion tons, Khyber Pukhtoonkhwa 90 billion tons and Azad Jammu Kashmir 9 billion tons of coal reserves.

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Automotive Review- Exclusive by AM

Will CCP report on auto sector help car buyers? It is to be seen whether the report will provide any benefit to the consumers or it will prove another white paper of the CCP that continued to arrive in the past and did not make any difference in the working of auto sector. The Competition of Pakistan (CCP) has tightened the screw of powerful local auto industry which works under a cartel. However, it is to be seen whether the report will provide any benefit to the consumers or it will prove another white paper of the CCP that continued to arrive in the past and did not make any difference in the working of auto sector. First the CCP in its detailed report grilled the Pakistan Automobile Manufacturers’ Au thorized Dealers Association (PAMDA) leaking the malpractice, cartellization and corruption and then came out with a detailed report titled “Competition Impact Assessment Report on the Automobile Industry of Pakistan” to assess the level of competition in the automobile industry. Director Competition Policy and Research Department CCP Ms Kishwar Khan, is the person who put up an effort to uproot the wrongdoings of the local auto industry. For this effort she must be praised as majority of the consumers who want the value of the money need high quality cars instead of decade’s old models which had been phased out and replaced with innovative models all over the world. Many consumers have been frequently writing in the “letters to the editor” sect ion of v ariou s n ewspapers complaining about poor quality of cars being produced in Pakistan and urging the government to further liberalize the imports of used cars. However, it is surprising that these two pinching reports including PAMADA report have arrived at a time when the industry was already waiting for the

Auto Industry Development Policy (AIDP) from the PML-N government. The policy has been delayed by around 1.5 years.

PAMADA has yet to respond to the allegations of cartelization leveled against them by CCP while Pakistan Automotive Manufacturers Association (PAMA) has responded in the last week of October terming the report as an exact replica or carbon copy of 2013 report. According to the executive summary of CCP report, the automobile industry was established in Pakistan in 1950 and since then has fluctuated through different phases of remaining in private and public controls. From 1980s onward, the control of the automobile industry remained in private hands. For the purpose of this report, the competition assessment of the passenger cars in the automobile sector in Pakistan has been analyzed.

Presently, there are three major car manufacturers/assemblers in the car industry in

Pakistan namely: Pak Suzuki Motor Company Limited, Indus Motor Company Limited (Toyota) and Honda Atlas Cars Limited. Between 2001 and 2011, car sales in Pakistan increased by 217% and the sales of the above mentioned three players mainly contributed towards this growth. Indus Motors, Pak Suzuki Motors and Honda Atlas have increased their sales by almost 322%, 241% and 217% respectively in this time period. Pakistan automobile industry is inward looking and it tries to protect itself t hrough the use o f regulat ory instruments. Pakistan needs to develop the automobile industry instead of protecting it and in this regard, imports have a disciplinary impact on domestic firms. Currently, the import of cars is allowed only under the Gift, Personal and Baggage Schemes with restriction on allowable age limits. The policy for import of cars with an allowable age limit of 5 years remained in practice until 12 December, 2012. This policy was changed and the allowable age limit was again reduced to 3 years in December, 2012. Furthermore, on 31 August, 2012, the depreciation rules were also changed. The current dealership/supply chain structure in the industry does not allow for meaningful competi tion as

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Monthly AutoMark International

According to the executive summary of CCP report, the automobile industry was established in Pakistan in 1950 and since then has fluctuated through different phases of remaining in private and public controls. From 1980s onward, the control of the automobile industry remained in private hands. For the purpose of this report, the competition assessment of the passenger cars in the automobile sector in Pakistan has been analyzed. dealerships are behaving merely as agents of the manufacturing companies and have no real incentive to compete in the market. Due to delay in deliveries, premiums are charged in the secondary markets. CCP recommend s imp rovi ng competition, both in the short run and long term which are: 1. Opening up of domestic market to the import of new cars at reasonable tariffs and reducing protection of local industry to allow foreign competition for the benefit of consumers will bring in new technology and offer more choice to the consumers. This increased competition will reflect in better pricing and improved quality, as well as availability of cars on demand. 2. Benchmarking its auto policies against other major developing country auto producers such as India, Thailand and Turkey by fully implementing the Trade Related Investment Measures (TRIMs) agreement. 3. Discontinuing the formulation and continuation of auto policy through SROs. 4. Discontinuing the control of the Engineering Development Board (EDB) over the materials and components used in the auto industry, the degree of local content, and the management of new entrants. 5. The recent reduction of allowable age limit for import of cars from 5 to 3 years in December, 2012 will further protect the domestic automobile industry which is already inward looking. Import of 5 year old vehicles p rov i d es a b et t er comp e ti t i v e environment in the local automobile industry; 6. However, the idea of increasing the age limit from 5 years to older than 5 years on the import of used cars may be subject to strict road worthiness tests. It is preferable for the import of used cars to be open, rather than allowed under the Gift, Personal and Baggage Schemes that add transaction costs. It is also necessary to have stringent evaluation measures to assess the depreciation and actual values of the used imported vehicles.

7. Removing the entry barriers imposed by higher tariffs for imports by significantly lowering the tariffs and making them relatively more uniform across all automobile categories. This will make cars more affordable, push the local assemblers to be more competitive, and incentivize the automobile industry to strive towards international standards and pricing. The tariff structure needs to be finalized in consultation with the National Tariff Commission (NTC). 8. The recent measure of lowering the depreciation allowance needs to be reconsidered as it may reduce consumer welfare by increasing the price of imported used cars. 9. Mandatory testing for emission and road-worthiness are needed to be introduced as part of a regulatory regime and renewal of registration of vehicles may be contingent on passing of requisite tests in line with developed countries. 10. Dealerships are merely agents of the manufacturing companies and have no real incentive to compete in the market. It is proposed that strict laws should be implemented that prohibit both parties (manufacturers and dealers) from charging any premiums f ro m the cust omer . In creas ed competition would also eliminate the premium problem, as cars will be readily available and customers will not have to wait for 6 months before receiving their car after having paid the full price in advance. 11. Focusing on job-creation in the auto-parts sub-sector which constitutes the major portion of auto-related jobs. An i mp o rt ant el ement o f any competition assessment is to identify the beneficiaries and affecters of any lack of competition in the market. The Pakistani passenger car market only has three major players, each of which domi nates a d ifferent segment of the market. Hence, the noticed vulnerability in our automobile industry is the lack of internal as well as foreign competition. Therefore, to improve the competitiveness of the

industry. The way forward for the automobile industry in Pakistan lies in the removal of investment and regulatory barriers. It is time that the practice of giving excessive protection to the industry through high import tariffs and custom duties is discontinued, and tariffs and duties are significantly lowered and made relatively more uniform across different categories. In this way, the industry will be exposed to greater global competition and the internal distortions caused by varied rates will be reduced. At the same time doors for foreign investment and new players should be opened so that a more competitive environment can propagate in the automobile industry.

PAMA’s reply After going through the CCP report, PAMA found only ‘recommendations’ in the Executive Summary and ‘Para 4, being the new insertions, however, the rest of so called report is carbon of the previous report of 2013, which was based on industry position up to 2012. Therefore, how the October 2014 report would reflect an accurate position, if it is based on more than two years old data, while objective situation has undergone material change ever since!.

