Automark October 2010

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MONTHLY

The Magazine for Pakistan Au tomotive Sector

October 2010 Vol 3, Issue 10 Editor : M. Hanif Memon Sub Editor : Dr. Raja Irfan Sabir Contribution Writers : Mohammad Owais Khan Samiullah Khan Engr Khurram Mateen Omar Rashdi

Advisor : J. Pereira Abdul Majeed Sheikh Circulation Manager : Abdul Khaliq Designed By : Mustafa Hanif

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Editorial Increase in markup rate termed anti-industry The decision of increasing mark-up rate by 0.5 percent has been taken at a very wrong time as trade and industry are facing multiple challenges including war against terror, deteriorating law and order situation, political instability, energy shortage and high input cost.

"The increase is not just of 0.50 basis points, State Bank has increased one percent from 12.5 to 13.5 percent in just two months. Therefore, this increase is actually of eight percent, a huge jump in just two months. As a result, all time high inflation in the country will further increase from average inflation rate of 13.25 percent to 14.5 percent. Already, Pakistan is amongst the seven countries in the world where inflation is over and above 15 percent. In the month of July and August, inflation jumped to 29.9 percent which is the highest in the country in last 30 years."

Business community was hoping that Governor State Bank of Pakistan, Dr. Shahid Hafeez Kardar would take measures to provide some relief to the crushed industry as he, himself, is of the view that mark-up rate should be brought down to single digit but on the contrary, he has increased it.

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

Now, in the modern world, the new concept is to pump in more and more supply of money into the system by slashing mark-up rates in order to control inflationary pressure on the economy.

Therefore, we would strongly recommend Governor State Bank to immediately review increasing of mark-up in order to save the already floating and thousands of jobs, already at risk due to the prevailing economic situation in the country.

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CONTENTS The Monthly Magazine for Pakistan Automoti ve Sector

Your trust is our success Japanese motorcycle assemblers restart pushing 9-10 up the prices on weakening of the rupee against the Yen Exclusive Article on Motorcycle sector Used car dealers claim that decision on used car rules is still hot and may be taken in the new Trade Policy Exclusive Article on Car Sector

11-12

Pak Suzuki, Honda Atlas and Toyota increase prices

13

Does low price motorcycle means low quality by some new assemblers?

Exclusive Article on Bikes Quality Issues

14-15

Car sales in August as compared to July Exclusive Article in Car sector

13-14

FPCCI, KCCI flay raise in power tariffs

22

Workshop on Costing and Pricing

23

How India beat China in auto exports

36

Local assembled car price list

40

Used car prices

41

Indus Motor holds 19th Annual Dealer Conference Corporate Event

45

Total Quality Management VS Six Sigma Exclusive Article by Khurram Mateen

46-47

Hybrid / Electric Car Exclusive Article by by Omar Rashdi

49

Motorcycle price list

50-51

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Exclusive Article

by Ali Hassan

Japanese motorcycle assemblers restart pushing up the prices on weakening of the rupee against the Yen Many people think that some kind of new policy or measures should be unveiled by the government so that consumers could see a drop in Japanese bike prices.

In a country where cartelization and monopoly of the companies exist in a big way, a tradition has been going on that the markets’ old players try every thing at various levels to restrict the arrival of new competitors. They in connivance with the bureaucracy and government officials create problems to affect the working of the new comers.

It can be said here that the Japanese car makers virtually enjoy a monopoly here and only one Korean company was allowed to enter in Pakistan but it has been suffering very badly here in terms of losing sales and also financially.

A number of global car makers who also produce small engine cars have entered India thus giving a tough competition to the existing players besides providing an open option to consumers to choose the cars as per their pocket income.

In Pa kistan Pak Suzuki enj oys a monopoly in 800cc for more than two decades and consumers are still driving 1990 Mehran model in 2010 with slight changes in front grill, head light, bumper etc instead of witnessing a whole new shape.

No new company has been allowed to take plunge in Pakistan. Even Pak Suzuki has some competition with Hyundai Santro (already in hot waters) and Daihatsu Cuore which is losing sales to Suzuki Cultus and Alto and to imported used cars.

Pak Suzuki’s venture of 1,300cc had already failed in various models like AUTOMARK | October-2010 09

Baleno and now in Liana and from November 2009 Swift was launched to test the consumers’ taste.

There are a number of European and Chinese car makers who had shown interest in Pakistan but could not land here due to various reasons.

The government few months back had finally realized that the country needs smaller car assemblers. The Economic Coordination Committee (ECC) of the Cabinet has approved removal of conditions on new entrant of having 500,000 units in production in countries other than Pakisstan.

In case of car, the new entrant will now have 100,000 units annual in countries oth er t ha n Pak is ta n. For local manufacturers/joint ventures the target of 100,000 car will be achieved within three years from the date of operation subject to prescribed international standards. Moreover, there will be no other restriction on setting up new indus tries in a utomobil e s ect or .

It is a good step that the government should have taken 10 years backs to break the monopoly of Mehran 800cc and also to curb imports of used cars that could have not drained out precious foreign exchange.

It is to be seen how foreign car makers see this government’s initiative to allow new assemblers in broader perspective in a market where consumers had been accustomed of Japanese cars because of its quality and durability.

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Exclusive Article

APMA vice chairman had already disagreed that engine comprising of over 80 per cent parts are being produced locally. He had already sought details of parts makers from the EDB on this issue.

Why localization is not increasing in Pakistan.

He said the main bottleneck is the EDB which does not issue the IORC to the vendors and assemblers under SRO 655/656.

It is to be seen how foreign car makers see this government’s initiative to allow new assemblers in broader perspective in a market where consumers had been accustomed of Japanese cars because of its quality and durability.

Sabir Shaikh said that the Chinese bike makers had still not increased the prices and the assemblers are not ready to raise any price.

Many people think that some kind of new polic y or measures should be unveiled by the government so that consumers could see a drop in Japanese bike prices.

For instance, a leading Japanese bike maker has been in forefront to hit the Chinese bike industry in order resume its monopoly in the 70cc bike segment.

Despite all odds, the Chinese bike makers have succeeded in creating a niche in the market through their low price bike.

Chinese motorcycle makers say that the price bei ng charged by a leading automobile giant (both in car and two wheeler business) has been the highest in the country if compared with other counterparts like Chinese and Japanese brands producers. But this practice has been go in g on for years and the government has yet to take any notice.

They express surprise that what is more special about this Japanese player that the government has never tried to ask the assembler for charging higher prices.

Vice Chairman Association of Pakistan Motor cy cle As se mblers (AP MA) Mohammad Sabir Shaikh has raised four points about a leading business group who produce Japanese assembled 70cc bike.

One is that the group is the producer of most costly bikes in collaboration with Honda of Japan while Chinese bikes of almost same models are selling at much lower prices.

The group is also rolling out the most expensive cars (Honda Civic and City) while the price of Toyota and Suzuki cars are comparatively lower than Honda cars.

The same group, Sabir says, also sells costly spare parts while the same parts produced by other companies are available at low rates. Atlas Group is also a big importer of costlier imported AUTOMARK | October-2010 10

parts from various countries including Japan.

Atlas Honda has enhanced the price of CD-70, CD-100, CG-125 standard and CG-125 Delux by Rs600 to Rs2,000.

Now the CD-7 0, CD-1 00, CG-125 standard and CG-125 Delux are now priced at Rs Rs 63,500, Rs 70,900, Rs 86,500 and Rs 108,900 respectively.

CG-125 Delux has remained the highest priced motorcycle in Pakistan’s history and in 70cc segment, the Honda CD 70 excels due to its price as compared to other 70 CC models whose price ranges between Rs 40,000 to Rs 45,000 (all are Chinese affiliated bikes). One can easily buy a car at Rs 100,000 if the price of CG-125 Delux is taken into account.

Sabir says that assemblers of Japanese motorcycles have increased prices due to weakness of the rupee against dollar and Yen, which made the imported parts dearer amid slight increase in steel prices.

The prices of YD 10 0cc Juno on, YD100cc Yama 4 and YB 100cc Royale, produced by DYL Motorcycles Limited, have been raised to Rs73,300, Rs69,900 and Rs70,000 from Rs72,785, Rs69,363 and Rs68,850, respectively.

The company has, however, kept the rate of YD-70 Dhoom unchanged at Rs45,300. Dhoom is being produced in collaboration with the Chinese principal.

Consumers are surprised over the frequent increase in Japanese bike prices when two leading assemblers have achieved over 80 per cent deletion level and also in engine comprising 80-90 per cen t locally produced part s.

“If the Chinese bike makers would have not entered in the market then the Honda CD-70cc would have cost the consumers over Rs 80,000 due to the monopoly of a single market player,” Sabir said.

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Exclusive Article

Mohammad Owais Khan

Used car dealers claim that decision on used car rules is still hot and may be taken in the new Trade Policy No plan in sight to relax rules on used car imports. Govt is still taking car price hike issue by assemblers very lightly.

The car makers must have taken a sigh of relief now after reports that the government is unlikely to allow used car imports. Reportedly, the government has realized that any such move will have a negative impact on revenue collected from the local automobile sector.

Ad dit io na lly , t h e E n g in ee r in g Development Boa rd (EDB), after analyzing the data provided by local auto manufacturers, has observed that price in crease is mai nl y due to rupeedollar/yen parity and the overall inflation that has increased the fixed cost element of the industry. Besides, under utilization of capacity is another reason for price hike.

Under the current import policy, threeyear old cars can be imported which are in fact four-year old, given the one year registration peri od. The impact of import relaxation on Pakistan's economy is about Rs 14. 4 billi on and, if the government extends the age limit of imported used vehicles, it would suffer an additional revenue loss estimated at Rs 1.5 billion, or a total of Rs 15.8 billion.

Further, there would be an additional foreign currency outflow on purchase of used cars, especially when the country needs to conserve forei gn exchange reserves.

However, the importers of used car, who also lobby through various sources in the go vernment circles, are of firm opinion that the issue of used car imports or relaxation in rules of used

car import s is s til l u nder ac tive consideration and any thing could happen.

Some analysts think that one thing is certain that the powerful car makers are unlikely to reduce prices as previous concerns shown by Prime Minister Yousuf Raza Gillani asking car makers to reduce prices have failed to prove any desired results. Even the Ministry of Industry and Production Minister Mir Hazar Khan Bijrani had said in middle of May that the Cabinet had taken serious notice of increase in car prices of locally assembled cars. But now it seems that these sort of light warnings to the cartel of car assemblers have remained a routine exercise of top government officials just to show how much they care about the concerns of general public.

Due to lack of government’s seriousness on various issues, stakeholders in car industry are fully utilizing the situation by keep pushing up the prices of cars.

Even the government is least concerned AUTOMARK | October-2010 11

in taking serious notice of price hike in food items, leaving the consumers at the mercy of wholesalers, manufacturers and retailers to make windfall when literally no government machinery is out there to regulate and monitor prices.

The assemblers have come out with another inc reas e in car prices in September linking the hi ke to the weakening of the rupee against major currencies especially the Yen. Has the government ever checked the real impact of currency difference on the cost of car production? W hy the government has been showing lethargic attitude in taking to the task to the as s embler s for th eir fa il u re in loc ali zatio n of hi-tech engine parts des pite th eir fir m commit ment .

Many market people feel that the issue of rising production cost on the pretext of rupee-yen parity has been debated time and again and its solution is to open used car imports in order to create competition and provide choices to the end users.

Some feel concerned that opening used car imports would actually benefit the used car dealers only in an unregulated market where malpractice is rampant.

One way to bring down car prices is to lower the import duties on pa rts especially the hi-tech engine parts.

Meanwh il e, a ccordin g t o official documents and sources in Ministry of Industries and Production (MoI&P), the Economic Co-ordination Committee (ECC) of the Cabinet in its forthcoming

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Exclusive Article

Many market people feel that the issue of rising production cost on the pretext of rupee-yen parity has been debated time and again and its solution is to open used car imports in order to create competition and provide choices to the end users.

Some feel concerned that opening used car imports would actually benefit the used car dealers only in an unregulated market where malpractice is rampant. meeting is expected to approve changes in the 'transfer of residence', g ift an d p e rs o n al baggage schemes for import of used/secondhand cars.

The incumbent Chief Executive Officer (CEO) of th e E ng in eerin g Develop ment Boa rd (EDB), Ayaz Niazi, was co-accused in the BMW ca s e . M in is t r y o f Commerce is resisting any role of Industries Ministry in the transfer of residence, gift or personal baggage schemes as these schemes are in the jurisdiction of Commerce and are very much part of Trade Policy 2010-11.

Sources said that pursuant to the ECC decision of July 1, 2010, the EDB gave a presentation to the Deputy Chairman of Planning Commission about its functioning and contribution towards automobile industry. Representatives from the Ministry of Commerce, Federal Board of Revenue (FBR), Bo ard of Investment (BoI) and National Tariff Commission (NTC) were also present.

With regard to the ECC decision that th e g ove rn men t s h ould e ns ur e consistency in its policies on deletion program in the automobile sector, it was agreed by the participants that reduction in tariff on import of new cars (in CBU condition) may not be an effective tool for reduction in prices of new cars due to huge price gap between the imported new cars and locally assembled new cars.

Similarly, downward revision of tariff on CKD kits from current 32.5 percent to 30 percent as per AIDP would have negligible impact as far as reduction in prices of locally assembled new cars is concerned.

Wh ile r eite rat ing go v ern men t's commitments to follow AIDP in its true spirit, it was agreed by the participants that the only effective way to ensure reduction in prices of locally assembled

cars is to modify the schemes concerning import of used cars, viz, transfer of residence, gift and personal baggage scheme, so as to ensure a competitive ma rket for th e local ind us t ry.

Accordingly, the Ministry of Industries and Production proposed to the ECC that the age limit in respect of imported used cars up to 1,000cc be enhanced from current three years to four years, considerin g the narrow pri ce g ap between used imported cars of 1,000cc and Pakistani used cars of si milar capacity. The price gap between 1,300cc imp ort ed an d local us ed cars is substantial; therefore, the age limit of imported used cars exceeding 1,000cc is expected to be increased from existing three years to five years.

The MoI&P considers these proposed measures not only foreign exchange neutral but able to ensure availability of reliable cars to the consumers at affordable price without disrupting the market of locally made used cars.

However, it will be a huge task for the government, especially MoI&P, to ensure quality, safety and after sale service of imported cars.