The most shocking part of the report i.e. recommendations which are afflicted with lack of information, disregard of its mandate by CCP and reflects hostility with the indigenous industry. Most part of the report was devoted in support of import used cars about which, we are sure, the CCP would not have been able to gather any reliable information as activities of used cars traders are obscure to the authorities; billions of rupees transacted in the economy but all that stays out of tax net. Please read the complete report at www.automark.pk

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CBI Experts Imtiaz Rastgar & Jan Elferink with Pakistan Group at EICMA

EICMA 2014, Milan Italy Pakistani Motor Cycle Parts Manufacturers Present at the 100th Event Of The World’s Largest Motorbike Trade Fair. More than one thousand exhibitors from all over the world are present to give a show of their bike offerings of 2015, t o g e t h e r w i t h fo u r Pa k i st a n i manufacturers of motorbike parts, sponsored by the Dutch Centre for Promotion of Exports from Developing Countries, in Hall 6, M-22. The Pakistani Group , part of the Export Coaching Program of CBI, consists of Tecno Pack, Risan , Super Tech and Carbu which lead a pack of enterprising vendors of motor cycle parts, who contributed to production of 2.2 million motor cycles in Pakistan in 2013. As a result of high volumes produced, Pakistan made parts can now compete favourably in the world market. CBI is the Dutch Center For Promotion of Exports From Developing Countries, www.cbi.eu . Milan, Italy, The World’s Design Center. A total of 45,806 trade visitors profited

from EICMA’s B2B initiative; the percentage of foreign operators increased by 20%. Highly successful was the debut of the “MatchMaking” platform: a new service made available to exhibitors and operators from the world over to develop and expand their business;An estimated 551,404 visitors are at the EICMA from all over the world; The EICMA Motorbike Fair was

inaugurated on 4th Nov, 2014 , the 72th Exposition of Motor Cycles(from November 4th to 9th at the Milan Fair Grounds is the most important exhibition in the world regarding motorcycles and scooters that in 2014 celebrates its centenary. During the opening ceremony at the Congress Center Stella Polare of the Rho Fair intervened: Federica Guidi (Economic Development Minister), Maurizio Lupi (Transport Minister), GiulianoPisapia (Milan Major); e AntonelloMontante (EICMA S.p.A President and “master of the house” ). EICMA celebrates a century of life with its 280,000 sq.m. of exhibition area both outside and inside, 1053 brands, that represent 34 Countries, moreover 23% of exhibitors are debuting this year. Also for this year the service dedicated to B2B is confirmed: Match Making

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Monthly AutoMark International

The Pakistani Group , part of the Export Coaching Program of CBI, consists of Tecno Pack, Risan , Super Tech and Carbu which lead a pack of enterprising vendors of motorcycle parts, who contributed to production of 2.2 million motor cycles in Pakistan in 2013. As a result of high volumes produced, Pakistan made parts can now compete favourably in the world market. CBI is the Dutch Center For Promotion of Exports From Developing Countries, www.cbi.eu . platform, that is available for all the exhibitors for free, offers the possibility of getting in contact with the sector’s experts and organize focused meetings, to take advantage of the presence at the exhibition. MotoLive’s high level competitiveness (with 80,000 sq.m. entirely occupied by official races and spectacular moments); “The Green Planet”, a wi de- sp read area d edi cated t o sustainable mobility where the protagonist is the “electric world”; “EICMA Custom” the area dedicated to custom lovers and customization artists; “The Safety Area”(Area Sicurezza) that tells about the situation of Italian infrastructures and directly promoted by Confindustria ANCMA; for the first time the Temporary Bikers Shop, realized in cooperation with Subito.it the first website in Italy for secondhand market, is an outlet for motorcyclists; debuting this year is also the EICMA’s Boutique selling all products that celebrates the passion for two wheels.

Ex Vice Chairman Aslam Rayaz with Imtiaz Rastgar at Hero Stand

“To inaugurate the new edition of the EsposizioneMondiale del Motociclismo that this year became centenary, is a honor and a privilege for me – states AntonelloMontante, EICMA S.p.A President – “Motorcycle sector represents an important part in the Italian patrimony. This long lasting history we have, allowed Italy to “move”, to rise in the darkest moments, to implement our genius, to collect successes in sport, to be the state-ofthe-art in technical development, this is the “baton” that we must give to new generations in this handover towards the future. Only the ability to recognize who we have been and who we are, can be the key that opens the door for a new path. A path that can’t be ignored by the people who rule this country. Starting from the local institutions: because two wheels must be the privileged interlocutor to make citizens’ transfer easier and make our cities healthier.” It was interesting to note the presence of India’s Motor Bike Manufacturer

HERO Moto present at EICMA with a very large stand and a staff of more than a dozen people. Through persistent export efforts, HERO has become India’s largest exporter of motorbikes and has created its presence on all five continents. One wonders at how Pakistan government’s over protection of its automotive industry has out-lived its usefulness and how the captains of our industry are content in their cozy cocoon.

MOTOLIVE Even for MotoLive is time for celebrations. The outdoor area is celebrating, in fact, the tenth edition and continues to surprise EICMA’s audiences with a content of high quality that no other trade fair is able to offer. As usual, will be declared the overall winner of SX European Championship, a title that is assigned in a single race. Among other disciplines: Quad Race, International of Italy SuperMoto Series, Italian International Supercross. For the first time, the multiple World Champion Toni Bou will show in the

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Automotive Sector - Update

arena. EICMA FOR PROMETHEUS nonprofit association, will be the racing event with a beneficial purpose and will see 10 teams compete in a relay race of quadssupermotos and Minicross. There will be areas for a test ride and riding school. Radio Deejay is confirmed as the official radio station.

EICMA CUSTOM True art masterpieces, jewelry of fine craftsmanship, unique pieces, leader industries, international personalities and Rock’nRoll atmosphere for what has become a trend of lifestyle: these are, the elements which sign the success of t h e ar ea d e d i cat e d t o t he customization, which continues to assert itself in the landscape of KustomeKulture. Even in 2014, a must see is the appointment with the International Custom Bike Show, developed in collaboration with the magazine Low Ride and able to attract the attention of the most important magazines in the world. Now in its second edition, the Lady Custom Bike Contest, which took place in various Italian stages throughout the year, will crown the winner at the Exposition. The Artist Contest still promises great e mo t i o n s t h a n k s t o t h e l i v e performances: the artists will have to create products respecting the theme of 100 Years 100 Years of EICMA and two wheels. Indian Larry Motorcycles, David Uhl, Kevin Bean’re, Charlie Gnocchi, Charly Castro just a few names of EICMA Custom’s guests. Virgin Radio is the official broadcaster of the area.

THE GREEN PLANET For the first time The Green Planet, in collaboration with the monthly magazine InSella, is on a “widespread” area: all companies offering electrical products, no matter in which pavilion or stand, are identifiable through the display of a stamp with the wellestablished logo that identifies the theme of sustainable mobility. This gives to the

audience the opportunity to find out about the green even if the exhibitors have not only clean vehicles. The public can follow a path to visit all the “green” brands, thanks to the map on the EICMA official mobile app. The advantages of electric traction involve zero emissions, reduced maintenance costs, high energy economy and ability to integrate with consumer solutions such regenerative brakes, engine hybrid, fuel-cell, solar panels.

SAFETY AREA Confindustria ANCMA describes the pr esent conditio n o f Italian infrastructures and the most avantgarde two-wheel products now being launched on the market: this, in a nutshell, is the institutional space which represents the everyday activity of the association with regard to road safety. A complete and utter showcase on the topic, both in its contents and the setting in which it is hosted. The association is supporting the new strategy for road safety. The safe ride to the future, that has the aim to increase ev en more the safet y level of motorcyclists in Europe, presented by ACEM the European association of Motorcycles manufacturers. The long term plan of the motorcycle industry follows an integrated approach that involves technology of vehicles, courses for final users and infrastructures safety.

TEMPORARY BIKERS SHOP At EICMA 2014 for the first time, and thanks also to the partnership with the website Subito.it, all the visitors will be able to go shopping at Temporary Bikers Shop. The place to be, where dreams come true at nice price. In the special area, indeed, will be possible to find famous brands sold at small prices by the most important dealers in the Italian market. From clothing to bags, helmets and tires, but also components andmoto parts. The real news is actually the

creation of the first outlet for bikers, where they will be able to touch and see the products of the past seasons and be assisted by expert vendors.The Temporary bikers Shop is also a great chance for customers to pull themselves ahead wit h Christ mas gi ft s at competitive and favorable prices and, perhaps, treat themselves wit h something for the new year. Nearly 12 Pakistani bike apparel manufacturers were with stands and did brisk business with visitors.

100thAnniversary Of The EICMA In the year of its centenary EICMA has in store many news and surprises. For example the project “100 anni di storia verso ilfuturo”. The initiative realized by EICMA and the monthly magazine In Moto, will give to several companies the chance to tell their own history through images, characters and vehicles and products that became epic in two wheels history. EICMA itself will prepare its own area dedicated to its history. You will have the chance to dive in a century full of happenings surrounded by a magical atmosphere. The visitors total number is equal to the population of Austria, Switzerland and Portugal put together.

THE SECTOR The Motorbike Sector offers immense opportunity for Pakistani OEMs as well as parts manufacturers. There is also an opportunity for designers of clothing, safety equipment as well as add-ons. The Fair is an eye opener at how disposable incomes of affluent European bikers can bring good profits to businesses in Pakistan. There is a need for our government policy to let go of protection of the two and three wheeler market and encourage the Pakistani manufacturers to expand their market overseas......

Exclusive Report by: Imtiaz Rastgar

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Forklift - Review

THE OPTIMAL TIME TO REPLACE YOUR FORKLIFT A key component of any successful fleet management program is a planned replacement strategy. As a general rule, forklifts have an economic life of approximately 10,000 to 12,000 hours. Again, this varies based on maintenance practices, operating conditions and the type of equipment used. When running an efficient operation, itâ&#x20AC;&#x2122;s important to keep in mind the right time to replace older, less efficient forklifts. This can reduce your maintenance costs, improve your productivity and most importantly, save money and maximise your return on investment. As a direct result of timely replacement, the profitability of your business can be significantly enhanced. When forklifts are not appropriately maintained or utilised efficiently, downtime can increase which means productivity decreases and profits suffer. Ultimately, your bottom line is affected, as costs increase due to maintenance when efficiency could be elevated. So how do you determine the right time to make a new, significant purchase? All too often companies make the mistake of utilising forklifts for longer than they should. They continue to repair their forklifts rather than replace them. A lot of the time, more is spent on maintaining old forklifts rather than replacing them with new ones. Many also fail to take into account the hidden cost of decreasing productivity levels of

the forklifts. Downtime, due to nonproductivity of forklifts, results in a loss of income and should therefore be avoided if possible. Based on an economic life cycle model (shown below), a materials handling asset may be subjecting you to higher costs per hour and reduced productivity.

Forklift Life Span Companies tend to make the mistake of focusing on how long a forklift remains useful rather than focusing on its effective economic life. Some forklifts may remain useful for 10 years or more, however, these forklifts may no longer operate economically. For every forklift,

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Monthly AutoMark International there is a limit to its economic effectiveness. At some point, the cost to maintain it exceeds the cost to replace it.

The optimal time to replace your forklift is dependent on a number of factors which include: • The type of forklift and the age of its design • The severity of the application • The number of hours it operates per month and per year • The type and frequency of maintenance it receives

Type of forklift: Generally speaking, electric forklifts will have a longer life than Internal Combustion Engine (ICE) forklifts. This is because electric forklifts have far fewer moving components than ICE forklifts.

Application: Your application has a major influence on the economic life of your forklift. Forklifts which are exposed to extreme temperatures, brine or corrosives will have a shorter life span. Forklifts that operate in clean warehouses with wide aisles would generally have a longer life span. The number of hours of operation: The number of hours you operate a forklift each month determines how long it can operate economically. If you run your forklift in multiple shifts, the optimal time to replace it may be accelerated.

management program is a planned replacement strategy. As a general rule, forklifts have an economic life of approximately 10,000 to 12,000 hours. Again, this varies based on maintenance practices, operating conditions and the type of equipment used. Every operating and ownership situation and application is different. It is important that an experienced and knowledgeable fleet management professional evaluates all relevant costs and determines the optimal replacement po in t f or for kli ft s i n a giv en application/operating environment. Substantial cost savings are available through the implementation of a fleet management program that incorporates the philosophy of planned fleet replacement once a unit has reached its Optimum Economic Replacement Threshold. In order to run an efficient and productive operation, the timely

replacement of machinery is crucial. This avoids costly maintenance procedures as well as loss of profits due to downtime and delays. By replacing your forklifts at the optimal economic time, productivity and profits can increase within your bu si ness.

Periodic maintenance: If your forklifts are on a program of periodic maintenance, they will operate more efficiently and last longer, than those that receive attention only when something goes wrong. It is important that the forklift operators or mechanics check the vital fluids at the start of each shift. This can assist in prolonging the economic life of the forklift by up to 2,000 hours. Based on these factors, Hyster has designed a chart to serve as a guideline in order to aid with the timely replacement of a forklift. The chart assumes that the forklift receives regular maintenance. The chart is designed as a guide only; actual economic life may vary.

Planned Replacement is Key to Success A key component of any successful fleet

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Automotive Sector - Update

Monthly AutoMark International

Car makers fear new auto policy could open up imports The auto industry policy, which expired in 2012, is still awaiting renewal and has been sent to the Economic Coordination Committee (ECC) for approval. However, industry players claim that they have not been consulted in the process of drafting the new policy.

“We fear that the draft could tilt in favour of opening up imports for everyone and it is obvious that trade lobbies have had their say,” said a source in the auto industry. “The manufacturing sector has not been involved in the discussions.” The first auto policy was framed in 2007, when the local industry notched up a growth of 15% and started contributing 2.5% to gross domestic product. That policy considered the opinions of all stakeholders. However, the Pakistan Automotive Manufacturers Association (Pama) – the major stakeholders in the industry – claims they have no clue what will feature in the new policy. In the 16th meeting of the Auto Industry Development Committee (AIDC) on August 20, 2013, it was stated that the focus of the policy was on giving ap pr oval t o n ew p roj ect s and investments. “Some old companies have registered themselves with new names only to get duty concessions, we have reservations

about this,” said the source. According to the minutes of the meeting, the participants were of the view that if one company was using the facilities of a n o t h e r co m p a n y fo r v eh i c l e manufacturing (contract manufacturing), it should be ascertained whether the company was originally a new entrant or the same entity with a new name. The minutes further stated, “It was decided that another exclusive meeting should be convened early to deliberate on various issues pertaining to qualifying new entrants as per SRO 1098(I)/2011 and decisions with regard to facilitating genuine investments.” In spite of the obvious reservations of participants about the merits of the case, the decision was taken by the chair to grant approval to the new entrants, which were using new names for a cover to get remission in duty and taxes. “It does not require much imagination to realise what is going on in the name of the new entrant policy,” said the source.

“In the same meeting, a company, which proposed to introduce three new trucks, got the status of a new entrant. However, it was already in possession of a manufacturing certificate to produce thre e-whee ler rickshaws and motorcycles – both non-performers in the auto sector. “This proposa l f or contract manufacturing means that significant investment will not be coming in and it will be easy to gain huge benefits by way of remission in taxes and duties.” Pama Managing Director Abdul Waheed said, “The government is making the auto policy without consultations and we wonder how it will work without the opinions of genuine stakeholders of the industry.” For Waheed, their proposals for the new policy have not been considered by the authorities and the other proposals will just help some old names to re-register with a new name only to take policy benefits while making little or no investment.