The ECC, in its meeting on July 1, 2010 after deta iled delibera tions on a summary of Ministry of Industries and Production (MoI&P) titled 'rationalizing the prices of locally manufactured cars' took the following decisions; (i) approved removal of condition on a new entrant of having 500,000 units in AUTOMARK | October-2010 12

production in countries other than Pakistan; the new entrant were to be allowed 100,000 units annual production in countries other than Pakistan. For local manufacturers /joint ventures the target of 100,000 cars was to be achieved within three years from the date of operation subject to the prescribed international standards.

Moreover, there was no other restriction on s etting up new ind ustries in automobile sector; (i i) ECC deferred decision on the proposals regarding reduction in tariff on import of new cars as wel l as commercial import of three-year old cars; (ii i) Mini st ry of Indu str ies an d Production was to submit a summary to the next ECC meeting.

The a uto in dus try ent ered in to "Development Phase - 2005-2012" where the consolidation of initial achievements commenced alongside the development of strategy to shape the in dust ry in th e new competitive environment.

The deletion program, based on Government of Pakistan's agreement with World Trade Organization (WTO) on Trade Related Investment Measures (TRIMS), was done away wi th. A compli ant system was in troduced, named Tariff Based System (TBS) from July, 1 2006.

Under the TBS, assemblers have the choice of buying components at most competitive price, quality and improved supply chain ie techno economic basis.

TB S supported FBR in receiv ing penalized duties (50 percent under SRO 693) instead CKD duty (32.5 percent under SRO 656) promptly at the time

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Automotive Sector - Update

Pak Suzuki, Honda Atlas increase prices

Two local car manufacturers– Pak Suzuki Motors Co Ltd and Honda Atlas Car Pakistan Ltd – have increased per unit prices on their different models, according to a letter of the companies sent to authorised dealers.

“The decision to increase prices on different models of Suzuki and Honda has been implemented from September 18”, said an authorised dealer. “Both the companies, however, gave appreciation of yen against rupee as a reason for this increase in prices.”

He said Pak Suzuki and Honda Atlas issued a lett er to their respective authorised dealers to increase the booking price from Rs 8,000 to Rs 15,000 on different Suzuki models, while Honda has increased prices by Rs 30,000 per unit on all models of Honda Civic and Rs 35,000 of Honda City.

Authorised dealers said the companies have taken this surprise decision just after the devastating flood has ruined a major part of the country. They also said that surprisingly high premium is also being charged on almost every vehicle.

According to new price list, Mehran 800cc would be booked at Rs 539,000 after an increase of Rs 8000-10000,

Alto VX 1000cc at Rs 692,000 after an increase of Rs 100 00 to Rs 12000.

Similarly, the company has set price of Cultus VX at Rs 878,000 after an increase of Rs 12000 to Rs 15 000.

Honda Atlas has raised prices by Rs 30,000 on every model of Honda Civic and Rs 35,0 00 on Ho nda City.

The la tes t f igu res by Pa kis t an Automotive Manufacturers Association revealed that the car sales in August increased by a minimal nine percent to 19,625 units as compared to 17,950 units in the corresponding period of last year.

Analysts have forecast that the auto sector may show dismal performance ahead as the floods wo uld lead to depressed sales in the coming months.

H.M. Shahzad, chairman of the All Pakistan Motor Dealers Association, crit icis ed t he d ecis ion b y car manufacturers to increase prices and said the federal government should take serious n ot ice of t he prev ai li ng monopoly of local car manufacturers.

He said prices of al l vehi cles are declining in international markets, including Japan and Korea, but prices in th e cou ntry are in crea si ng. ...

of import and there was no need to wait for a minimum of one year, the time required for EDB Audit, customs duty as ses sment a nd OEMs pay ment.

As per EDB record, auto assemblers increased their plant capacity from 93,000 cars during 2001-02 to 341,000 cars during 2009-10.

These assemblers also developed vendor cluster of over 800 registered local vend ing uni ts w ith hig h level of t e c h n ol o g y t r a n s f e r , h u m a n

development and training. Moreover, these assemblers financially supported local vendors for asset building and technology transfers.

Under ISDP, there were three categories for deletion targets: Category A, the parts which are successfully localized by at least one assembler like interior parts and assembling facility; Category B, parts which may be localized and technology is either available or easy to transfer some electrical parts; Category AUTOMARK | October-2010 13

Toyota prices increase The Indus Motor Company (IMC) has announced an increase in the prices of Toyota cars, according to a press release issued by IMC. The price of a Corolla has been increased by Rs25,000 and the price of an Altis has been raised by Rs35,000.

Analysts cited the appreciation of the yen against rupee and the increase in p r i ce s o f r a w m a t e r ia ls f or manufacturing parts as the reasons for t his price increa se. The yen has appreciated by eight per cent against r upee si n ce Februa ry thi s ye ar.

“The appreciation of the yen against rupee will affect the entire automobile sector and other anciliary companies will follow suit in raising their prices,” said Furqan Punjani, an analyst at Topline Securities.

He added that companies which are more locali sed in their production processes will delay price increases but the increase itself is inevitable. However, the price increase should not affect the sales of Toyota cars for now since “those who buy a Toyota will not be deterred by the price increase,” said Punjani.

The company had not increased the price of its cars till now in spite of the constant yen appreciation, the press release said, adding that the automobile industry is struggling in Pakistan and the floods only added to its woes by restricting demand.

The press release informed that those customers who booked their purchases before this announcement will pay the previous price and the company will absorb that loss.

C comprised of non-deletable parts which are either capital-intensive or wherein technology is not available e.g. engine, body, power train and chasis, etc. However, the assemblers also localised Category C parts, on techno economic basis investment of over Rs 20 billion in press shop for body parts by all auto assemblers is an evidence of localization by OEMs....

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Exclusive Article

by Team Automark

Does low price motorcycle means low quality by some new assemblers?

Consumers complain about quality and after sales service of some Pakistani made new comers of low-priced motorcycles

Perhaps Pakistan is the only country where there has been no follow up strict ch ecking on t he qu al it y by the g overnment on the products after coming out from the factories in the markets and some low-priced Chinese cum Pakistani motorcycles also falls in the same category.

On the launching of the product before h uge print a nd electroni c media presenc e and costly advertisement campaigns, some assemblers might have maintained the quality after the launch bu t so me of t hem hav e lost the consumers’ confidence on the ground of deteriorating quality and they also lost there market due to bad quality.

Currently there are hardly three Chinese cum Pakistani bikes which enjoy their large sales because of their famous brand name and after sales value otherwise majority of the assemblers are just still rolling out their models in very low numbers just to stay in the market.

Because they have invested millions of rupees on the projects for motorcycle assembling if they closed there business they lost huge amount in shape of investment in the factories. Many after failing to survive because of their poor quality and high cost of production have packed up their business.

Smelling a big boost in demand and

s al es , s ome ma rket people a nd medium/large business groups, already running and having surplus money in other businesses like sugar, foam, hotel, fan etc , have plunged in the bike assembly business without having any prior techno logical kno whow and expertise in two wheeler engineering but on the basis of putting their profits made in other business and further putting in more profitable venture. In past four Japanese assemblers also are same category and they also did not had any automobile experience.

Irrespective of the renewed money making interest of new stakeholders in t he bike busin ess – th e ultimate beneficiary of new investments were the low income group people who went wild for low cost bike launched at Rs 32,00034,000 as compared to over Rs 71,000 price of Honda CD 70cc in the year 19992000.

A leading Japanese bike maker literally used to enjoy a big share in 70cc when the overall bike sales in the country were less than 100,000 units a year. If SME’s of motorcycle assembling did not start production in the year 2001 the leading Japanese bike makers will sell their products 70cc more then Pak Rupees one lac.

Despite achieving a towering success of AUTOMARK | October-2010 14

producing 1.38 million bikes in 20092010 as compared to 917,628 bikes in 2008-2009 both Chinese and Japanese, no serious efforts have been made to ma in tai n and ch eck t he qua li ty.

However, the price of Chinese bikes has been not been increased the way the Japanese bike makers ha ve been pushing up on the back of falling rupee value of the rupee against various currencies.

C ons u mer s a pp ear sa t isfie d in purchasing good quality low priced motorcycles in different areas of the country from the different brand names / assemblers. Some assemblers are selling there product in some areas of the country and the other assemblers are selling their product in the other areas of the country.

In Pakistan usually a product is launched without any planning but after sales service and quality issues are literally ignored by the producers despite achieving volumes. The quality declines as the volumes soar. If small companies will try to achive high volumes definitely quality wi ll go down witho ut any planning and investment in shape of after market.

“The increase in volumes of sales of Chinese bikes does not mean that bike sales have swelled because of quality but

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Exclusive Article actually the low price as compared to Japanese bike Honda 70cc is the main reason.”

Chinese bikes are not popular in rural areas because so many companies do not have after sales service all over the Pakistan and also lack quality and durability as compared to Japanese bikes. Growers usually purchase costly Ja pan ese bike before a nd a fte r harvesting good crops but they lack any trust on Chinese bikes as they need tough bikes to run at the depleted roads and passages in the rural and around crop producing areas.

Mohammad Arif, who works in private office, said he had a very bad experience of buying a popular Chinese brand like low quality parts, head lights, seal and front and rear needles (rim) and seats.

He said he had also approached the company and Pakistan Standards & Quality Control Authority and EDB but could no t get the desired results.

Mr. Qamar Ahmed, another Chinese bike buyer, said that he faced problems of low qualit y shocks and engin e vibration after six months of purchase.

The products producer informed him the name of vender who supplied shocks to them.

Buyers said that the after sales service is not available at the showrooms but buyers have to rush to other areas where authorized dealers look after the bike after purchasing. Sometimes it takes too much time as these dealers get involved in other bikes while dealing our problem.

“We cannot compare Chinese bike with Honda or other rivals. So it is better to have Chinese bike in view of its low price,” remarked another student.

In the period of dominance of Japanese bikes, there were very low number of students and boys of 20-25 ages who could own (either any sources of income) of Japanese bikes. Situation has changed and now these group of ages are the ma in buy ers of C hi n es e b ike s.

For the last one or two years, these young generation have been seen doing dare devil activities especially on the big main roads and Liaquatabad Fly over.

After purchasing bike they change the head of the engine to improve the engine thrust and speed. These activities (some times resulting in big accidents) had emerged because of bike affordability and these acts were not visible few years back in the era of Japan ese bike

monopoly.

Dealers said after the arrival of Chinese parts, the quality of Honda CD 70cc is not up to the mark if compared with its models of early 1990s. They said that early 90s models were really tough as consumers use to face problems after 10 years of their purchasing and even these bikes are still running on the roads.

Dealers said that for the last four to five years, the quality and durability of Honda bikes have dwindled. It seems that higher localization of parts means low quality as Honda having higher imported parts in 80s and 90s were more dura ble than the currently produced Japanese bike.

Japanese bikes have attained a deletion level of 65-75 per cent while two leading companies claim to have been producing engine locally comprising of 60-75 per cent locally produced parts. However, Chinese bike makers did not agree with this.

If the Japanese bike comprise of 65-75 per cent engine parts then why these bikes are costlier and their assemblers taking the excuse of weakening rupee against various currencies had been pushing up the price on changes in currencies parities.

Some bike makers are using engine comprising 50-60 per cent locall y produced parts while ot hers a re assembling engine after procuring imported parts. Some are assembling engine after through smuggled parts.

Association of Pakistan Motorcycle Assemblers (APMA) had already taken up the issue wi th the Engineering Development Board (EBD) seeking lists of those vendors who are making engine parts locally so that bike makers could fulfill the task of making Made in Pakistan 70cc bike engines.

Coming back to Chinese bike quality, many consumers feel that if they could run the Chinese bike for four to five years without any problem then they will be happy enough. However, these low priced bikes cannot be used roughly as comp ared to Japan ese bikes.

However in majority of cases, consumers start feeling problems either soon after purchasing Chinese bikes or after six to one year time. Many consumers, having cash problems try to maintain the bike by continuously putting up money on its mai ntenan ce or removing t he problem while others after losing hope AUTOMARK | October-2010 15

switch over to used Honda CD 70 or try other Chinese brands.

Contrary to the after sale and quality problems faced by the consumers after purchasing Chinese bike, one thing is certain that the entry of Chinese bike makers had opened new job venues besides expanding the vendors’ base and investment in the country. One can say that bikes’ population some times look more than human and car population especially on the Karac hi roads.

In a country where population is rising and ha ving no authentic da ta of population (sometimes exceeding 160 mill ion), the number of motorcycle assemblers including three Japanese bike makers have reached over 60 units while many are in the pipeline. One of the Japanese bike assemblers also start production of 70 cc motorcycle with the affil ia tion of Chin ese princ ip les.

Rising number of bike makers have neither not resulted in price decline nor created any sort of competition for the benefit of general public. Instead one can say that another mono poli zed culture in shape of Chinese bike makers have cropped up of maintaining a uni form ra te of bikes by al l th e assemblers. Perhaps that is because of purchasing the parts and accessories with the vendors who are feeding all the assemblers. Those assemblers who are involved in under invoicing in parts and using smuggled parts have also kept the price at par with assemblers who are purchasing parts from the local vendors.

Now a days the minimum cost of Chinese 70cc motorcycle is Pak Rupees 35000/ if any assemblers sell there products less then this amount how he will run his factory?

The government especially Engineering Development Board, PSQCA & FBR should initiate an enquiry over the falling quality of bikes and restrict issuing fresh assembly licences to the new entrants as over 60 bike makers were enough for the limited population if compared with China and India.

Instead of counter checking the quality the government departments usually indulge in bad practice of demanding money or other financial incentives after pressurizing the low cost bike makers by creating bureaucratic hurdles.....

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Fuel & Energy - Update

CNG stations inspection ECC may grant 40 percent rights to HDIP The HDIP had introduced CNG as motor fuel in Pakistan and developed high competence in CNG technology with nation-wide infrastructure for the development, safety and technical inspections of CNG industry in accordance with rules and regulations.

HDIP has been denied the right of ins pecting CNG st ations desp ite necessary expertise while Ogra, which lacks technical expertise, is empowered to ins pect CNG ins ta ll ations by outsourcing to private sector companies at a cost of Rs 6 to 7 million per month.

Petroleum Minis try h as moved a summary to the ECC, recommending to divide inspection work on 60:40 basis bet ween Oi l a nd Gas Reg ulat ory Authority (Ogra) and HDIP respectively.

Og ra stop ped outs ourcin g C NG inspection task to HDIP in October 2009.

Sources said that Ogra was willing to grant 20 percent CNG inspection rights to HDIP but Petroleum Minister Naveed Qamar intervened and the Petroleum Min is t r y mo v e d a s u m m a r y recommending 40 percent inspection rights to HDIP. HDIP has recommended doing away with the role of private companies in inspection of CNG installations entirely.