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Automotive Sector - Update

Monthly AutoMark International

Import of used cars jumps 63% over 3-month period The import of used cars jumped to 9,569 units in the first three months of fiscal year 2014-15, up 63% compared to 5,863 units in the same period previous year. Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Siddique Misri said the policy – which states that the import of used cars is restricted under the transfer of residence, personal baggage and gift scheme – is being misused by dealers. Misri said that despite the misuse, government officials were caving into the demands of used car dealers. The Paapam chief added that even after the government’s budgetary measure to grant tax exemptions on Hybrid vehicles, dealers were avoiding decreasing prices. The government had announced

reducing duty and tax rates ranging from 50% exemption on vehicles upto 1,800cc and 25% upto 2,500cc engine categories. Meanwhile, Paapam Vice Chairman Iftikhar Ahmed said car dealers are making huge profits, ranging from Rs200,000 to Rs400,000 on the sale of each car. He claimed that transactions were not being conducted in a transparent manner and without any contribution to the exchequer, as no taxes are paid on profits made by the used car dealers. These imports are also damaging the Pakistani economy as they result in a loss of valuable foreign exchange. Paapam officials said that the Federal Board of Revenue needed to step up and audit the sales of car dealers, which would increase the collection of taxes that are being evaded. Secondly, government agencies are duty bound to carry out an investigation of dishonest customs appraisement officers

Auto sector has great potential Former Pakistan Asso ciat ion of Automotive Parts and Accessories Manufactures (Paapam) chairman Syed Nabeel Hashmi has called upon the government to support the auto industry, which has the potential to earn up to $5 billion annually in export earnings. He said Pakistani auto parts have the potential to grab a share in the international markets and needed government focus to utilise its potential. Referring to the recently held auto parts

show in Lahore, he said that there was a need for more such events, which would facilitate buyers in getting acquainted with locally engineered and exportable products. Nabeel said as many as 162 autos and vending industry related companies from Germany, Taiwan, India and China set up stalls at the “Pakistan Auto Parts Show”. He said the government’s economic policies and under-progress power producing projects would give great impetus to business and trade activities in the country. “Installation of new industrial units would create jobs and alleviate

Pak Suzuki launches GD110 motorbike series

Pak Suzuki arranged a ceremony at a local hotel in Karachi to launch a new version of Suzuki GD110 motorbike series by the name of GD110S. The newly introduced motorbike has reinvigorated features of comfort and modernity. The aim of the ceremony was to create awareness among the masses about the latest Suzuki products being designed to fulfill the contemporary needs of the users. Welcoming the gathering Mr. Azam Mirza, GM Marketing, Suzuki said that the newly launched GD110S motorbike is equipped with attractive and value added features that will prove to be a impetus of change in the field o f mot orbi ke ind ust ry besi des being financially a huge success for Suzuki. Mr. Hirofumi Nagao, MD Pak Suzuki said that GD110S has been designed to be the best consumer choice among all its counterparts in the market. He said that the new Suzuki product will set benchmark standards for the motorcycle industry in the country. The features that Suzuki GD110S incorporates are: 1- Headlight cowling; 2- Self Ignition start; 3- New Stylish seat; 4- Aluminum Alloy wheels; 5Introduced in 4 x vibrant colours to give customers v ariety of choice.* *

Pak set to delay motor vehicles pact Pakistan is learnt to have conveyed to SAARC countries that it is yet to complete its “internal processes” on the Motor Vehicles agreement. While no objection from Islamabad has been received on the content of the agreement, sources said the pact would have paved the away for India to have transport linkages with Afghanistan

through Pakistan.Pakistan has not been comfortable with the idea of India’s overland transit to Afghanistan. According to the SAARC practice, the agreements have to be adopted by “consensus”. And in this case, since Pakistan is not on board, it is unlikely that the agreement will be signed. Indian officials said New Delhi is keen

about an agreement on the SAARC motor vehicles, as that could be an “omnibus agreement”. This agreement allows the member states to ply vehicles in each ot her’s t errit ories fo r transportation of cargo and passengers subject to various terms and conditions.

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By Mohammad Shahzad S.A.E; D.M.P

Managing Millennial Customers Millennial customers are transforming the landscape of the service industry lot has changed in the automotive customer service industry in the last decades, but one fact is still true: high-tech, high-touch customer service inspire timeless loyalty in the demanding new world of social commerce. Whether they are old customers, young customers, or everyone in between, they’re changing customer service culture inside-and-out by their behavior and expectations faster than dealers and customer service providers can keep up with. Within the next few years, millennial customers born between 1980 and 2000 (the first generation bigger than the infamous baby boomers) also known as Gen Y will become the core customers with a new set of expectations, and they are already transforming the landscape of the service industry. Understanding and dealing with these types of generation “Y” customers is much more challenging compared with the customer group over 35 years. However, if you put yourself in the shoes of Gen Y and take a brisk walk at their pace, you can grasp and easily read their mobile minds to match with yours thoughts to resolve their issues and concerns. This new generation thinks differently about customer service, about how they want to be treated in business interactions. It is a generation of

consumers defined by the digital world that they’ve known since infancy. A group of people, larger by far than the baby boom at its height, who have lived their entire commercial lives immersed in an internet-, Wifi-, smart phoneen abl ed world and have li tt le understanding of the more earthbound sy st ems and expectat ions that dominated the customers landscape only a few years ago. “Millennials are a very open generation, and a great resource for brands, as cocreation is second nature for them” says Jacqueline Anderson, Director, at J.D. Power In dealership business, we tend to think of customer service and hospitality as following age-old principles, and there’s certainly truth to the idea that hospitality dates back to ancient biblical and Greek models. But the particulars of how customer service has been delivered for the last several decades are extremely baby boom specific. It’s time for dealerships to change, and change fast. Millennials have different ideas of where humans should fit into customer service delivery. If an app can deliver what they need, so much the better. This is one reason most millennials consult their smart-phones first–even when they’re in your store and a human paid to assist them is standing at the ready. A millennial customer isn’t willing to call you to find out whether and when

vehicle will be ready, they want to proactively receive an automated, instant confirmation in their inbox or on their smart phone. Understand customer selfdetermination. Allowing customers to control their own destiny needs to be a component of your new millennial-friendly service model. Give up old notions of control and replace them with a transparent model that allows, wherever possible, your customer to be in the driver’s seat. Embrace crowd sourcing: You can’t control product ratings, product discussions, or much else, except by providing the most extraordinary customer experience possible and letting your customers, and your critics, hash out their discussions of it in public. Become a speed freak. Millennials are superb multi-taskers who put a p remium v alu e on convenience – it’s one of the great drivers for younger clientele. Millennials’ internal time clocks and customer expectations are shaped by the instant gratification they’ve grown accustomed to from the online/smartphone experience. Speed and efficiency are of the utmost importance: in how quickly you can approach and offer up choices of product or service to meet and satisfy these customers’ needs. I have done a lot of research on the younger demographic, creating and

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Monthly AutoMark International

I have done a lot of research on the younger demographic, creating and maintaining loyalty with today’s younger customers is more of a challenge than ever before. Today we need to be on top of emerging technologies in order to capture the attention and loyalty of these millennial younger customer segments. maintaining loyalty with today’s younger customers is more of a challenge than ever before. Today we need to be on top of emerging technologies in order to capture the attention and loyalty of these millennial younger customer segments. Gen Y has high expectations because in the technological world they grew up in, they are cost conscious and they want to ensure they are getting a good price. Make sure the communication that you send are relevant to their ownership experience. Millennials are success driven, goal oriented, determined, self-confident, techno-dependent, interdependent, straight speakers and optimistic. All are excellent qualities but as customers it makes them very demanding: they expect it now; they like it short and simple because they are always multitasking: they are bored quickly; they are driven by convenience; and they always want feedback. Today we should expect millennial as our core customer base and it’s important to understand the critical role that mobile plays in their daily life. If dealers aren’t mobile optimizing every digital asset of the dealership, then they’re going lose in today’s ultracompetitive market.

Facing Facebook Generation The first generation to grow up with the Internet and mobile devices, Gen Y is also the first generation to consider behaviors like tweeting and texting, along with using Facebook, Google, Wikipedia, and YouTube, not as novel ideas, but as normal aspects of their social lives and their search for information.

Goggling Google Generation Y is the most educated, savvy, optimistic, diverse, techproficient, and soon-to-be the largest generation ever. They are exceedingly informal, and have different words, and methods, of communicating. Today’s millennial customers life blood group is “Digital Positive” they live and sleep with their devices to breathe by

their accessing information instantly by goggling Google, either through their smart-phones, tablets, or computers. Think about it, young adults today are more conditioned to have a meaningful conversation using text messaging and social media than picking up the phone and engaging in the same conversation.

Meeting and Matching Millennials’ Mobile Mind Recently, I had an upset millennial customer who wasn’t happy with the repairs. I followed up, apologized and invited him to meet to review and resolve concerns. We both agreed on meeting time. However, just before meeting I received an email from OEM head office regarding his issues. During our meeting, I asked him why he sent an email to the head office, knowing in advance that I was ready to resolve his concerns. He said, just to speed up process to get result quickly on spot rather to sit and wait. I told him regardless of his approach, the only way to resolve his issue is by re-inspecting his vehicle by our service technician and by having face to face meeting with the support of computer aid to review history of events. CRM at OEM head office just provide support and forward us issues to review and resolve at dealer level. However, the final win-win decision is dealt with case-by-case and matched with our CRM process. After a satisfactory resolution, within no time he s ent g oo d feed b ack as an acknowledgment. What I have learned from this situation is that millennial put a premium value on speedy resolution to get results in real time. Due to lack of patience, their expectations are shaped by the instant gratification; they are surrounded by digital media as the integral part of their life. Therefore, speed and efficiency are very important when it comes to resolving concerns to

their instant satisfaction. If you want to build a relationship with these customers, you are going to have to explain "why" first, and then deal with the “how”. They will get upset very quickly if you don't know the answer to their question immediately. And give them an experience they’ll want to share. The Gen Y's don't make eye contact very well because they tend to be focused on screens of all sizes and not a human face. Maybe that is why only 55 % of that age group actually likes interacting with people. Millennial customers expect brands to interact with them when things go right–and wrong. Do you remember David Carroll’s musician story, when his guitar was damaged by United Air an d a ft e r ex ha us t ed wi t h n o compensation from their public relations, he recorded his grievance into a video song and posted on YouTube. He got millions of hits, and within no time, the airli ne resolved and compensated his loss. But it was too late to avoid the public backlash; the damage to the brand’s image was done. Dealerships are going to have to adapt as millennials become a larger share of their market. While other dealers may argue that millennials are still far away from their peak, most dealers see this as an opportunity for adopting and meeting millennials and starting to build strong relationships. By focusing your efforts on quality customer care, you’ll be able to connect with these customers more deeply and help win their trust. Ultimately, regardless of a customer’s age and profile, their utmost satisfaction is more than just something for a dealership to be proud of. It is a key component of dealership business success by promoting exceptional customer service that enhances loyalty, retention and revenue. .... This exclusive article on ‘Managing Millennial Customers’ has been written by Mohammad Shahzad S.A.E., D.M.P., specially for Monthly AutoMark Magazine. (Automotive Engineer/Doctor of Motors) He is a Senior Group Manager for Customer Management Operations with The Brimell Group, Brimell Toyota and Brimell Scion in Toronto, Canada. Free advice for Automark readers; please do no t h esi t a t e t o cont a ct h i m a t shah@brimelltoyota.com or automarkcanada@gmail.com

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Exclusive Review by David McMullan

China Vs. Japan Motorcycle Rivalry – Best of Enemies

One of the oldest rivalries in the world has been the bitter relationship between China and its arch nemesis Japan. Thankfully, in the modern era this rivalry is played out on an industrial and economic level – and nowhere is the rivalry stronger than in the relative motorcycle industries. When Chinese motorcycle manufacture began in earnest during the mid-1980s, there was little suggestion that the industry would evolve to challenge that of their traditional enemies let alone exceed it in terms of units manufactured. The burgeoning Chinese motorcycle industry had its origin grounded in the manufacture of military equipment (a la Royal Enfield, BSA, Benelli et al) and created motorcycles exclusively for the domestic market. At that time there was minimal cause for alarm amongst Japan’s “big 4” who had successfully dominated the world commuter motorcycle market; nearly 30 years later things have changed significantly. A trip back to the early 1950s will show the Japanese motorcycle industry closely resembling t he modern Chinese equivalent in terms of the amount of automotive technology companies manufacturing poweredtwo-wheelers. After the Second World War Japanese companies were prohibited from p r o d uc i n g a rm am en t s l ea v i n g this industrious nation to concentrate its efforts on global supremacy through it s aut omot ive and electronics industries. During the early history of Japanese motorcycle production there were a multitude of companies producing 2wheelers, so many in fact that the

Japanese government made the decision to restrict the amount to four leaving companies like Fuji and Bridgestone to concentrate their efforts in other directions. The Chinese government has imposed no such restrictions and still actively encourages the opening of new motorcycle factories despite the recent industry down-turn. It’s evident that the Chinese motorcycle industry’s relentless march to becoming the principal manufacturer of twowheeled vehicles (petrol and electric) in the world has been aided by their aptitude to “clone” the style of Japanese motorcycles and sell them at a much cheaper price. Although these days are not yet entirely gone it is obvious that the larger Chinese companies are investing in advanced R&D and design schemes in an attempt to provide workable opposition to the Japanese on “western” and certain leisure motorcycle markets. This is not to say that Chinese manufacturing companies have given up completely trying to copy Japanese models. Every year Honda and Yamaha send agents to the Canton fair motorcycle section to make a note of all the “similarities” between exhibited motorcycles and their models, sometimes resulting in the offending “clone” being taken off display. While Japanese supremacy holds firm for now in Europe and North America, Chinese motorcycles prevail in most of Latin America and Africa with new battlefields emerging in Brazil, Thailand, Vietnam, Indonesia and Malaysia to name but a few and although it was once the case that the Chinese and Japanese only really drew battle lines in the commuter markets of Latin America

and South East Asia, now the trend is changing. Last year Chinese models outsold Japanese models in the UK for the first time, couple that with Llexeter’s winning of the “scooter dealership of the year” award for 2013 (Llexeter importing and developing Chinese motorcycles and scooters) and a new tendency towards quali t y Chi ne se co mmut e rs i s developing which will no doubt trouble the Japanese giants especially if China manages to capture other European ma rket s (Chinese c ommu ter motorcycles are now becoming much more recognized and common in Poland). There is of course some very successful cooperation’s between Chinese and Japanese motorcycle manufacturers, not least Wuyang Honda and Sukida Honda. Chongqing giant Jianshe cooperate with Yamaha and Qingqi have a long standing relationship with Suzuki. Currently, Kawasaki is the only Japanese motorcycle company not to have a partner in China (they do in India, a coup for the Indians) although the rumors of a possible collaboration with Zongshen have been circulating for years. In conclusion, it’s very clear that the Chinese have a long way to go to compete with the Japanese on the leisure motorcycle markets but they are fast catching up on some of the commuter markets that the Japanese might once have regarded as “safe.” David McMullan can be reached at engl i shmani nchi n a@g mail .co m. Also, visit his website at www.chinamotorcyclenews.com

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Monthly AutoMark International

By Ashiq Hussain

83% of automotive components sold fake or illegal

Pakistan Association of Automotive Parts& Accessories Manufacturers (PAAPAM) has estimated the value of fake and illegal automotive spare parts in the after-market at Rs 2200-2500 crore. Despite many crackdowns from government authorities and legal action from Original Equipment Manufacturers (OEMs), the fake or counterfeit automotivespare parts market is prospering in Pakistan — at least two in every five automotive components sold are fake or illegal. Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) sources has estimated the value of fake spare parts in the aftermarket at Rs 2200-2500 crore. The guesstimate of fake spare parts accounts for about 80-90 per cent of the overall after-market for spares (in retail outlets), estimated at about Rs 25, 00 crore (as of June-end). Most common in counterfeit or fake parts are clutch parts, filters, lamps, wipers blades, bearings, steering arms, as well as life-saving parts such as brakes and brake linings. Counterfeit parts are not only rambling in the case of cars and sports utility vehicles, but are equally widespread for trucks, buses and motorcycles, as these are priced 20-30

per cent cheaper. Mumshad Ali (R.K.Gears Pvt LTD), Chairman (PAAPAM), said, “Pakistan does not have mandated safety standards for after-market products; as a result of which import of counterfeit products cannot be checked…Unfortunately, it is not possible to quantify the production in the unorganized sector and the trading of counterfeit goods, as much of it remains unreported, undetected and unnoticed.” Owing to the ease of manufacturing, packaging and importing these products and the higher margins on the sales of counterfeits, retailers and mechanics prefer these. The short replacement cycles of some parts, supply constraints faced by original component manufacturers and legal shortcomings are driving the flourishing fake parts market. The Global Status Report on Road Safety 2013 published by the World Health Organization (WHO) declared road accidents in Pakistan. The report recorded at least 5,192 deaths in 2010, but the National Highway and Motorway Police (NHMP) and Rescue 1122 put the annual death toll due to road accidents

at around 12 , 0 0 0 . P A A P A M sources said in this regard about 20 per cent of all road accidents in Pakistan co uld be e i t he r directly or indirectly ascribed to the use of counterfeit auto parts. The fake parts market is also leading to a huge loss for the government — it is losing about Rs 12 billion a year in tax revenue, as none or only a few fake parts come wit hi n the country’s tax framework. Car manufacturers complain the use of fake parts impact s a vehicle’s performance and, consequently, its brand value. A few manufacturers, backed by local police, have started conducting raids in this regard. Pak Suzuki Motor Company Limited, for instance, raided the outlets of counterfeit spare parts and sent legal notices to the fake parts manufacturers. These manufacturers were selling their products under the ‘Suzuki Genuine Parts’ and use Suzuki’s logo and brand name in Lahore, Rawalpindi and Karachi.