The regulatory, technical and safety inspection is essentially a job for public sector agencies like HDIP, but the ECC in 2006 also allowed private sector entry into the field.

Accordingly, Ogra inducted two private companies for this activity and divided the inspection work on 60:40 basis between HDIP and private companies, which reduced HDIP's revenue stream

proportionately. Sources said that Ogra had prescribed an agreement, to be signed by Ogra and HDIP, which was to place HDIP on the same pedestal as private companies.

The agreement had provisions for (i) Performance guarantee of Rs 1 million from a scheduled bank (Clause 8); (ii) only two years contract, extendable for another t wo years entirely at the discretion of Ogra (Clause 3); (ii i) dis cretionary powers to Og ra t o terminate agreement any time during the subsistence of the agreement without assigning any reason (Clause 12); and (iv) power to Ogra to interfere in as signment of personnel by HDIP (Clause 9).

Analysts noted that these provisions were highly asymmetric for a public sector organisation like HDIP that had been established by an Act of Parliament for the specific purpose, inter alia, to conduct inspection of CNG industry, testing, equipment approval, technical AUTOMARK | October-2010 16

advice, etc.

The agreement was considered by the HDIP Board on October 3, 2009, and was not endorsed. The HDIP had introduced CNG as mot or fuel in Pa kis t a n a n d d ev el op ed h ig h competence in CNG technology with nation-wide infrastructure for the development, safety and techni cal in spect ions of CNG in dus try in accordance with rules and regulations.

The HDIP has been performing the functions of Third-Party Inspectors (TPI) for the CNG Industry Regulator, ie, initially for the Ministry of P&NR and then for Ogra.

Central Chairman of All Pakistan CNG Association, Ghyas Paracha, alleged that Ogra had stopped assigning the task of CNG installation inspection to HDIP subsequent to receiving complaints against its officials. He said that CNG station owners had approached HDIP to address their concerns against HDIP officials but no action was taken.

"CNG stations owners then approached Ogra to take action and HDIP was stopped from inspecting CNG stations," he said, adding that Ogra assigned CNG inspection task to private companies, which also failed to provide quality service. He said that both pri vate companies and HDIP should be engaged in a bid to give a choice to CNG industry to opt for one or the other.....

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Oil & Gas - Update

The regulator under clouds The Oil and Gas Regulatory Authority was set up in 2002 to foster competition, increase private investment and ownership of the midstream and downstream petroleum industry.

It was mandated to protect the public interest while respecting individual rights and provide efficient regulations.

Under the Ogra Ordinance 2002, the federal g overnment assi gned to it functions for the regulation of activities relating to liquefied petroleum gas (LPG) and compressed natural gas (CNG) sectors.

In theory, it should regulate oil and gas busi ness in public interest in a n autonomous and quasi-judicial fashion, independent of other branches or arms of the government.

In recent months, however, the Ogra has become controversial. One of its members, having more than 30 years of experience in oil and gas sector, recently r es ig n e d a n d is n ow s e ek in g investigations into violations of Public Procurement Regulatory Authority rules and the government’s approved policy putting a ban on setting up of new CNG stations due to acute gas shortages.

In a letter to the prime minister, provincial governments, secretaries of petroleum and cabinet and director general of Inter Services Intelligence (ISI), the Ogra’s former member (Oil) Dr Ilyas Fazil has sought investigations into three particular issues. An official at the petrol eum ministry said the allegations by the former Ogra member could not be simply ignored but it was up to the cabinet division to decide.

He said the prime minister had imposed a ban on CNG stations in March, 2008, saying, “New CNG licenc es in the pipeline be held up. CNG connections should not be given except to those who have already imported CNG machines.”

The directive said: “No new provisional lic ence be issued which enables an investor to undertake construction, import machinery or apply for various NOCs etc.”

To set up a CNG station licence, the investor has to obtain various NOCs from the district authorities as well as a certificate from the Chief Inspector of Explosives for the site in question to ensure safety standards. A licence for a CNG Station, therefore, is site-specific.

Since the ban, a number of attempts were made by unscrupulous elements to bypass procedures to obtain licences despite the ban, especially by those whose provisional licences were issued prior to the ban but for some reason could no t complete the required formalities for obtaining formal Ogra licence and then ‘sell’ it to a third party.

One novel way to bypass the ban was to request for change of site, under the same provisional licence. Since change of site meant a new site, and in turn meant a fresh licence, all these attempts were successfully thwarted by Ogra till January 2010, saying, change of site cannot be allowed under an existing provision al li cenc e. On the same principle, Mr Fazil claimed the Ogra disallowed a change of site requested by MNA Mian Riaz Hussain Pirzada (for Chaudhry CNG Station, Hasilpur City, District Bahawalpur) on January 13, 2010.

However, a letter originating from within the Prime Minister’s Secretariat on February 11, 2010, based on the request of the same MNA asked Ogra to “revisit its policy related to change of site”. As the secretariat had issued s ta nd ing ins tr uct ion s t o ver ify AUTOMARK | October-2010 21

authenticity of PM’s letters in case of doubt, two O gra members so ught clarification in the matter, after disc ussing it wi th t he ch airman .

Mr Fazil said the chai rman Ogra ‘illegally’ ordered in May 2010 an inquiry for seeking clarification from the PM although the law did no t allow the chairman or members to pass decisions against each other and any violation has to be proceeded against for misconduct by t he Fed er al Pu blic S erv ice Commission.

On a complaint to the prime minister through the cabinet division, the two Ogra members requested proceedings against the chairman and a member. He said the secretary cabinet desired to resolve the matter without involving the prime minister.

In the meanwhile, he said the Ogra chairman allowed through his casting vote to allow change of site in violation of the March 2008 ban.

The former member (Oil) also alleged that Ogra, in spite of having a fullfledged legal department manned by full-time lawyers, has during the last 34 months, engaged outside counsels and, mostly from outside the panel of lawyers approved by the Authority. “This venture of patronising favourites and friends has cost the organisation almost Rs6 million in this short period, which is almost equal to the total amount spent on this account since Ogra’s inception eight years ago.

In his letter to the prime minister, Mr Ilyas Fazil has also said that the cabinet division while seeking fresh applications for the appointment of member oil, has required under the Ogra Ordinance that “No person shall be appointed by the federal government as a member if he has any direct or indirect financi al interest in or has any connection which

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Power & Energy - Update

FPCCI, KCCI flay raise in power tariffs The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly condemned the further two per cent raise in power tariffs.

The continuous increase in electricity charges is a planned conspiracy for sabotaging the economy of the country, which will only result in halting trade a n d m a n uf a ct ur in g a ct iv it ie s .

This was stated by Sultan Ahmed Chawla, the president FPCCI in a meeting called to discuss the recent increase by National Electric Power Regulatory Authority (Nepra) at the Federation House.

Mean while, Karac hi Ch amber of

Comme rce a nd In dust ry (KC CI) president Muhammad Saeed Shafiq, senior vice-president Talat Mahmood an d vice-president Jun aid Esmai l Makda in a joint press statement also vehemently rejected the decision of the ministry of water and power to increase the electricity tariff by two per cent for all categories of consumers across the country as the government decided to dissolve Pepco.

The statement said if Pepco was going through turbulent times, there seems no justification in passing the losses onto the consumers. It said that if the Minister of Water and Power Raja

Pervaiz Ashraf feels that the raise of two per cent is a little one, then why the government decided to share the load with the masses.

Th e st at emen t fu rth er s ai d t he government’s plan for improvement in structure of power sector is welcomed but there is no assurance that it would resolve the prevailing energy crisis.

The recently announced restructure plan seems very complicated and it should be explained. Moreover, business and ind ustrial commun it y s ho uld be consulted before chalking out any s trategy, the statement added.. ...

However a Japanese bike maker believes that if the level of localization in bike industry would have not been at the present high level of 80 per cent including locally produced engine parts, then the prices would have gone up much higher.

APMA vice ch airman had a lready disagreed that engine comprising of over 80 per cent parts are being produced locally. He had already sought details of parts makers from the Engineering Development Board (EDB) on this issue.

Why localization is not increasing in Pakistan. He said the main bottleneck is the Engineering Development Board (EDB) which does not issue the IORC (Input Output Ratio Certificate) to the vendors and assemblers under SRO 655/656.

Pak Suzuki Motor Company Limited (PSMCL) has also increased the prices from Sept 29, for its models like GS150, GS-125, Sprinter and Sprinter ECO to Rs86,000, Rs79,900, Rs70,000 and Rs67,000, showing a rise of Rs500 to Rs1,500.

Earlier, the bike makers had raised the prices few months back after t he increase in sales tax rate to 17 per cent from 16 per cent followed by increase in prices of imported and local parts.

There is a marked increase in prices of locally made bikes if compared with the rates prevailing in December 2007. For example, Suzuki GS-150 and GS-125 were avai lable at Rs68,5 00 and Rs64,500. Honda CD-70 and Honda

CG-125 were priced at Rs54,900 and Rs71,500. DYL’s YD 100cc Junoon, Yama 4 and YB Royale were selling at Rs61,500, Rs59,400 and Rs59,000.

Sabir Shaikh said that the Chinese bike makers had still not increased the prices and the assemblers are not ready to raise any price and instead they have been trying to absorb the increase in cost of production due to higher power tariff.

Pakistan’s bike assemblers (Chinese and Jap an e se m ad e) h ad ac h iev ed production of 1.38 million units in 200910 as compared to 917,628 units in 2008-09. The production may come down in the current fiscal year owing to floods, which had destroyed some crops and lands of growers, besides affecting over 20 million people.

September’s sales figures would further give a clear picture regarding the impact of floods on bike sales, especially in rural areas.

The price of locally assembled cars from January 2008 till to date has increased sharply on the back of losing strength of the rupee against foreign currencies, especially yen, which pushed up the cost of imported parts and raw material in world markets.

The prices of costly cars imported by the local assemblers have also gone up tremendously.

Toyota Corolla Xli and GLI prices had risen to Rs1,325,000 and Rs1,450,000 as compare d to Rs 893, 000 and Rs981,000 in January 2008. Toyota Corolla 2.OD and Altis prices had risen

to Rs1,740,000 and Rs1,830,000 from Rs1,296,000 and Rs1,249,000. Daihatsu Cuore CX CNG rate has gone up to Rs 7 8 5, 0 00 f r om R s 4 80 , 00 0.

The price of 800-1,000cc cars, known as middle income group choice, has surged manifold. For example, the price of Suzuki Mehran VXR CNG 800cc has risen to Rs539,000 from Rs395,000, Alto VXR CNG to Rs692,000 from Rs540,000, and Cultus VXR CNG rate climbed to Rs878,000 from Rs600,000.

Bolan VXR CNG and Ravi VX CNG prices have gone up to Rs635,000 and Rs51 9,0 00 from Rs 466,0 00 and Rs344,000, respectively. Liana RXI CNG 1,3 00cc price has increased to Rs 1 ,1 9 9, 000 f rom Rs 84 0, 000.

Pak Suzuki Motor Company Limited (PSMCL) has also been importing APV 1,500cc and Jimny, whose rates are now tagged at Rs1,850,000 and Rs 1,870,000 as compared to Rs1,058,000 and Rs1,130,000.

Honda Citi Manual is now tagged at Rs1,259,0 00 as compared to Rs 887,000, while its automatic version is no w avai lable at Rs1,426,0 00 as compared to Rs 947,000 in January 2008. Honda Civic Vtec manual and Vtec prosmatec versions are now priced at Rs1,673,000 and Rs1,930,000 as comp ar ed t o Rs 1 ,3 87 , 000 a nd Rs1,567,000, respectively. Honda CRV Automatic and Honda Accord Automatic are now priced at Rs 5,566,000 and 5,966,000 as compared to Rs3,199,000 and Rs 3,599,000. ….

AUTOMARK | October-2010 22

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Press Release - Education

Workshop on Costing and Pricing of Engineering Goods and Auto Parts Islamabad, September 17: Centre for Promotion of imports from developing countries, Netherlands, Ministry of Development Cooperation (CBI) and Skill Development Council, Islamabad will jointly hold a two days workshop in Lahore on “Costing and Pricing” for SME engineering sector firms on December 13 &14, 2010 at the Holiday Inn, Lahore.

SME Engineering Sector companies in the engineering sector are always under stress and lack the skills to workout the cost of a sub-contract part or subassembly. They need to be correct with the “right price” while still ensuring that the deal is profitable for them. Often the owners lack these skills and also do not have staff, which is trained.

Whether these firms work for the local auto and tractor assembly plants, the local machine building industry or for

the export market, they are short of skills on how to cost their product and defend their price. With ever increasing energy costs and sky-rocketing raw material prices, many vendor companies are unable to convince their customers on the genuineness of their claims to price increase.

The Sill Development Council Islamabad have identified this skill gap and together with the CBI have put together a course

Japanese bike prices up on weakening rupee

Assemblers of Japanese motorcycles have increased prices due to weakness of the rupee against dollar and Yen, which made the imported parts dearer amid slight increase in steel prices.

An official in the DYL Moto rcycle Limited said that the prices of YD 100cc Junoon, YD100cc Yama 4 and YB 100cc Royale have been raised to Rs73,300, Rs69,900 and Rs70,000 from Rs72,785, Rs69,363 and Rs68,850, respectively.

The company has, however, kept the rate of YD-700 Dhoom unchanged at Rs45,300.

When asked why the prices of bikes had been increased when over 80 per cent deletion in parts has been achieved, he said if the level of localisation in bike industry would have not been at the present high level, the prices would have gone up much higher.

Pak Suzuki Motor Company Limited (PSMCL) has decided to increase the

prices from Sept 29, for its models like GS-150, GS-125, Sprinter and Sprinter ECO to Rs86,000, Rs79,900, Rs70,000 and Rs67,000, showing a rise of Rs500 to Rs1,500.

Atlas Honda enhanced the price of CD70, CD-100, CG125 standard and CG1 25 Delux by Rs600 t o Rs2,000.

Earlier, the bike makers had raised the prices few months back after the increase in sales tax rate to 17 per cent from 16 per cent followed by increase in prices of imported and loc al parts.

There is a marked increase in prices of locally made bikes if compared with the rates prevailing in December 2007. For example, Suzuki GS-150 and GS-125 w ere a vai la ble at Rs68,5 00 a nd Rs64,500. Honda CD-70 and Honda CG125 were priced at Rs54,900 and Rs71,500. DYL’s YD 100 cc Junoon, Yama 4 and YB Royale were selling at Rs61,500, Rs59,400 and Rs59,000. ...

AUTOMARK | October-2010 23

for owner managers and executives of Engineering Sector SMEs from Auto parts, machine building, pipe and process manufacturing sector and sub contract manufacturers The main purpose of this workshop is to build the capacity of SME engineering sector companies through an interactive process, kno wledg e tran sfer, EU business cases; individuals work on real life aut omotiv e bu si n ess ca ses .

The workshop will be very interactive and comprises real life cases as well as prac tical experience wi th original equipments manufacturing (OEM) and RFQ process; participants will gather knowledge and practical know-how with respect to calculations, negotiations and price defending. These are encouraged to make an overview of the cost price calculation methods in operation in their own company prior to coming to the training.

The workshop will be conducted by a strong faculty consisting of Mr. Jan Oude Elferink, Mr. Martin Bitter and Mr. Imtiaz Rastgar, CBI External Expert in Pakistan .

Last date of registration is November 20, 2010 . Seats are limited and admission will be on first come first served basis SDC Islamabad focus to maximize the potential of participants through the acquisition of knowledge and skill, it also provide extra ordinary on target training and motivation of honesty, quality, self respect, performance and integrity to all participants to prepare executives needed to make Pakistani businesses competitive.

visit our website www.automark.pk for more other news and articles

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Focus on Economy

Export-oriented sectors Government's intention to withdraw zero rating criticised He is afraid that the country may see serious negative outcome of any such action including sharp drop in exports besides large job cuts in this industry Chairman Site Association of Industry (SAI), Salim Parekh has criticised the government's intention to withdraw zero rating from five export oriented sectors.

He was of the view that discontinuity of zero rating will lead to another circular debt for Pakistan.

He said that the intention of the present government to withdraw this zero rating of sales tax and implementation of VAT would be a step backward and ruin the backbone of the nation's economy-the textile sector. Talking to newsmen, he fou nd it s urprisi ng th at des pit e experiencing the great advantages of the zero rating facility, the Government is again going backward.

Parekh said that the textile sector is undergoing the worst ever crisis with yarn prices doubled, power shortage, gas load shedding, and frequent increase in power and gas tariffs. He said that in war like situation in the country due to

heavy floods and severe law and order problems the government's intention to withdraw zero rating from five exportoriented sectors would push this foreign exchange earning sector to the wall.

He said business community was in favour of in creasing ta x net and extending tax levy on services and other n on -t ax e d s ect or s . Cr it icis in g bureaucracy, he said it appears that bureaucracy has found a simple way by withdrawing zero rating facility on major foreign exchange earning and exportoriented sector. Parekh feared that the government's move may create serious liquidity problems for this sector.

Referring to Federal Board of Revenue (FBR) performance in refund cases, he said FBR had introduced electronic refund system and made several claims of quick processing of refund cases but all these measures failed miserably in effecting timely refunds. Citing Member

FBR, he said that VAT canno t be implemented before clearing all pending cases of refunds, and added refund cases were shifted to RTO in November 2009 but since then hardly any claim has been cleared. Opposing move of reintroducing refund regime, Parekh sa id that reintroducing refund regime will only open floodg at es of corru pt ion.

He is afraid that the country may see serious negative outcome of any such action including sharp drop in exports besides large job cuts in this industry.

Replying to a question, Parekh said that the Government should charge Sales Tax on retail sale which is not paid back and must exempt the manufacturerscum-exporters because Sales Tax is taken and then given bac k w hich involves large Government machinery and proves to be an exercise in futility....

Floods damage 67 industrial units As many as 67 industrial units, including a sugar mills, were devastated by floods in Sindh, causing loss of millions of rupees.

Most of the units are located in districts Jac oba bad , Sha hd kot, La rkan a, Hyderabad, Thatta, Shik arpur and Kashmore.

Industries secretary Ali Ahmed told media that details of damag e to industrial units in other areas are still awaited and would be available after water recedes. He said it was premature to say whether the government would be able to pay any compensation to owners of lost units.

Meanwhile, a list of affected industrial

units revealed t hat 67 uni ts were damaged by floods in the province.

A total of 13 units, mostly rice mills, were damaged in Jacobabad.

The claims submitted by the owners estimate the loss per unit at Rs1.2 to 1.5 million. Of the 13 units, 11 were rice mills. In Taluka Garhi Khairo, eight industrial units, mostly rice mills, were damaged by floods, causing average per unit loss of Rs2.5 million.

The higest number of units, 35, was affected by floods in Taluka Thul where the loss per unit has been estimated at Rs2 million.

In district Kashmore and Kandhkot, floods wrecked 11 units. The average per AUTOMARK | October-2010 24

unit loss has been estimated at Rs2.5 million. Most of the affected rice mills are located at Ghouspur and Karampur.

Director of Industries Ishrat Siddiqui confirmed that so far there is report of 67 factories damaged by floods in the province.

Cha irma n, Pak ista n Sug ar Mil ls Association, Sindh chapter, Wajid Arain, told media that flood water entered Larh Sugar Mill causing capital loss to the machnery and plant.

It may be pointed out that after Larh sugar mills knocked out of production, only 28 mills would start crushing this season...

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City Transport - Update

Karachi Transport Master Plan JICA presents progress report to technical body Japan International Cooperation Agency (JICA) has completed surveys in 18 towns of Karachi under the first ever 'Transport Master Plan' of the city.

About 40,000 residents from 18 towns and six cantonment boards participated in the survey.

According to sources, the Japanese team, which has been working on the master plan for the last one year, presented its progress report to the te ch n ical co mm itt e e of S in dh Government on last week.

The report was presented by Minoru Shibuya, Japanese team's head in a meeting of the committee, headed by Managing Director Karachi Mass Transit Cell Malik Zaheer.

The meeting was attended by experts and officials of various departments including Finance Department, Planning

and Development, Civil Aviation, KPT, Port Qasi m, DHA, Milit ary Land Cantonments, Traffic Police, Population Department, Pakistan Railways, and City Di strict Government Kara chi (CDGK).

The representatives of the departments hailed the work and progress of the JICA team.

Th e s t u d y u n d e r 'T r a n s p or t Improvem ent Project' wo uld b e completed within two years, which would be the first tranport-related master plan of any city of the country.

Sources said the study, would facilitate the preparation of 'Karachi Transport Master Plan 2030'. Besides, it would validate the transport project identified in the Karachi Development Strategic Plan-2020 (the transport section of Karachi Master Plan).

It is worth mentioning here that for the last 62 years, n o mast er plan of transportation has ever been prepared for any city of Pakistan and it is for the fist time that a complete planning for at least 20 years is bein g made for Karachi.....

AIDC fails to hold regular meetings Only four meetings of Auto Industry Development Committee (AIDC) have been hel d in 33 months sinc e its formation.

According to terms of reference of the notification, the meeting was required to be held at least once a month, but from December 2007 till todate, only four me etin gs ha ve been held.

The AIDC was formed throug h a notification issued by Ministry of Industries and Production on Dec 18, 2007 as per a decision of the Economic Coordination Committee.

While taking up the matter with the government, vendors of car industry told Dawn that the AIDC is a platform of all stakeholders which has a main role to play in preparing and implementing government policies.

Vendors said: “The AIDC meetings

should be held in the first week of every mon th. ” Parts mak ers w ere al so unhappy about the non-implementation of the Auto Industry Development Programme (AIDP).This programme, which replaced the deletion programme in 2006, was prepared with consensus of a ll st a keh old er s , in clu di ng government, car makers and vendors.

Vendors said that one of the key AIDP issues regarding lo calisation of hi-tech parts and their inclusion in SRO-693 still requires a timely action from the Engineering Development Board (EDB).

Under a five-year tariff plan in the AIDP, a total of 10 main hi-tech parts were needed to be localised and included in the SRO-693 with effect from July 2009.

In the meantime, the EDB granted a one year extension for providing support to the car assemblers under a commitment AUTOMARK | October-2010 25

that the inclusion of these 10 parts in SRO-693 would be done from July 2010.

However, the Federal Budget 2010-2011 completely ignored this issue which is tant amoun t to violation of bas ic requirement of the AIDP. Prior to the budget, an exercise of preparing budgetary recommendations was condu ct ed by th e E DB an d committees were formed under the con venorship of Engr M A Jabbar (Committee on Indigenisation and Budget Proposals) and Feroz Khan (Committee on Review of SROs and PCT Heads). Despite hectic discussions among government and stakeholders and submitting recommendations to the EDB for implementation in the 20102011 budget, recommendations were not incorporated in the budget....

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News Updated

Smart card for payment of vehicle tax

Mr. Dabeer said that there were about 5,000 vehicles whose owners had not collected their original number plates after registration.

The Motor Vehicle Registration (MVR) Department of the Ministry of Excise and Taxation is all set to introduce smart card to facilitate payment of vehicle tax.

The handy card would help vehicle owners to pay tax at special counters after office hours. Arrangements will be made with the non-bank institutions to receive vehic le tax from the smart cardholders.

Director MVR Dabeer Ahmed Khan told media that the card wo uld benefit owners of about 2.2 million vehicles registered with the department and would also serve as a secondary proof of ownership of the vehicle during Traffic Police checks.

The card would carry nominal handling charges, but would save from standing in long queues at MVR office at Civic Centre, he added.

Collect files Mr Dabeer also advised owners of the vehicles registered before 1980 to collect their files from the department otherwise the record would be destroyed.

Since the entire record of vehicles has been computerised, the department has no space to preserve thousand of files.

Around 40,000 files to be destroyed if their owners did not collect them, he added.

He said despite hectic media drive the vehicle owners had not shown any interest in collecting their files, which are needed at the time of sale and p urcha se t o get a be tter price.

According to data released by the MVR department about 30,000 to 40,000 vehicles were not road worthy and were off the road but their owners had not reported to the department resultantly huge road tax had been accumulated on the owners.

Mr Dabeer said that there were about 5,000 vehicles whose owners had not collected their original number plates after registration.

He said that motor dealers had been directed not to deliver any new vehicle without registration.

“The Traffic Police is out to confiscate v ehi cle s w ith AF R (ap plied for registration) number plates on the directive of the Sindh High Court,” he said.Mr Dabeer expressed ignorance about reports that the go vernment intended to liberalise import of used cars to bring down prices of locallyassembled cars. “About 300 locallyassembled cars are registered daily with the department co mpared to only 10 imported cars,” he disclosed.

BCCI elects new body Wali Mohammad from the Progressive group has been elected unopposed president of Balochistan Chamber of Commerce and Industry, Quetta, for 2010-11. Rafu Gul Barrach and Mumtaz Ahmed have been elected vice presidents of the BCCI. Earlier, 14 members were elected uno pposed t o the corp orat e and associate classes.

They include Haji Rafu Gul, Haji Ghulam Sarwar Mengal, Malik Abdul Rehman, Jamil Ahmed Khan Jogezai, H aj i N az ar Moh a mm a d , H a ji Mohammad Rasool and Syed Sher Ali Khan Mas hwani (corporate cl ass) Mumtaz Ahmed Paricha, Abdul Rehman Shah Agha, Syed Abdul Qadir Agha, Haji Abdul Wadood Achakzai, Syed Ghulam Sarwar Shah, Haji Mohammad Afzal and Mohammad Hasan Ac hakzai.

USAID, SCCI sign MoU USAID an d Sa rhad Cham ber of Commerce and Industry (SCCI) on Monday signed a memorandum of underst anding (MoU) to provide fin an cial a s si s ta n ce t o Khy be r Pakhtunkhwa for its economic revival.

Peshawar based US Consul General, Elizabeth H Rood signed the MoU on behalf of the USAID while president SCCI Riaz Arshad represented SCCI. Talking to media, Rood said that the economy of Khyber Pakhtunkhwa was

faci ng enormous challenges due to militancy and extremism and natural disasters.

The MoU aims to involve the chamber, provincial government, civil society, academia and experts to develop a vision for the economic growth of the province in the coming years.

She said that they wanted a brighter and pros perous future of the Kh yber Pakhtunkhwa adversely affected by the recent super flood.

AUTOMARK | October-2010 26

Giving details of the MoU, she said that funds would be provided for trade, communications, agriculture and other sectors of Pakhtunkhwa province that was badly affected by the devastating floods.

To a question regarding the revival of the sick industrial units of the province, she said that they would in collaboration with SCCI in this regard...

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Automotive Sector - Update

2043 unclaimed vehicles set to be auctioned

“Right now in all there are 2,043 vehicles available for the auction,” said an official citing from a recently compiled data.

“They are 1,731 two-wheelers and 312 four-wheelers. The bidding arranged by the Citizens-Police Liaison Committee (CPLC) will continue for four days under the supervision of a civil judge and a judicial magistrate.

The Sindh government is set to auction more than 2,000 unclaimed vehicles lying at the centralised vehicles’ pool — commonly known as Nazarat — after it retrieved over 330 vehicles from senior government officials, members of the armed forces and influential individuals, following a Supreme Court order, it emerged on Sunday.

Officials said the process to hold the four-day auction — from September 28 to October 1 — had already been initiated after it was made sure that no such vehicle remained in the use of any institution or individual who were lent the impounded vehicles under the ‘supardari’ rule.

“Right now in all there are 2,043 vehicles available for the auction,” said an official citing from a recently compiled data.

“They are 1,731 two-wheelers and 312 four-wheelers. The bidding arranged by the Citizens-Police Liaison Committee (CPLC) will continue for four days under the supervision of a civil judge and a judicial magistrate,” the official said.

He said that officials of the Pakistan Army, home and revenue departments would also be part of the team that would witness the overall bidding process during the four days.

“Among the 2,043 vehicles, those 335 vehicles are also included which have been retrieved from different senior government officials or other individuals in line with the Supreme Court order,” added the official.

He said that the retrieved vehicles were 153 four-wheelers, including several fou r- by fou r ve h icles , a n d 1 82 motorcycles which were in the use of mostly senior officials.

The ‘supardari’ is a process wherein unclaimed vehicles are allowed to be used by different individuals with a pledg e of returni ng them to th e authorities when the rightful owner claim them.

However, the Sindh High Court in 1992 had issued an order that vehicles must not be handed over under the socalled arrangement to any person other than the owner.

The officials said the arrangements for the planned auction had almost been completed with the aim of disposing of the vehicles in a transparent manner.

“Before the next auction the due procedures are met under Sections 523 (procedure by police upon seizure of property taken under Section 51 or stolen or procedure where owner of the property seized is unknown) and 524 (procedure where no claimant appears within six months) of the criminal procedure code (CrPC) before holding final bidding,” said CPLC chief Ahmed Chinoy.

He said the CPLC which organised the centralised vehicles’ pool (CVP), or Nazarat, had a history of successfully ho ld in g tr ans paren t au ct ion s of unclaimed vehicles. He expressed the hope that the activity would continue on a regular basis.