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Internationa Automotive Industry - Update

Monthly AutoMark International

TOYOTA TO START SALES OF FUEL CELL AUTOMOBILES NEXT MONTH Toyota Motor Corp. will introduce its first mass-market fuel cell car next month, hoping to replicate the success of its Prius hybrid with a vehicle that runs on hydrogen instead of gasoline TOKYO â&#x20AC;&#x201D; There will only be a few hundred, and they won't be cheap, but Toyota is about to take its first small step into the unproven market for emissions-free, hydrogen-powered vehicles. The world's largest automaker announced yesterday that it will begin selling fuel cell cars in Japan on Dec. 15 and in the U.S. and Europe in mid-2015. The sporty-looking, four-door Toyota Mirai will retail for 6.7 million yen ($57,600) before taxes. Toyota Motor Corp hopes to sell 400 in Japan and 300 in the rest of the world in the first year. "In time, the fuel cell vehicle will become mainstream. We wanted to take the first step," said Mitsuhisa Kato, a Toyota executive vice president, at the vehicle's launch yesterday. "We want to be at the leading edge." Fuel cell vehicles run on compressed hydrogen gas, which in the Mirai's case is stored in two tanks mounted underneath the vehicle. They emit no exhaust, though fossil fuels are used in the production of hydrogen and to pressurize it. Both Honda and Hyundai are also experimenting with limited sales and leases of fuel cell cars. Honda showed a fuel cell concept car on Monday. Besides the relatively high cost, buyers will have to contend with finding fuel. Only a few dozen hydrogen filling stations have been built worldwide, though governments are subsidizing the construction of more. It's an uncertain future that depends both on whether makers can bring down the price, and a wide-enough network of filling stations is built. Asked if it's a risk, he said yes, but Toyota views it as a challenge. Likening it to a chicken and egg situation, he said if you say it's too risky and don't move forward with production, the number of filling stations will never grow. Toyota faced a similar scenario with its gasoline-electric hybrid, the Prius, which now sells in big

numbers.

"It was a big challenge when we first introduced the Prius, or hybrid car, in 1997," he said in an interview in Tokyo. "And it's an even bigger challenge this time because there is no infrastructure, and we're trying to lead" the commercialization of fuel cell cars. Hoping to offset the inconvenience of finding fuel, Toyota gave the car a futuristic look inside and out Mirai means future in Japanese and made it peppy to try to attract buyers. It accelerates particularly quickly from about 40 to 70 kilometers (25 to 45 miles) per hour, Tanaka said. The Japanese government also plans to offer a 2 million yen subsidy to purchasers of

fuel cell cars, reducing the effective price to 4.7 million yen. Sales will be limited to the primarily urban areas that have fueling stations. In Japan, with about 30 stations, that means the regions around Tokyo, Osaka and Nagoya cities in central and western Japan and the northern part of Kyushu island in the south. A few stations have opened in California in the United States, and there are plans to build some in the Northeast. Germany and the United Kingdom are among European countries that have or plan to build them. The company has about 200 pre-orders for the vehicle, mainly government agencies and companies that want to go green, the company said. Over time, Kato said, Toyota hopes to help build a "hydrogen society." The Mirai can travel 650 to 700 kilometers (400-435 miles) on its two tanks of hydrogen. In the US, its range is 300 miles because of different driving conditions. Hydrogen may be more expensive than gas initially, because there are so few customers but, over time, Toyota expects it will be cheaper to run a car on hydrogen than with gas. "To rely less on oil is very important," said Kato. "Japan has to spend its money to import fuel, so we should use it as carefully as possible."

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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.

Product & Model Name Hero RF-70 Hero RF-70 Plus Honda CD-70 Honda CD Dream Hi-Speed SR-70 Ravi Premium R1 Road Prince bullet Road Prince 70cc United US 70 United Extreme 70

Retail Price Rs. 46,000/= Rs. 47,000/= Rs. 69,900/= Rs. 73,500/= Rs. 43,000/= Rs. 46,950/= Rs. 45,000/= Rs. 39,000/= Rs. 42,000/= Rs. 44,500/=

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

Brand & Model Name Super Star SS-125 Super Star SS-125 DLX Honda CG-125 std Euro II Honda CG-125 DX Honda Dream Ravi Piaggio Storm 125 United US-125 Euro 2

Retail Price Rs. 59,000/= Rs. 67,000/= Rs. 102,500/= Rs. 124,000/= Rs. 105,900/= Rs. 112,000/= Rs. 69,500/=

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

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

Retail Price Rs. 725,000/= Rs. 1,600,000/= Rs. 2,500,000/= Rs. 1,500,000/=

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

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

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

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

Brand &Model Name Honda Pridor Super Star SS-100 Super Power SP-100 Road Price Jackpot 110cc United US-100 Euro 2 United Regular

Retail Price Rs. 86,000/= Rs. 57,000/= Rs. 60,000/= Rs. 44,000/= Rs. 49,500/= Rs. 48,500/=

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

Product & Model Name SD110 Sprinter ECO SD110 Sprinter ECO Del

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

Retail Price Rs. 90,400/= Rs. 85,400/= Rs. 98,400/= Rs. 122,500/= Rs. 109,900/= Rs. 122,000/=

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Car / Light Vehicle Price List www.automark.pk SUZUKI Model Model

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

APV 1.5L GLX MT (Petrol)

HONDA Price Price Rs. 919,000 Rs. 1074,000 Rs. 1114,000 Rs. 635,000 Rs. 688,000 Rs. 1,321,000 Rs. 1,382,000 Rs. 1,518,000 Rs. 1,059,000 Rs. 1,465,000 Rs. 1,544,000 Rs. 695,000 Rs. 700,000 Rs. 666,000 Rs. 637,000 Rs. 642,000 Rs. 2,418,000

Model Price Honda Aspire Manual 1.3L Rs. 1,652,000 Honda Aspire Prosmatec 1.3L Rs. 1,794,000 Honda City Manual 1300cc Rs. 1,572,500 Honda City Prosmatec 1300cc HYUNDAI Rs. 1,713,500 Honda Civic VTI Manual 1800cc Rs. 2,035,000 Honda Civic VTI Manual SR (Oriel) Rs. 2,267,000 Honda Civic VTI Prosmatec 1800cc Rs. 2,156,000 Honda Civic VTI Prosmatec SR (Oriel) Rs. 2,388,000 Honda CR-Z Sports Hybird Manual Rs. 3,286,000 Honda CR-Z Sports Hybird Automatic Rs. 3,366,000 Advance Withholding Tax For Filer Active For Non-Filer Non-Active Tax Payer Tax Payer City 1.3 L 30,000 City 1.3 L 40,000 City 1.5 L 50,000 City1.5 L Aspire 100,000 Civic 1.8 L 75,000 Civic 1.8 L 150,000 All Variants All Variants

TOYOTA COROLLA

PM Auto Industries (Pvt) Ltd. Model Faw Truck Super 3 Ton (3200cc) Faw Truck Prime 2 Ton (2600cc)

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

Price Rs. 1,260,000 Rs. 1,034,000

Sokon - Mini Truck (1050cc) DFSK - Mini Truck 2700MM Deck DFSK - Mini Truck 2500MM Deck DFSK - Mini Truck (Double Cabin-AC) 1400MM Deck Introductory Price DFSK - Mini Truck (Double Cabin Non-AC) 1400MM Deck Introductory Price

Rs. 763,000 Rs. 731,000 Rs. 950,000 Rs. 900,000

Sokon - MPV 11 Seater (1300cc) DFSK - MPV 11 Seater (Without AC) Rs. 1,034,000 Rs. 1,084,000 11 Seater (Dual AC) 11 Seater (Dual AC-Power Steering) Rs. 1,134,000

Model

Dual AC - Power Steering+ Power Window Sokon - Cargo Van 1050cc DFSK

Rs. 938,000 Rs. 840,000 Rs. 977,000 Rs. 740,000 Rs. 685,000

Tractor Euro Ford 85 HP Tractor Euro Ford 60 HP Tractor Euro Ford 50 HP Price List - Ex Factory (Hyderabad)

Price

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

Rs. 1,859,000

Hilux Pickup 4x4 E

Rs. 1,145,000

Sokon - MPV 07 Seater (1050cc) DFSK Without AC Rs. 817,000 Rs. 887,000 With Dual AC Dual AC - Power Steering Rs. 928,000

Price 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

DAIHATSU

11 Seater (Dual AC - Power Price Model Steering +Power Window)

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

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 December- 2014

Exclusive Review by S.M.Ahsan

AN INTRODUCTION TO AUTO ”PARTS MANAGEMENT” (Second Edition)

‘AUTO PARTS’ INVENTORY CONTROL BACKGROUND & SIGNIFICANCE The ongoing principle: “Maximum Effect at Minimum Cost” applies in the case of ‘Parts Inventory control’ as well, and it is the essence for optimized success in this very important business segment. Generally, the trade practice and a study of the behavior for the demand and consumption trend of Auto Parts reveal that around 15% of stocks generate 90% of Parts Revenue and the remaining 85% of Inventory cater to only 10% of Parts Sales. This proposition has been verified by Mr. Pareto and popularly known after him as ‘Pareto Chart’. Such statistics help in developing the basic strategic approach for most profitable and efficient Auto Parts Stocks management. The main distributors /dealers, however, have to mandatorily stock all running Parts to meet the aspiration of the clients and as per their ‘After sales’ Commitments. One satisfied customer would normally speak to three others while one dissatisfied customer will complain before at least ten others about the non availability of Parts etc. In a Buyers market, the competitors may also capitalize on such news and opportunity in order to defame the rivals and thus snatch prospects of orders from them. Again the interest of the Investors/owners and the Parts consumers are also diametrically opposed, while the former would prefer to maximize their profitability through Parts Sales of minimum stocks value, the latter will insist on 100% Parts availability at all times. The Parts Inventory Controller has to work in above environments and strike a balance and use all his/her skill and expertise to keep both parties satisfied Let’s first examine some terms ; commonly used when we talk of Auto

Parts Inventory Management • Stocks Dimension: No. of Lines (Horizontal)x Days/Months(Vertical); which the stocks will cater to • Stock-out Situation: Due to abnormal demand/Order delays, the Stock on hand reaches Nil level. • Stocks Dormancy: Due to error in ordering/decline in consumption, lot of Parts remain unmoved • Lead Time: The total time required from the ‘date of Ordering’ to ‘arrival of Parts in the warehouse’ • Competitive Parts vs Captive Parts: Fast Moving Parts generally available in the Market place versus those usually found with authorized distributors only • VOR: ‘Vehicle Off Road’ for want of required Parts • FIFO/LIFO: ‘First In First Out’ and ‘Last In First Out’ costing method of inventories • Average Costing: The cost charged to clients are generally the average ‘Weighted’ Cost and remains firm • Loss Leader: Some ‘fast Moving’ Items are politically and for strategic reasons, priced on cost to cost or below cost basis to beat competition and d i s c o u r a g e p i r a t e importers/mushrooming roadside copiers • Lifecycle Span: CBU’s useful life has direct bearing on Parts consumption • Boat Order vs Air Order: Stock orders through sea shipment versus

Emergencies through Air freight for economic reasons • UIO: ‘Units In Ope ration’ ,the aggregate population of CBUs to which Parts are deemed to cater. S.M.Ahsan • S af et y St ock Level: Measured in number of days to cater to the fluctuations in demand pattern based on historical data in consumption of any Part

INVENTORY MANAGEMENT A TYPICAL “PARTS CONSUMPTION TREND” GRAPH

Parts Consumption Curve

Product Life Span (years/kms)

The graph depicts the Quantum demand of Genuine Parts as the CBU or vehicle grows old. This however does not take into account the abnormality in demand for ‘Crash Body’ Parts and

www.automark.pk | November-2014 | Page 42

Monthly AutoMark International

One satisfied customer would normally speak to three others while one dissatisfied customer will complain before at least ten others about the non availability of Parts etc. assumes ‘accident-free’ use of the vehicle. In the initial stage shown as ‘ Introduction’, the Parts consumption (provided the vehicle has regular Preventive Maintenance) will be almost ze ro or minimal exc ept f or periodic/preventive service Parts as Filters, spark plugs etc and other consumables. This situation could continue till the vehicle has reached a life span of about 40,000Kms. Thereafter the need for replacement of usual ‘Wear and Tear Parts’ will come in for example Brake Pads, Shoes, Clutch Discs , Belts or certain Bearings, etc. This phase may be termed ‘Growth’ which will entail regular replacement of such worn out components. After the vehicle reaches over 100,000 Kms, the necessity for Engine Overhaul and maintenance will creep in followed by replacement of certain components of Suspension or axles etc. This stage may be called Maturity. As the vehicle becomes older and older, consumption of Genuine Parts will usually decline and use of Imitation/re-conditioned Parts could be preferred by the vehicle owner for economy reasons. Around this point, the consumption of Genuine Parts marked as ‘Decline’ will sharply droop as shown in steep fall of the parabolic curve. The Inventory manager should note this as ‘alert’ ,decelerate and fine tune the re-ordering parameters to avoid landing into excess surplus stocks As will be observed from the above Graph, the most effective Inventory

control should result in ensuring the stocks level to follow their Consumption Pattern and should ideally reach the Nil Stock level when the CBU comes to the end of its useful life. This is indeed a very challenging task and entails wide expertise, understanding of tricks in Parts business , resorting to air ordering or even removing components/assemblies from a n e w un i t (g e n e ra l l y c al l e d ‘cannibalizing).Some Manufacturers agree to buy-back dormant Stocks in order to encourage their distributors to take sustained risk of over-stocking and as a gesture to reduce their burden of stocks obsolescence

‘ONLINE’ ORDERING, RECEIPTS, DATA ENTRIES

Monitoring Stocks movement has now been mechanized and facilitated through use of computers system . Except for Crash body Parts or epidemic demand for certain failed components/assemblies, the demand pattern can now be very accurately projected from historical data inputs and steps taken to maintain optimum level of inventory. There is yet another consideration: the ‘Cost of Acquisition’

vs ‘Cost of Retention’ of the Inventory. For all practical purposes, a combination of Boat Order and Air Order is deemed to be implemented to ease out the funct i on of In v ent ory Con tr ol For Boat Orders, there are empirical formulae based on relevant parameters vis Order Qty= Maximum Stock levelQty on hand-Qty on Order+Safety Stock level+ Lead Time Stocks Level. But there is nothing as a rigid formula and the Inventory Controller uses such equations for guidance purposes only To be continued-----------------About the Author: S.M.Ahsan is a BE in Mechanical Engineering Graduate with PGD in Business Administration (from IBA, Karachi University ) and has had the working experience for 36 years in Manufacturing and Sales/Marketing of Technical Products. Last assignment was for 22 years as Country Parts Manager in Muscat, Oman ,at OMASCO, a subsidiary of Al-Futtaim Group of Companies/Conglomerate of UAE in sale and distribution of HONDA,HINO,YANMAR brand of Products. During this period , he has traveled extensively and participated in many Conferences and seminars and workshops with suppliers team. Author can be reach Managing Director , Automotive Parts Trading Tel: +92 21 35344224, Cell: +92 300 3467927 E-Mail: ahsan.apt8444@gmail.com

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Monthly AutoMark International

Yamaha Motor Chennai plant to go on stream soon The Chennai-plant of Japanese twowheeler manufacturer Yamaha is set to go on stream very soon, a top company official said today. "Very soon. We are even working hard to make it operational," Yamaha Motor India Vice-President (Strategy and Planning)Ravinder Singh told PTI. The company is setting up the plant at Vallam Vadagal in Kancheepuram district. It will invest Rs 1,500 core in phases. According to company officials, the plant would have an initial capacity of 4.5 lakh units per annum and can be scaled upto Rs 18 lakh units by 2018. Singh and senior company officials were here to announce the four top riders who will be participating in the 11th Yamaha ASEAN Cup Race 2014 in Indonesia next month....