AUTOMARK | October-2010 27

Established in 1992, the CVP is designed to help people locate their missing or stolen vehi cles , which have been recovered, at one place instead of visiting different police stations.

Nazarat is monitored jointly by the city government and the CPLC. “At the last auction in March 2009, we managed to dispose of more than 800 unclaimed vehicles, which were lying at Nazarat, in a threeday open auction. The auction generated over Rs17 million for the provincial exchequer through the open and transparent bidding,” added Mr Chinoy.

He said under a defined procedure the successful bidders would have to deposit the earnest payment — 25 per cent of the bidding amount — at the drop of the hammer.

The remaining 75 per cent of the bidding amount plus the income tax would have to be paid within seven days after the confirmation of the auction proceedings by the provincial government, he added.....

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Automotive Sector - Update

Autos Sector Shows Growth Potential

The sales growth covered all car segments, but the global trend for a shift to small cars was bucked as the highest m-o-m growth came in the 1300-1600cc segment, where sales rose by 31%. The 850cc and 1000-1300cc segments both recorded growth of 25%.

Pakistan's car sales have shown signs of improvement in the early months of FY10, largely thanks to price reductions on the part of carmakers. Car sales of 10,372 units were up by 28% monthon-month (m-o-m) in October and were 8% higher than in October 2008.

Al though this may appear to be a welcome sign of recovery after a 50% decline in car sales in FY09 (ending June 2009), t he Pakista n Aut omotive Manufacturers Association (PAMA) has partly attributed the growth to a rush by consumers to buy before prices were increased again at the end of October.

Several carmakers have raised prices to counter the effects of exchange-rate fluctuations, which have been adversely affecting margins.

The sales g rowth covered all car segments, but the global trend for a shift to small cars was bucked as the highest m-o-m growth came in the 1300-1600cc segment, where sales rose by 31%. The 850cc and 1000-1300cc segments both recorded growth of 25%. For the first

four months of FY10 combined (July to October), sales rose 21% to 34,553 units.

However, with October's price hikes li kely to affect sales in the coming months, BMI is forecasting car sales growth of around 5%. While we expect some correction in the market from a particularly low base in the last financial year, higher prices will drag on the market's potential growth.

With this in mind, Pakistan rounds out BMI's Business Environment Ratings for the automotive industry in Asia Pacific in 14 th place with a rating of 38.9 from a possible 100. The market is held back by low production growth potential and an average rating for sales growth. However, as a signatory to the Trade Related Intellectual Property Rights Agreement (TRIPS) under the a u s pic es of t h e W or ld Tr a de Organisation, the country's regulatory environment scores well. A number of free trade agreements also contribute to this criterion, although forming FTAs with non-Asian countries would improve

this rating further. Despite low marks for bureaucracy and corruption, the market does score well for its long-term economic risk and policy continuity.

The competitive landscape remains restricted to a handful of players, however. Indus Motor took advantage of growth in the higher engine capacity passenger car segment, with sales of the Toyota Corolla contributing to growth of 25% y-o-y in October and growth of 77% for the first four months of the financial year. This took the company's market share to 42% from 28% in the same period of the previous financial year. Pak Suzuki's market share for the four months fell to 45% as its sales for the period were down 2% y-o-y, despite a 23% increase m-o-m in October and 2% y-o-y increase for the month. There is an opportunity for Pak Suzuki to claw back some ground, ho wever, after launching five variants of the Suzuki Swift in October.

Aamir elected PAAPAM chairman

Aamir A. Allahwala has been elected uno pposed as Chairman Pakistan Assoc iation of Automotive Parts & Accessories Manufacturers (PAAPAM), while Syed Nabeel Hashmi elected as Vice Chairman. Election Commissioner Mohammad Saleem announced the official results of PAAPAM election 2020 in the annual general meeting (AGM).

The other elected members of the

Managing Committee are Mohammad Aslam Mal ik, Mohammad Ashraf, Sheikh Mehboob Ashraf, Mehmood Alam Sherani, Mohammad Siddique Misri, Shariq Sohail and Arshad Amin Awan.

Federal Secretary Industries Abdul Ghaffar Soomro, Chairman and CEO Engineering Development Board Aitezaz Niazi and out-going chairman Tariq AUTOMARK | October-2010 28

Nazeer congratulated the new body.

PAAPAM office bearers said that local manufacturers were providing cheapest motor cycles and tractors in the region due to 90 percent indigenisation and transfer of technology. They said if the international manufacturers of cars transfer technology to the local vendors, then prices of locally made cars would also come down.

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Focus on Economy

Govt studying future plan without IMF The 23-month $7.6 billion SBA was originally approved by the IMF’s executive board in November 2008 on the request of former finance minister Shaukat Tarin and on the basis of a stabilization programme which was augmented in August 2009 to $11.3 billion for 25 months because of shortfalls in international aid flows following a cold response from the Friends of Democratic Pakistan (FoDP).

The government is considering to wind up the Standby Arrangement (SBA) with the International Monetary Fund (IMF) on a “positive note” after meeting all conditionalities and receiving the next $1.7 billion tranc he in NovemberDecember this year.

Informed sources said the authorities hoped to meet the remaining major conditions of the IMF programme, including introduction of a broadbased reformed general sales tax (RGST) and energy sector reforms during the current qua rter (Oc tober-December) and complete the fifth review in OctoberNovember.

The review would enable the authorities to draw another tranche of about $1.7 billion before end-December this year.

A go vernment official said that the authorities had discussed the option in internal meetings and a final decision about the termination of the SBA would be made by November this year keeping in view the economic situation at that time.

With the completion of the fifth review and release of $1.7 billion, Pakistan’s remaining share of the $11 billion SBA programme would come down to about $1.7 billion that the authorities now consider not to avail.

Pakistan’s foreign exchange reserves increased last week to about $16.75 billion, enough to cover more than five months’ imports. Robust remittances from overseas Pakistanis and lower than

previous years’ trade deficit had given confidence to the authorities to discuss a pr emat ure completion of t he p ro gr a mme , t h e s our ces s ai d .

They said that the proposal to conclude the IMF programme had three positive aspects. One, the government would be able to adjust repayment of about $1.2 billion due to the IMF during the current fiscal year against the last IMF’s tranche, instea d of pilin g up more loan s.

Second, it would give a positive signal to the international capital market that Pakistan’s economy was stable enough to meet its programme criteria and inter national obli gat ions despite d eva s ta tion s ca us ed b y floods .

Third, the sources said, the government wo uld be able to negotiate a fresh programme with the IMF, if need arose at a later stage, on the strength of an e a rl ier s u cc es s f ul p ro gr a m me completion.

Pak istan had terminat ed an IMF programme prematurely during former prime minister Shaukat Aziz’s tenure on a positive note after successful c o m p l e t i on o f p r o g r a m m e ’ s conditionalities and had given up its right to draw last tranche of the programme. That was the only IMF programme, out of seven arrangements, Pakistan had successfully completed and started repayments ahead of time.

The 23-month $7.6 billion SBA was originally approved by the IMF’s executive board in November 2008 on AUTOMARK | October-2010 33

the request of former finance minister Shaukat Tarin and on the basis of a stabilization programme which was augmented in August 2009 to $11.3 billion for 25 mon ths because of shortfalls in international aid flows following a cold response from the Friends of Democratic Pakistan (FoDP).

Pakistan has so far received about $7.3 billi on un der th e S BA wi th the completion of fourth review in May this year. Since then the IMF has withheld payments of t he remain ing three instalments because of continuous sl ippages on performance criteria.

A few months ago, Pakistan and the IMF had agreed to merge three instalments of $1.2 billion each into two tranches of $1.7 billion each but the releases could not be made when Pakistan did not introduce the value-added tax with effect from July 1, 2010, or complete the power sector reforms as committed to the IMF, t he W orld Ba nk a nd the As ia n Development Bank.

The SBA was meant to restore financial stability through a tightening of fiscal and monetary policies to bring down inflation a nd stren gthen foreign currency reserves, protect the poor by strengthening the social safety net and rai se budget ary revenues t hrough comprehensive tax reforms (VAT) to enable significant increases in public investment and social spending required for ac hievin g s ustaina ble growth.

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Industry - Update

Protection for local industry MoI&P suggests adoption of import-restricting measures Th e Min is try of Indu st ries a nd Production (MoI&P), in order to protect local industry, has suggested adoption of import-restricting measures which d o n ot v io la t e W or ld T ra d e O rgan isa tion' s (W TO) s trictu res.

The draft industrial policy suggests that given limited policy space in tari ff measures, the go vernment should effectively use non-tariff measures to its a dvantag e in lin e wit h the WTO a gr eeme nt . In th is reg ar d, t he government should more effectively use border control measures such as sanitary and phytosanitary (SPS) measures, quali ty standards such as technical barriers to trade (TBT), quantity and quality measures such as preshipment inspection, temporary measures to slow imports or to impose import restrictions that safeguard local industry as well as balance of payment measures to protect local industry.

Acco rding to the draft of Industrial Policy 2010, trade policy reforms in

1990s and 2000s were in line with the WTO a nd reversed protect ionis t, inward-oriented import substitution policies of the previous deca de.

S in ce 1 9 96 , su b st a n t ial t r a de liberalisation and tariffication has been realised through tariff cuts, tariff rat ionali sation, removal of quota regimes and import surcharges. Pakistan h as al so s ign ed re gi on al t ra de a g re eme n ts wi t h n eig h bou rin g countries.

Keeping in view the limited policy space a vai lable to t he g overn ment the following proposals have been put forward. i) Trade policy is an instrument of industrial policy. Therefore, it should be drafted in conjunction with industrial policy, and not independently. MoI&P has propos ed that the Ministry of Commerce in future should frame its trade policy in accordance with the broader objectives of the industrial policy.

Naeem Malik assumes charge of OGDC MD Muhammad Naeem Malik, DirectorG enera l, Petr oleum Conc es si ons (DGPC), assumed charge of the office of Managing Director of the Oil & Gas Dev elopmen t Com pan y Lim it ed (OGDC) here Monday. He has vast experience, of more than 30 years, in exploration and production sector of hydrocarbon resources in Pakistan.

OGDC Officers Association and Mazdoor I t e h a d U n io n (C B A e le c t e d representatives) welcomed Naeem Malik at the OGDC House, Islamabad, in a befitting manner. Addressing the officers and workers on this occasion the OGDC MD said that OGDC would move forward, upholding the high standard of professionalism based on merit and integrity.

He said that he accepted this high profile responsibility in the larger interest of the company and the E&P sector of Pakistan. He reiterated that OGDC would make strenuous efforts to achieve t he set goa ls of ex ploration and

production of hydrocarbon resources to meet the energy requirement of the country.

He gave a clear and loud message to the employees to concentrate on their duties more consciously and carefully. He said that unnecessary indulgence in nonproductive activities wo uld lead to nowhere.

Naeem said that OGDC being national oil company is more responsible towards completion of its development projects and exploration targets set by the Ministry of Petroleum and Natural Resources to play a positive role in the national econo my. He desired that professionals of the company should perform their responsibilities with hard work and dedication in a transparent manner. He assured them that upright a n d f a ir e mp loye es w ould be acknowledged for their achievements and services rendered, and the bad ones would not be spared.-PR AUTOMARK | October-2010 34

Syed Ali Raza elected 43rd President RCCI Syed Ali Raza Saeed Shah was elected a s 43rd Pres ident of Rawal pin di Chamber of Commerce and I ndustry (RCCI) and took over the charge during the Annual General Meeting (AGM) of the chamber on Thursday.

Syed Ali Raza Saeed Shah was Senior Vice President of the chamber during previous term.

The AGM of the chamber was presided over by former Presidents Najam Malik and Sabir Hussain Butt. RCCI's exPresidents and large number of business community was present on the occasion.

The out-going President Kashif Shabbir presented Presidential Medal to the newly elected President Syed Ali Raza Saeed Shah, while two vice presidents Mian Ateeq Sheikh and Dr Shumail Ahmed also took the charge from their out-going counterparts.

There were no elections of executive body seats as well as for the slots of three office-bearers this year as they all returned unopposed as no one filed no mination papers against winning candidates.

Speaking on the occasion new RCCI President Ali Raza Saeed Shah reiterated his resolve to work for the betterment of the business community and take RCCI to new horizons through constant process of development.

He said that government should revise its fiscal policy as financial position of the country is deteriorating day by day.

The industry has almost closed down and the trade related activities have reac hed at the brink of dis aster.

"It is very imperative to diminish the deficit of trust for creating business friendly atmosphere and for this purpose government has to take initiative first," Shah said, adding that it is the need of hour to take business community into confidence, while making economic policies to bridge the gap between government and businessmen and to attract the investors.

He said that country is passing through very hard time and havoc played by flood added fuel to fire. In these circumstances entire nation should make collective efforts to drag out the country from the prevailing crises....

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International Automotive - Update

FAW expanding innovative capabilities The automobile industry is a capital-intensive, technology-intensive and labor-intensive industry. Besides, another characteristic of this industry lies in long industrial chain, higher association, and wide range of employment To build the most excellent and worldrenowned FAW brand, we should inherit the enterpr ise's s pirit of "study , innovation and self-reliance", striving for the first, creating new cause and shouldering the responsibili ty. In addition, we should also create the optimal manufacturing environment with the optimal workforce, product and process technologies. Thereby, we can provide the users with best vehicle prod uct s an d marketing service.

"The automobile industry is a capitalintensive, technology-i ntensive and labor-intensive in dustry. Besi des, another characteristic of this industry lies in long industrial chain, higher as so cia tion, a nd wi de ran ge of employment as well as strong capability of boosting consumption. Therefore, such a special and influential industry in economic development shall be taken as an important part during the rapid tran sforma tion of t he econ om ic de ve lopm en t mo de in C h ina . " From the macroscopic view, the talk with Xu Jianyi, general manager of FAW Group was spread out. At the very beginning, he emphasized the meaning for automobile industry to transform its development mode.

"What can we see from the development proces s of developed count rie s?

Generally, automobile industry in developed countries is powerful. Thus careful consideration must be given to automobile industry which shall be taken as a very essential content during the tr ans formation of econ om ic development mode." Xu Jianyi says."

Xu Jianyi held tha t independen t in n ov a t ion is ce n t ra l t o t h e t r a n s fo r m a t i o n o f e co n o m ic development mode. "What independent innovation concerns more are the quali ty, efficiency an d benefits of development. Independence is the foundation for an enterpri se a nd innovation is the soul to make progress.

If an en terprise can no t operate

independently and make its main operation under control, it will have no foundations for development. In terms of the State, it is expected that several la r g e en t e rp r is e g r ou p s w it h international competitive strength to support and promote the development of the natio nal economy should be cultivated. It is for us an enormous task, bu t in dep en de nt inn ova t ion is inevitable."

The first truck of new China, Jiefang, was produced by FAW who was born in in de pe nd en ce a nd b eg a n wi t h independence.

Xu Jianyi said, "For FAW, independence is very important. It is out of its calling and what people expect. For this reason, independence is always highlighted in recent years. First, we put forward clearly to go towards a new course of independent innovation with concerted efforts and with one hand and one mind; second, get our ideas into shape, seeking unity in targets including short-term, mid-term and long-term, targets, and then define and implement those targets one by one; third, scientifically allocate and integrate resources. " FAW now has given top priority to independent cause. "We put forward 'two changes in three years': greatly changing the operation of independent innovative cause and the competition of independent innovative products in three years. What does FAW leave us?

Th e answer is management base, experience and talents. The most direct performance is that we have spent 57 AUTOMARK | October-2010 35

years to make two brands--Jiefang and Hongqi. Therefore, besides inheriting the Jiefang and Hongqi brands, we shall leave the future generations with capability of system innovation, for system can provide support for brand."

Now, FAW is quickening the pace of independent innovation by opening and cooperation. "At the present stage, it is complementary and promoting to each o th er t o d eep en op en in g a nd cooperation and accelerate independent development. We obtain relevant knowledge of talent, management and technology through cooperation, which is necessary and essential for developing independent cause. To deepen opening and cooperation is also to develop independently. One important problem is that we shall emphasize the cultivation of our own system.

We must digest and absorb the key core technology as soon as possible to make us more competitive. In this process, we must respect the law of automobile market development, and grow stronger as soon as possible based on our actual situation. As for FAW, it is at the best time to speed up development of independent cause. FAW has possessed capability of chassis matching for highend sedan, and of fully independent development of the body of whole vehicle.

After the improvement of Jetta and operational testing of the Hongqi, basically, FAW has possessed capability of fully independent development of the medium and the below passenger vehicles. The biggest advantage of our company lies in knowing what our customers need. Furthermore, we have more and more profound understanding of requirements and standards for automobile manufacture after so many y ea r s of in n ova t ive p r ac t ice s.

Now independent innovation or ownbrand development is at its fastest growth, and FAW shall play its part.....

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International Automotive - Update

How India beat China in auto exports The ultimate compliment to India’s design skills came from Carlos Ghosn of Renault-Nissan. He decided to build an ultra-cheap car (that might compete with Tata’s Nano) in collaboration with Bajaj Auto.

This week, Ford Motors announced that India would be a global manufacturing hub for its new small car, the Figo. This u nd e rlin e s a re ma r ka ble n ew development. India has overtaken China as a car exporter this year, exporting 201,138 cars in January-July against China’s 164,800. What’s more, Indian exports in this period went up 18%, while China’s fell by 60%.

Of other big Asian exporters, Korea’s exports have fallen 31% and Thailand’s 43%. In a terrible global recession, India is the onl y country with zooming exports. Hyundai has long made India an export hub for small cars, and aims to export 300,000 India-made cars this year. Maruti-Suzuki comes second in exports, with Tata, Mahindra and others well behind. Nissan is about to build a new factory in India specifically for exports. India looks like exporting half a million cars in 2009-10, and should cross the million mark within five years.

What accounts for India’s success? Visionary planning?

Long-term strategy? No, India’s triumph was completely unplanned. No planning document ever envisioned or planned for beating China.

Analysts say China has become a great auto exporter because of huge subsidies, an undervalued exchange rate and dirtcheap credit. But India never aimed at an undervalued exchange rate to pile up large trade surpluses — rather, it aimed to keep the real effective exchange rate unchanged from 1993 onward. India’s interest rates were always among the highest in Asia. It stubbornly refused to reform its inflexible labour laws, with adverse effects on productivity and wages relative to Asian competitors. No Indian strategic vision targeted special provisions or subsidies to the auto

sector. Indeed, the sector for years suffered exceptionally high excise duties and sales tax.

How then did this sector become world class?

In the early 1990s, auto production was freed for investment by any domestic and foreign investor. Indian planners as well as foreign investors regarded India as a low-skilled, low-productivity country producing third-rate cars like the Ambassador and Premier. Foreign investors came only because car imports were virtually banned. The small size of the Indian car market created serious scale diseconomies.

Critics from both the Right and Left criticized the new auto policy. Leftists claimed foreigners would decimate the industry. Freemarketers complained that foreigners were being wooed to create an inefficient, high-cost industry behind high tariff walls.

Nobody foresaw what fierce competition would do. Auto companies compete by constantly producing new models with improved features like fuel efficiency.

Indian con sumers are very pricesensitive , so design changes to reduce costs are also vital. India’s auto parts companies had rarely been asked for inno vative changes during the old lice n ce -p e rm it ra j, w h en t h e Ambassador and Premier faced little competition. But MNCs brought in competition, and started a dialogue with aut o ancill ary m anufa ctu rers on constant design changes. To thei r surprise, th ey foun d that Indian engineers had considerable skills, and could make improvements quickly and cheaply.

Bharat Forge, which makes auto forgings like crankshafts and axles, was among the first to reali ze that India’s big advantage was not cheap labour but cheap skills. The company decided to AUTOMARK | October-2010 36

have no blue collar workers at all, only engineers. This yielded a huge rise in innovation and productivity, and soon made Bharat Forge the second biggest auto forging company in the world.

For new auto components, global giants like Delphi and Visteon typically took three months to go from concept to design, prototype, testing, removal of glitches, and final manufacture. But Bharat Forge found it could do the entire sequence in just one month.

Soon, every auto company and parts maker in India focused on using cheap skills to constantly produce better and cheaper parts and vehicles. Bajaj Auto once relied on knowhow from Kawasaki for motor-cycles, but soon found that its own R&D produced far better bikes for Indian conditions. Maruti Suzuki made India a global hub for R&D. And Tata Motors created the Nano , the world’s cheapest car, making the world sit up.

The ultimate compliment to India’s design skills came from Carlos Ghosn of Renault-Nissan. He decided to build an ultra-cheap car (that might compete with Tata’s Nano) in collaboration with Bajaj Auto. In such partnerships, the global partner usually does the R&D and the Indian pa rtn er t he low- cost production. But Ghosn decided the new car should be designed by Bajaj Auto, which had never produced a car before.

Why? Because Ghosn felt it was easier to upgrade from a two-wheeler than downgrade from a standard sedan to produce an ultra-cheap car.

This then is the secret of India’s success.

Don’t waste time with strategic planning and picking win ners . Simply let competit ion happen. You will be surprised how the most unlikely sectors can become world class. That’s how Ind ia h as jus t bea ten C hi na .. ..

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Industry Update

The Squeeze on Global Rubber Supplies Freakish weather hurts rubber production across Asia

Extreme weather across the globe this year, from drought conditions in Russia and Ukraine to flooding in Pakistan and Cana da, is li ghting a fire under commodity prices. Wheat prices have spiked since June, while corn rallied to a 23-month high, coffee reached a 13year peak, and cotton advanced to its most expensive levels since 1995. Now the price of rubber, a key industrial commodity, is taking off.

Goodyear Tire & Rubber (GT) and Cooper Tire & Rubber (CTB), the two largest U.S. tiremakers, have begun notifying customers they will raise tire prices by as much as 6.5% by early November. Bridgestone, the largest tiremaker by sales, said in late August that it's increasing prices by up to 6% in Europe, the Japanese company's second price inc reas e thi s year.

The industry is facing supply problems owing to bad weather that hit rubber production in Asia. "Drought earlier this year and heavy rains later on hampered

tree-tapping across Asian plantations," sa ys Pon g sa k Ker dv on gb un dit , managing director of Von Bundit, a big natural-rubber producer and exporter based in Phuket, Thailand. "Global production will lag behind soaring demand for at least another two years."

Inventory stockpiles of rubber, also used in products like gloves and condoms, will drop 12 percent and cover just 67 days of projected demand in 2011, the lowest level in at least a decade, accordi ng to Goldman Sachs (GS) an a lys t s in a Se pt . 3 r ep ort .

Consumption will outpace supply by 127,000 metric tons, the most since 2007, the bank estimates. Prices of rubber futures in Singapore may jump 20 percent by March, says Mako to Sugitani, a senior director at Newedge Japan. If so, that would work out to a record $4.20 a kilogram.

The global econo mic reco very and white-hot growth in China are powering demand for rubber products. World

aut o sa les, propelled by Chin ese demand, will increase 8 percent this year, to 68.5 million cars, and 7.2 percent, to 73.4 million cars, next year, figures Ashvin Chotai, London-based managing director at Intellig ence Automotive Asia.

Tiremakers are passing on the higher costs, and future hikes can't be ruled out. "We don't do a lot of raw-material hedging" says Keith Price, a spokesman for Akron-based Goodyear.

Top Glove, based in Selangor, Malaysia, the world's biggest rubber-glove maker, passes on "the majority" of higher costs, says Executive Director Lim Cheong Guan. Rising costs are "a headache," says Sakae Kubota, managing director of Okamoto Industries, Japan's biggest condom maker. However, competition from other brands may li mit the company's ability to raise prices, Kubota added.

CDGK seeks 12 new mega projects' approval City Di strict Government Karachi (CDGK) has sought the approval for 12 new mega projects costing Rs 2 billion, which will begin in the current financial yea r aft er app roval from Sindh Government.

The projects include the construction of 4 new flyovers, 6 major road, installation of storm water drainage system and construction of causeway at Malir River.

Th i s w a s s t a t ed by K a r a ch i Administrator Fazlur Rehman while addressing the meeting of officers of Works and Services Department in DCO Camp Office on Oct 7.

The meeting was called to review and discuss the on goi ng development projects and start of new projects in the city. During a briefing on this occasion

the EDO Works and Services said that all the ongoing projects will complete on time.

Administrator Fazlur Rehman directed the officers to ensure timely completion of development projects by accelerating the pace of work and to carry on the planning for new projects.

He said that the city government will construct a flyover at Korangi Crossing with the cost of Rs 350 million in this year while another flyover will be built near Abbasi Shaheed H ospital in Nazimabad with the same estimated cost. "The flyover at Ibne-Sina Road, Korangi Nullah and Gujjar Nullah will have an estimated cost of Rs 200 million," he said.

City Government will also construct AUTOMARK | October-2010

37

many major roads including from Model Colony Avenue to Khokhrapar Malir with a cost of Rs 100 milli on, from Paracha Chowrangi to Northern Bypass Hub River Road Phase-I with a cost of Rs 300 mil li on , from Mosamyat Chowrangi to Superhighway (4.5km road) with a cost of Rs 200 million.

Administrator Karachi said that the causeway at Malir River will be made two tracks with a cost of Rs 150 million while the roads at Banaras Chowk and adjacent areas will be constructed with a cost of Rs 782 million and the construction of road from Mazar to Surjani Chowrangi Manghopir Road has an estimated cost of Rs 150 million.-PR

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International Automotive - Update

2011 Mahindra Mojo 300 | Preview Indian mega manufacturer Mahindra (specializing in utility vehicles and tractors since 1945-after executives visited the Willy's factory in Americaand now branching out into financial services) officially unveiled their first foray into the two- wheel realm of motorcycles.

Targeting the transportation needs of a ra pidly grow in g In dian market , Ma hindra sh owed off its n ascent endeavor in Mumbai today (Sept. 30) with an affordable and somewhat stylish motorcycle with the bold name (insert your own Austin Powers reference here); the 2011 Mahindra Mojo motorcycle.

The 201 1 Mahindra Mojo wi ll be available in both a 125cc and 300cc version. The Mojo 300cc is aimed at earning its kudos by way of the title as the most powerful motorcycle produced in India. The liquid-cooled, 4-valve single produces a claimed peak power rating of 26 horsepower at 8500 rpm.

The 292cc engine in the bigger Mojo utilizes a 6-speed transmission to get all that sc reaming ho rsepower to the ground via 17" al loy spoke wheels mounted with disc brakes front and rear (single 320mm front and single 220mm rear).

In keeping up with the times the Mojo has inverted front forks and a mono shock suspension arrangement for the rear. The press release, backing up the

In India, Mahindra ‘Mojo’ Motorcycle Launched

By Bollywood Actor Amir Khan heavy ad campaign, boasts that the Mahindra Mojo's LED taillight and twin barrel headlight is "sure to rewrite the design standard of the Indian bike industry."

Going by the pict ure the Mojo Motorcycle actually has a pretty hip profile, with tubular trellis frame design and decent flow in its wedged bodywork, tank, under fairing and bikini screen.

No doubt the Mahindra is going to score big with this new 2011 motorbike. In a country hungry for transportation alternatives to serve its burgeoning and youthful (read: style conscious) work force numbering in the hundreds of millions, it's a smart move. I wonder how long before Yoshimura has an aftermarket pipe for it? (The Mojo is not currently avai lable in th e USA)

GM hybrid study reduces fuel consumption When th e s econd-g eneration GM Hybrid System is applied to a fourcylinder common rail diesel the fuel economy improvements are achieved along with a corresponding reduction in emissions according to Maurizio Cisternino, the GM powertrain Europe advanced engineering hybrid innovation manager.

During a present ation at t he US Department of Energy’s 2010 Direction in Engine Efficiency and Emissions Research Conference he spoke about an internal study that included test-bed experimental engine work and vehicle

tests using an Opel/Vauxhall Corsa with a 1.3litre diesel 95hp Euro 5 engine with manual transmission. The activities looked into the optimisation of hybrid control a nd calibration strategi es incl uding: start/stop functionality; s ta r t/ st op ac t iv at ion s tr a te gy ; enhancement of vehicle transi ent performance; and drivability subjective as s ess men t in coa st a nd br ak e regeneration modes.

The t est ing r eve al ed a g ene ral improvement of CO and HC emissions thanks to the decrease in engine idling time. There was also a reduction in AUTOMARK | October-2010 38

exhaust emissions thanks to lower generation and quicker DOC light off.

Furthermore, nitrogen oxide emissions improved by 13 per cent when the EGR functionality was mated to the hybrid functionality, while electric assist also helped to reduce emissions.

Now GM will continue it’s testing in an attempt to evaluate the synergies of mild hybrid technology with a turbocharger for optimal turbo-charging; as well as lower temperature EGR; and a valve deac tivation for energy recovery.