TURKEY’S AUTOMOTIVE SECTOR EXPORTS TO 180 COUNTRIES According to Turkish Exporters' Assembly's data, the Turkish automotive sector made exports to 180 countries and autonomous regions and 14 free trade areas all around the world in the January – November 2014 period. Overall automotive exports were worth 18.64 billion USD during that period, of which 13.76 billion USD worth, representing 73 percent of exports, were made to EU countries. The Turkish automotive sector made exports to Barbados, the Cayman Islands, Antigua, Bermuda, Honduras, Bhutan and Central African Republic for the first time in the ten month period of 2014.

Honda admits under-reporting serious U.S. accidents since 2003 Honda Motor Co failed to notify U.S. safety regulators of 1,729 claims of injuries and deaths related to accidents in its vehicles since 2003, the automaker acknowledged on last week. The Japanese automaker said in a statement that its count of underreported claims came from a thirdparty audit. Honda cited "various errors related to data entry" and said it used an "overly narrow interpretation" of its legal reporting requirements. It said it is taking steps to remedy these shortcomings. "I haven't got a detailed report yet, but it se ems t her e we re a l ot o f administrative mistakes on the ground," Honda CEO Takanobu Ito told reporters at a corporate event in southern Japan on last week. Honda's U.S. arm responded to a Nov. 3 order from the National Highway Traffic Safety Administration (NHTSA),

seeking an explanation for why Honda failed to fulfill its legal obligation to report deaths and injuries, especially those involving air bags. Honda and Japanese supplier Takata Corp (7312.T) have been at the center of investigations of defects in Takata air bags. Since 2008, Honda has recalled more than 7.5 million U.S. cars because defects can cause the inflators in some Takata air bags to rupture, spraying metal shards into vehicle occupants. Asked what Honda had made of an early, pre-recall Takata air bag accident, in 2004, Ito said: "We don't have knowledge of inflators but ... it was difficult to foresee that it would expand" to similar accidents or recalls. NHTSA sent a second order to Honda on Nov. 5, seeking details and documents related to the air bags and inflators....

Six Maruti Suzuki models in top ten best sellers in October Maruti Suzuki India's grip on the country's car market tightened in October with six of its models, including the newly launched mid-sized sedan Ciaz, featuring in the top 10 selling brands in the month. According to the Society of Indian Automobile Manufacturers Association (SIAM) while entry level model Alto continues to lead the best selling model chart, Maruti's compact sedan Dzire moved up to the second spot ahead of popular premium compact Swift, which has slipped to the fourth spot behind WagonR. In the same month last year, Maruti had only four models in top 10 with Alto leading the pact followed by Swift, Dzire, and WagonR in second, third and fourth spots respectively. This year in October, the newly launched mid-sized Ciaz (6,345 units) was in eighth spot followed by another fresh model Celerio (5,723 units) at ninth position.

Hyundai's new premium compact car Elite i20 (8,895 units) was the fifth best selling model in the country, while its compact cars Grand i10 and Eon were at si xth and sev enth positions respectively during the month. Honda Car India's new mid-sized sedan City (5,129 units) was the tenth best selling model, a spot which was occupied by rival Verna from Hyundai last year. According to SIAM figures, Maruti's Alto sold 21,443 units in October this year as against 22,574 units in the same month last year. Dzire clocked 16,542 units as against 16,222 units last year. While WagonR sales in the month were at 14,310 units as compared to 14,270 units last October, Swift sold 11,965 units as against 19,047 units last year. Hyundai's Grand i10 clocked sales of 8,400 units in October this year as compared to 11,519 units in the yearago month, while Eon sold 6,986 units as against 6,867 units...

www.automark.pk | December-2014 | Page 45

International Automotive Industry - Update

Lifan to build car plant in Russia

Chinese motorcycle and automobile manufacturer Lifan lans to build a car plant in one of central Russia's special economic zones, a governmental agent said Tuesday. "By January 2015, the Lifan company plans to complete the project's paperwork," a governmental agent for Russian special economic zones said in a statement. Lifan hopes to start production in the central Russian city of Lipetsk in April 2017 with an operation period of at least seven years. Lifan inked a deal with the Lipetsk regional administration in October for an investment of US$300 million. The plant will be Lifan's first car plant with a complete assembly cycle in Russia. It is expected to create 1,500 jobs while producing 60,000 cars annually. Lifan currently occupies slightly over 1% of the Russian car market with nearly 22,000 cars sold in 2014. After the plant starts production, the company's share might grow to 1.9%...

Tata Nano awaits its twist of fate With low-priced variants phased out, the Twist is not enough to raise Nano's profile. But it could be the first right step More than a year ago Tata Motors set out to revamp the Nano, accompanied by high-pitched campaigns. But the fortune of the mini car is still waiting to be lifted, even though the lower variants have been taken off the road. The on-road price of the current Nano, in Mumbai, puts it in nearly the same league of India's largest-selling car, the Maruti Suzuki Alto800. The Nano Twist (with power steering), which was launched in January this year, costs Rs 2.92 lakh whereas the more powerful Alto800 is priced at Rs 3.47 lakh and the Hyundai Eon is available at Rs 3.50 lakh (on-road, Mumbai).

With Tata Motors phasing out all three first-generation variants, Nano's replacements have not pushed sales but sent prices soaring. Last year Maruti clocked average sales of 21,500 Alto units every month, while the Hyundai Eon saw 7,200 units. The Maruti Alto800 is powered by a 796-cc engine and a top-speed of 150-kmph while the Nano has a smaller 624-cc engine, with top-speed of 105-kmph. In an effort to rid it of the tag of a poor man's car and promote it as a regular compact car, Tata Motors phased out the low-cost standard, CX and LX variants that debuted in 2008 over the last one year. The phase-out reinforces the new positioning of being an aspirational mini city car.

Honda to launch CBR650F,160cc bike in India soon While little else is known about the bike at the moment, currently, Honda’s 150cc bike portfolio in India consists of the CB Unicorn and the CB Trigger, both premium commuter bikes that haven’t achieved as much success in the segment as Honda would like them to. Apart from this, Honda also offers its more niche market, fully-faired CBR150R. Expect the upcoming 160cc bike to be a premium commuter bike, along the lines of the Suzuki Gixxer and Yamaha FZ series bikes. Honda is also working towards bringing in its fully faired CBR650F sportbike by around March 2015, assembled in india and coming into the country as a CKD import. Honda’s CBR650F is powered by a fourstroke, 649cc, in-line four-cylinder, fuelinjected engine capped by a four-valve per cylinder head. The CBR650F engine

is tuned to deliver improved low-tomidrange torque. Maximum power rating is 87bhp at 11,000rpm, while the upcoming CBR will deliver peak torque of 6.4kgm at 8,000rpm. The CBR650F will come to India with a six-speed gearbox, shifted in the 1-down, 5-up pattern. ABS brakes are expected to be a part of this potent, sporty package from the big H. The CBR650F comes to India at a good time, given that Italian bike specialist Benelli is about to introduce a pair of in-line four-cylinder bikes - the TNT 600i and TNT 600GT - in this rapidly growing segment. The Honda CBR650F will also have to contend with more established, twin-cylinder rivals - the Kawasaki Ninja 650 and ER-6n, as well as British bike maker Triumph’s naked three-cylinder Street Triple.

The 40-seat "Bio-Bus" The UK's first bus powered entirely by human and food waste has gone into service between Bristol and Bath.

www.automark.pk | December-2014 | Page 44

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