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October-2010

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Car / Light Vehicle Price List

SUZUKI

HONDA

Model MEHRAN VX 800cc MEHRAN VX (CNG) 800cc MEHRAN VXR MEHRAN VXR (CNG) ALTO VX 1000cc ALTO VX (CNG) ALTO VXR ALTO VXR (CNG) SUZUKI SW IFT 1.3L PETROL CULTUS VXR CULTUS VXR (CNG) CULTUS VXL CULTUS VXL (CNG) LIANA 1.3L RXI MT PETROL LIANA 1.3L RXI MT (CNG) LIANA 1.3L LXI MT PETROL LIANA 1.3L LXI (CNG) LIANA 1.6L Eminent AT RAVI PICKUP ST308R VX RAVI PICKUP ST308R VX CNG BOLAN VAN VX Petrol BOLAN VAN VTR PETROL BOLAN VAN VTR GL PETROL BOLAN VAN VTR CNG SUZUKI VAN CARGO

Price Rs. 443,000 Rs. 489,000 Rs. 495,000 Rs. 539,000 Rs. 564,000 Rs. 622,000 Rs. 643,000 Rs. 692,000 Rs. 1058,000 Rs. 837,000 Rs. 878,000 Rs. 886,000 Rs. 933,000 Rs. 1,140,000 Rs. 1,210,000 Rs. 1,191,000 Rs. 1,255,000 Rs. 1,256,000 Rs. 463,000 Rs. 514,000 Rs. 512,000 Rs. 522,000 Rs. 582,000 Rs. 635,000 Rs. 497,000

CHEVROLET Model CHEVROLET JOY CNG CHEVROLET JOY Petrol

Price Rs. 569,000 Rs. 539,000

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

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

NISSAN DIESEL TRUCKS Diesel Truck PKB 211 Diesel Truck PKD 411H Diesel Truck PKD 411E Diesel Truck PKD CD 411 Diesel Prim e Move r C WM 454

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

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

HYUNDAI

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

Price 5,866,000 5,316,000 1,294,000 1,424,000 1,659,000 1,834,000 1,779,000 1,909,000

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

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

Price 1,325,000 1,450,000 1,400,000 1,740,000 1,830,000 1,740,000 1,830,000

CHERY QQ Model

Price

CHERY QQ Petrol CHERY QQ CNG

Rs. 588,000 Rs. 628,000

LAND ROVER

DAIHATSU

Model

Model Price DEFENDER CUORE CX Rs. 7,00,000 (90 S/WJEEP STD) CX ECO (CNG) Rs. 7,45,000 (110 S/W A/C) CX AUTOMATIC Rs. 7,30,000 (90 Soft Top)

MASTER Model Master Highland M-260 (1,5T) Master Forland Super M-330 (3T) Master Econg M-390 (3.5T) Master Grande M-410 (4.5T) Master Rocket Faw (7.5T) Master Feng EQ 1032 Strip Chassis Master Feng EQ 1061 Strip Chassis

Price Rs. 625,000 Rs. 699,000 Rs. 930,000 Rs. 11,30,000 Rs. 12,60,000 Rs. 832,000 Rs. 832,000

Price updated October’ 2010

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

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Automotive Industry - Update

AUTOMARK | October-2010 41

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Report by Global Industry Analysts, Inc.

Global Natural Gas Vehicle Population to Reach 28.7 Million Units by 2015 GIA announces the release of a comprehensive global report on Natural Gas Vehicles (NGV) market. Although current growth remains moderated by the recent world economic recession, global market for natural gas vehicles (NGV) is nevertheless expected to recover poise and register 28.7 million units in vehicle population by the year 2015.

Primary factors fingered to drive this growth include economic and promotional support extended by governments, volatility in oil prices, technology innovations that further the practicality of NGVs as an alternative fuel vehicle technology and focus of the automotive industry on cleaner vehicle concepts. Sturdy demand patterns in developing markets, particularly Asia-Pacific, also augurs well for the market.

The automobile industry is among the worst hit industries by the recession.

Demand for cars witnessed hurting declines exacerbating t he already existing wo es of excess production capacities. The soft business climate, which characterized the industry even before the recession, worsened even further with the recession inducing punishing falls in auto sales, dragging the industry’s major giants into the red.

Slowdown in business operations, in clud in g gl oba l t ra de , ac t a s impediments to growth brought about by the economic recession. Current market distortions are manifested in the form of restricted ac cess to credit, decline in purchasing power, reduction in household wealth and the resulting postponement of new car purchases, decline in per capita automobile travel and volatile fuel prices, which although currently jumpy are sk ewed more sharply for future upward corrections.

The bailout packages offered as succor to the bleeding companies Chrysler, Ford and GM, stand testimony to the deterioration of the automotive sector.

Although the overall deceleration in market activity is undeniable, developing countries have recorded diverse trends in automobile demand. As against the s ta g na nt dem an d in d eve lop ed countries, developing countries like China and India have posted increase in sales after a temporary knee-jerk loss

in growth momentum.

Ag ai n s t t h e ba ckg roun d of a n automotive industry that is currently in a state of flux triggered by the recession, social, demographic, and environmental trends, the natural gas vehicles (NGVs) market not surprisingly faces a mixed bag of challenges and opportunities. The trickle down impact of the depressing business climate in the auto motive industry on the NGV market is reflected in the growth rates, which have largely failed to meet the optimistic expectations of the pre-recession era. Sales of NGVs recorded disproportionate declines in the year 2009, with North America reporting the worst erosion in sales, as a result of the general tendency of consumers to either postpone or even ca n ce l p ur ch a s e of e xp e n si ve automobiles during difficult economic conditions. With the financial crunch resulting in deep cutbacks on capital e x p e n d i t u r e s , a s a u t om o bi le manufacturers turn defensive against u n cert a in econ omic pr os pe cts , i n v e st m en t s i n R &D a n d commercializat ion of a ltern ative technology vehicles have taken a hit.

This in turn has displa ced timely development of NGVs. Over the last two years, lower oil prices have corrupted the economic incentive for buying NGVs. Preoccupat ion of bot h th e aut o manufacturers and consumers in dealing with the current crisis weakens the AUTOMARK | October-2010 42

e m p h as is on c lea n e r v eh i cle technologies in the immediate shortterm.

However, as the year 2010 limps out on a broken economy and paralyzed credit ma rkets begi n t o reviv e, market prospects are expected to look up.

Additionally, the stimulus and rescue p ac kage s offe red t o aut omotive industries by governments in Japan and Korea, among others, are being designed to support environmentally friendly vehicles, which in turn augurs well for the NGV market. In the post recession period, sales of eco-friendly automobiles, wh ich qualify as next -gen era tion alternative-energy powered vehicles critical to meet carbon reduction goals, w ill r em ai n impor ta n t f or t he automotive industry’s long-term growth.

Natural Gas Vehicles (NGVs) especially represent a bridge that connects to the lower carbon future envisaged by most governments worldwide.

Key factors expected to drive future growth in the market include growing levels of ackn owledgment, among go vernments, consumers and fleet managers alike, over the environmental benefits of lower emissions from NGVs, and the instrumental role played by NGVs in ach ievin g nation al selfsufficiency in meeting energy needs.

Technology developments that help result in incremental improvements in basic NGV engineering design, such as,

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International Automotive - Update

India’s first CNG-Electric Hybrid Bus from Tata Motors In the presence of top Ministers of our country and DTC (Del hi Transport Corporation) offici als, Delhi Chief Minister Mrs. Sheila Dikshit created history by flagging off India’s first CNGElectric Hybrid Bus in New Delhi.

Designed and manufactured by Tata Motors.

Mr. P. M. Telang, MD India Operations, Tata Motors, said on the occasion, “The CNG- Electric Hybrid Tata Starbus is a result of Tata Motors’ advances in alternate fuel technologies, including electric vehicles. We are grateful to the Government of Delhi and the DTC for giving us this opportunity of showcasing hybrid buses in the city of Delhi during the Commonwealth Games. We will eagerly look forward to the feedback of the DTC and passengers.”

As of now Tata Motors will run only four such hybrid buses during the CWG 2010.

Tata have developed these low floor h y b r i d b u s e s f o r i n t r a -c i t y transportation as they h ave been durability of components like natural gas regulators and on-board LNG tanks, enhancement in engine performance, will al so ai d in turbocharging the market’s growth in the medium to longterm period. R&D revolving around storage infrastructure/technologies for compressed natural gas (CNG) and liquefied natural gas (LN G), is also deemed as critical to the market’s future growth.

As stated by the new market research report on natural gas vehicles, AsiaPacific is the largest and the fastest growing regional market for NGVs, by vehicle population. The region continues to remain a key growth area for the total market, displaying a robust CAGR of more than 25% over the analysis period.

Economic growth, increased spending power, an d rise in dema nd f or automobiles, particularly in regional powerhouses such as China and India,

powered by an electric motor and CNG engine.

The system is built in such a way that both electric motor and CNG engine can w ork pa r al le ly to re du ce fu el consumption and increase efficiency of

have been driving NGV sales in AsiaPacific over the recent years, thereby add in g t o the NG V popu la tion.

Additionally th e inc ent ives , and mandates for aggressively converting vehicles to NGVs are driving increased adopt ion of NGVs in the region.

Major market participants include AB Volvo, Alternative Fuel Systems (2004) Inc., Bayerische Motoren Werke AG, Chrysler Group LLC, Caterpillar Inc., Cummins Inc., Daimler AG, Fiat S.p.A., Ford Motor Company, General Motors Corporation, Honda Motor Co. Ltd., Hyundai Motor Company, Isuzu Motors Ltd., Landi Renzo S.p.A., Mazda Motor Corpora tion, Mit subis hi Motors AUTOMARK | October-2010 43

the vehicle. The Hybrid bus also utilizes the energy los t during braki ng to recharge its batteries making it more environment friendly.

Corporation, Nissan Motor Co., Ltd., PSA Peugeot Citroën S.A., Renault SA, Suzuki Motor Corporation, GFI Control Systems, Toyota Motor Corporation, Vo lksw age n AG, a mong ot her s.

The research report titled “Natural Gas Vehicles: A Global Strategic Business Report”, announced by Global Industry Analysts, Inc., provides a comprehensive review of trends, product developments, mergers, acquisitions and other strategic industry activities. The report provides market estimates and projections for the United States, Canada, Japan, Europe (France, Germany, UK, Italy, Spain, Russia, and Rest of Europe), AsiaPacific (Pakistan, China, India, Australia, Bangladesh, New Zealand, Malaysia, Indonesia, and Rest of Asia-Pacific), Latin America (Argentin a, Brazil, Colombia, Venezuela, Chile, Mexico, and Rest of Latin America) and Rest of World......

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International Automotive - Update

GM promotes electric vehicle in Shanghai Expo General Motors has been committing to introducing advanced technologies of auto industry into Chinese market." added by Gan Wenwei.

On August 31, General Motors delivered two Chevrolet Volt electric vehicles to the Bureau of Shanghai World Expo Coordination and provided services for V IPs coming to visi t t he Ex po.

Chevrolet Volt is the first electric vehicle with extended range in the world, which has the significance of milestone in the electrification development of General Motors. The production version of Chevrolet Volt enters Chinese market and conducts the trial operation at the Expo site, which are to show the public advanced driving system and forwardlooking technologies, as well as good vision of General Motors for sustainable d ev e lop me n t of f u t ur e u rb a n transportation.

"General Motors, accompanied by its Chinese partner SAIC, has shown the more intelligent, more efficient and cleaner urban transportation vision to more than 1.4 million visitors at the SAIC-GM pavilion." said Gan Wenwei, President and General Manager of GM China Investment Co., Ltd. "Chevrolet Volt is the important step to realize the reduction of reliance on oil and exhaust emission in the auto industry. We deliver two Chevrolet Vol t vehicl es of the production version that enter into China at the earliest time to the Bureau of Shanghai World Expo Coordination. It proves again the firm commitment of General Motors, as one of the global

partners of World Expo, to support the success of Expo."

As the vehicles specialized for VIPs of Shanghai World Expo, Chevrolet Volt will also show the performances and advantages to people from vari ous industries, such as the government, auto in dustry and academic circle and motivate all parties to discuss the sustainable development of future urban transportation.

According to the scheme, Chevrolet Volt will officially appear on Chinese market in the year 2011. China will be then the first market to introduce the Chevrolet Volt outside of the U.S. "General Motors has been committing to introducing advanced technologies of auto industry into Chinese market." added by Gan Wenwei. "Along with the increasingly growing individual travel demand and otherwise chal lenges caused by the resulting future urban tr ans por tation development, t he advanced techno log ies of General Motors will provide consumers with the be st t ra ns por ta t ion s olut ion s. " Chevrolet Volt is currently the only type of electric vehicle that can work under all-weather and all-road circumstances without consideration of the capacity of the battery. When the driving range is less than 60 kil ometers, it can be completely driven by a vehicle-loaded lithium ion battery of 16 KWH to realize

AUTOMARK | October-2010 44

"zero fuel consumption, zero exhaust emission". When the electric power of the vehicle-loaded battery runs out to its minimum limit, the vehicle-loaded engine generator will automatically start to provide electric power for the vehicle to achieve additional range up to 450 kilometers or so.

Chevrolet Volt realizes the running of vehicle driven by electric power at fulltime and full speed. The electric drive s ys tem of e xte nd ed r an ge ty pe completely removes the concern of consumers on the short range of electric vehicles.

Chevrolet Volt to be launched in Chinese market will also be equipped with OnStar system. Apart from the overall vehicl e s afety and communi cation services, Chevrolet joi ns hand with OnStar to develop the first smart-phone system in the auto industry that really applies to electric vehi cl es. Thi s technology can help the owner of a Chevrolet Volt to achieve 24-hour allweather remote control of the vehicle and each function of OnStar system and bring in more comprehensive driving ex perien ce for the own er. Th is technology even realizes the initial interaction between the driver and the vehicle as well as the function of remote control in the electric auto industry...

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Corporate Event - Update

Press Release

Indus Motor holds 19th Annual Dealer Conference Speaking on the occasion, Mr. Hiroji Onishi praised IMC on achieving the milestone of 52,000 record sales in 2009-10 and congratulated the Company on increasing its production capacity to cater to the demand for its vehicles. He revealed that Pakistan is one of the most promising countries for Toyota and we expect an enormous potential for future growth.

Mr. H. Onishi, Managing Officer, Toyota Motor Corporation, Mr. Ali S. Habib, Chairman, Indus Motor Company and IMC Management with the Nationwide Best Performance Award winner - Toyota Ce ntral Motors at the 19th Annual Dealer Conference Indus Motor Company (IMC) held its 19th Annual Dealer Conference recently at a local hotel in Karachi. Mr. Hiroji Onishi, Managing Officer, Toyota Motor Corporation, Japan was the Chief Guest.

The Dealer Conference, which had the theme, “Leading Together” was attended by the Company’s dealers, guests from Japan, senior management from House of Habib, business partners and the Indus Team.

Speaking on the occasion, Mr. Hiroji Onishi praised IMC on achieving the milestone of 52,000 record sales in 2009-1 0 an d con gr atu la te d t he Company on increasing its production capacity to cater to the demand for its vehicles. He revealed that Pakistan is one of the most promising countries for Toyota and we expect an enormous pot ential for futur e g rowth . He requested IMC and its dealerships to keep in min d t he ph il os ophy of “Customer First” for better Customer Care.

Prior to the Conference, Mr. H. Onishi

also visited IMC plant where he was shown the manufacturing processes and was given a presentation on IMC’s performance, milestones, production improvement activities and future plans.

Mr. Ali S. Habib, Chairman, IMC, in his address, mentioned that Paki stan continues to face a challenging economic environment, and the automobile sector which saw unprecedented decline over the previous two fiscal years has shown modest signs of recovery in 2009-10.

The automobil e industry is under constant pressure from the government to reduce prices, despite forex and raw material price escalations, topped by impending threats to ease the imports of used cars, as a punitive measure against the industry. He urged Indus team and its dealerships to continue exerting t heir full est despite the challenges and to attain the highest standards of quality in all aspects of the b us ine ss for g rea te r C us tom er Satisfaction.

Mr . Par ve z Gh ia s, CEO , IMC , AUTOMARK | October-2010 45

highlighted the record accomplishments of IMC in the year 2009-10 and expressed his gratitude to the customers, employees , deal ers, vendors a nd stakeholders for their contributions. He stated the Company’s best ever quality result of SQA (final product leaving plant) and loc al parts supplies. He reiterated the fact that Indus Motor is not just a car manufacturer, it is aware of the contribution it needs to make to improve society at large. As a “Concern Beyond Cars”, the Company has several social projects and initiatives in the areas of road safety, education, environment, health, community development and r esp on s e t o na tu ral ca la mities .

To recognize the dealers’ efforts, awards were presented during the conference to the best dealerships in the three regions. The Nationwide Sales Award was won by Toyota Faisalabad Motors where as the Service, Parts, Customer Relations and the overall Nationwide Best Performance Awards were bagged

by Toyota Central Motors…..

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Exclusive Article on Quality

by Engr Khurram Mateen

Total Quality Management VS Six Sigma TQM is "a system of continuous improvement employing participative management and centered on the needs of customers".

Key components of TQM are employee involvement and training, problem solving teams, statistical methods, long-term goals and thinking.

In the 1950s, the Japanese asked W . Ed w ar ds D e mi n g , a n A m e r i c a n statistician and m a n a g em e n t theorist, to help them improve their econo my. B y implementing Deming's principles of total quality management (TQM), Japan experienced dramatic economic growth.

In the 1980s, when the United States began to see a reduction in its own world market share in relation to Japan, Amer ican bus in ess redisc overed Deming. Total quality management experts or gurus, Joseph Juran and Philip Crosby, also contributed to the development of TQM theories, models, and tools. TQM is now practiced in business as well as in government, the military, education, and in non-profit organizations.

TQM is "a sys tem of con tin uous improvement employing participative management and centered on the needs of customers". Key components of TQM are employee involvement and training, problem sol ving teams, statistical methods, long-term goals and thinking, and recognition that the system, not people, pr oduces ine fficien cies.

Employee awareness and motivation are essential. The chart below depicts how the management process constantly strives for continuous improvement, deliver customer value, and excellence.

All are responsible for ensuring quality

in terms of 'satisfying the customer' in all they do, and the approach is one of prevention of errors and faults rather than detection and correction. Typically, cultural change in the company from an inspection to a prevention approach, and to one of involvement is seen as required. Organizational change is also needed. A strong emphasis is typically also placed on meeting the customers' requirements and identifying internal customers.

Deming’s 14 Points For Implementing Quality Improvement: 1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy.

3. Cease dependence on inspection

AUTOMARK | October-2010 46

to achieve quality.

4. End the practice of awa r di n g business on the basis of price tag.

Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership.

8. Drive out fear, so that everyone may work eff ectivel y for the company.

9. Break down barriers between departments.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity.

11. Eliminate work standards (quotas) on the factory floor.

12. a. Remove barriers that rob the hourly worker of his right to pride of workmanship.

13. Institute a vigorous program of education and self-improvement.

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Exclusive Article on Quality Six Sigma is a shorter-term strategy; it is designed to generate immediate improvemen ts t o p rof it ma rgi n.

Compared t o t raditional qual it y management programs such as TQM that project three or more years into the future.TQM and Six Sigma have a number of similarities including the following:

14. Put everybody in the company to wor k to accomp li sh the transformation.

J M Juran sees quality planning as part of the quality trilogy of quality planning, q u a li t y c on t r ol a n d q u a lit y improvement.

Juran's 'Quality Planning Road Map' consists of the following steps: 1. Identify who are the customers.

2. Determine the needs of those customers.

3. Translate those needs into our language.

4. Develop a product that can respond to those needs.

5. Optimize the product features so as to meet our needs as well as customer needs.

6. Develop a process, which is able to produce the product.

7. Optimize the process.

8. Prove that the process can pr oduce the prod uct und er operating conditions.

9. Tran sfer t he pro cess to Operations.

Illustration of Quality Trilogy via a Control Chart: Juran concentrates not just on the end customer, but identifies other external and internal customers.

Six Sigma is a management philosophy

developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce defects in products and services.

The term “Six Sigma” is a statistical term that refers to 3.4 defects per million opportunities (or 99.99966 percent accuracy), which is as close as anyone is likely to get to perfect. A defect can be anything from a faulty part to an incorrect customer bill.

Six Sigma Consists of 5 parts having abbreviations DMAIC: Define: formally define the goals of the design activity that are consistent with customer demands and enterprise strategy Measure: The team identifies the key internal processes that influence CTQs and measures the defects currently generated relative to those processes.

Analyze: The team discovers why identifying the key variables that are most likely to create process variation generates defects.

Improve: The team identifies the maximum acceptable ranges of the key variables and validates a system for measuring deviations of the variables.

The team modifies the process to stay within the acceptable range.

Control: Tools are put in place to ensure that the key variables remain within the maximum acceptable ranges All Six Sigma processes are executed by Six Sigma Green Belts or Six Sigma Black Belts, which are then overseen by a Six Sigma Master Black Belts, terms created by Motorola.

Six Sigma can be costly to implement and can take several years before a company begins to see bottom-line results.

Comparison and Contrast of TQM and Six Sigma AUTOMARK | October-2010 47

• A customer orientation and focus • A process view of work • A continuous improvement mindset • A goal of improving all aspects and functions of the organizations • Databased decisionmaking • Benefits depend highly on effective implementation

Conclusion Both measurements of quality control within an organization have brought true success to companies who have applied their policies and procedures.

The leaders and management teams of any organization will have to evaluate which quality of control tactic is the most beneficial to the growth and improvements of their business. Both processes have taken the best of the best countries and companies from good to great and I personally feel that as long as you have one of these processes in place, you are setting yourself up for success.....

About Writer: Engr Khurram Mateen Assistant Director International Affairs & Trainings Standards Development Centre PSQCA,Ministry of Science & Technology Government of Pakistan - Lahore

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Corporate Update

INDUCTION OF DAEWOO AIR-SUSPENSION BUS FLEET IN KARACHI COACH SERVICE Right from the day of launching of the internatio nally acclaimed complete built-up product line in May 2010, DAEWOO PAK MOTORS (PVT.) LTD, has received tremendous response from the commercial as well as government public transport sectors across the country. Customers now respond with utter satisfaction that Daewoo Buses are best in Fuel Economy, Comfort, Safety and Longer Life that ensures Return on Investment in shortest time compared to all buses in the market.

Recently Karachi Coach Service (KCS), one of the biggest inter-city public transporters operating from Karachi, has inducted three units of Daewoo BH116, the most advance state-of-theArt Air Suspension bus with 340 Hp; in its fleet to introduce the Luxury and Speedy bus service initially from Karachi to Sukkur and further to Lahore and Pindi.

INTRODUCTION OF KCS: Karachi Coach Service (KCS) is honored to be the pioneers of long route public transport facility named KARACHI COACH SERVICE in 1989. Currently KARACHI C OA CH SE RVIC E is operating from Karachi to various cities

KARACHI COACH SERVICE

of Pakistan

OWNERS PORTFOLIO The owners of KCS are the famous family of (Late) Malik Haji Abbas Khan who was known as Baba-e-Transport among the transport sector.

He came to Karachi in the early fifty’s and started business of transport with a camel cart. Now today by the Grace of All Mighty Allah and by the vision of Malik Haji Abbas Khan, his family is running about 10 well known and well established transport companies in public and Goods Transport sectors.

Three sons of (Late) Malik Haji Abbas Khan who stated in the public transport sector wi th the name and style of Karachi Coach Service (KCS) are Malik Haji M. Ismail, Malik Haji M. Ishaq and Malik Haji M.Shafiq.

Malik Haji M. Ismail is also owner of Sajid Goods Transport Co. and New Haji Ismail Transport Co. Mali k Haji M.Ishaq is also owner of Al-Abid G o o d s Tr an sp ort Co and New Haji Abbas G o o d s Tr an sp ort Co.

Daewoo Pak Motors Director Marketing Mr. Tahir Javed & Manager Marketing Mr. Faisal Meraj along with the owners of KCS Malik M. Ishaq and Malik M. Shafiq on the occasion of delivery.

AUTOMARK | October-2010 48

Karachi Coach Service (KCS) started its operations in early 1988 with a dedicated fleet of brand new Hino A/C Buses.

Karachi Coach Service (KCS) bears h eav y los se s by run ni ng emp ty buses/coaches between Karachi and H yd era ba d, be cau se th ere wa s absolutely no concept of such service from the middle of the city. Very soon Karachi Coach Service (KCS) became the most popular Public Transport Service.

As a result of this success Karachi Coach Service (KCS) spread its operations and once again introduces the First Ever Air Conditioned Bus/Coach Service between Karac hi and Rawal pin di /Islamabad.

KCS EXPRESS: Karachi Coach Service (KCS) is about to launch a newly designed high quality service for passengers between various cities of Pakistan, starting from Karachi to Sukkar first with brand new fully e q ui pp e d Dae w oo BH 1 1 6 Air Conditioned & Air Suspension Buses which is state of the art product of Daewoo Pak Motors Ltd.

SALIENT FEATURES OF KCS EXPRESS SERVICE KCS Express service standards with Daewoo buses are planned and designed to meet the public transportation s tan dard s adopted in deve loped countries worldwide such as: • Daewoo trained drivers and attendants to ensure quali ty service standards • Luxury seats with dedicated head phone facility • All vehicles are equipped with latest tracking systems.

• ABS brakes makes the journey more safe and sound • Air-Suspension gives an unmatchable experience of comfort • Seat-to-Seat, non-stop and on time service ......

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Exclusive Article

by Omar Rashdi

Hybrid / Electric Car In the late 80s, California legislate a Zero Emission Regulation which requires large car makers to sell a certain percentage of ZEV (Zero Emission Vehicle), probably 10%, before the year 2000 or they will be banned from the state.

Zero Emis si on Regula tion which requires large car makers to sell a certain percentage of ZEV (Zero Emission Vehicle), probably 10%, before the year 2000 or they will be banned from the state. This regulation, although later p os tponed due to the imm ature technology developed, pushed many car makers to accelerate their development of electric cars.

GM's EV1 , the first mass produced electric passenger car in the world.

It uses lead-acid batteries.

Fully Electric car is new generation hybrid car. Hybrid means to take power from two sources, previous hybrid cars taking power from engine and electric motor. Engine helps to charge batteries but now in fully electric cars there is no engine, all power is just taken by electric motor and it is charged while the car is on driving. All the foreign countries want to use it, the biggest reason behind is that it’s pollution less car which helps t o mak e the environment better.

Nowa da ys pollu tion p roblem is increasing rapidity that’s why every country wants to use it as a normal car.

The other reason behind is to use electric as alternative fuel; fuel prices are as high as compare to use electric power.

General Motors is partnering with the electric power research institute to make s ure this electric car get the infra s tructure they disserve, they have electric cha rge stations to charge li thium-ion battery of car, once the battery fully charged the worth can travel 40miles.

Background You might not kn ow, electric cars appeared in the 19th Century just like motor cars, but they failed to become popular due to many technical and practical reasons. For example, the battery was very heavy, stored little energy and took too much time to recharge. As a result, electric cars received far less development than motor cars.

In the late 80s, California legislate a

Operation STARTING: Powered by electric motor only. It does not employ the engine during starting, because starting is a heavy load action which greatly inc reases the emi ssion pollut ant.

Moreover, t his arrangemen t als o benefits cold start emission, because the electric pre-heated catalyst has sufficient time to heat up befo re the engine intervene.

ACCELERATION: When the car gets up to speed, the engine joins and provides power together with the electric m ot or. The en gi ne provid es the necessary power that pure electric motor cannot provide. On the other hand, electric motor help easing the load taken by the engine, so emission level remains low.

STEADY SPEED: Still engine + electric motor. However, under light load, the engine will be switched off.

BRAKING / DOWNHILL: This is the most important advantage of h ybrid car. Conventional ca r wi ll eliminate the kinetic energy by braking, which means transferring to heat loss.

It will make good use of the kinetic energy to recharge its batteries through electric motor (now act as generator), and by the way generate braking force.

These double the mileage.

Electric cars are something that shows up in the news all the time. There are several reasons for the continuing interest in these vehicles: • Electric cars create less pollution than gasoline-powered cars, so they are an environmentally friendly alternative to gasoline-powered vehicles (especially in cities).

AUTOMARK | October-2010 49

• Any news s tory a bout hybrid cars usually talks about electric cars as well.

• Vehicles powered b y fuel cells are electric cars, and fuel cells are getting a lot of attention right now in the news.

An electric car is a car powered by an electric motor rather than a gasoline engine.

From the outside, you would probably have no idea that a car is electric. In most cases, electric cars are created by converting a gasoline-powered car, and in that case it is impossible to tell. When you drive an electric car, often the only thing that clues you in to its true nature is the fac t that it is nearly silent.

Under the hoo d, there are a lot of differences between gasoline and electric cars: • The gasoline engine is replaced by an electric motor.

• The electric motor gets its power from a controller.

• The controller gets its power from an a rra y of rechar gea ble ba tte rie s.

A gasoline engine, with its fuel lines, exhaust pipes, coolant hoses and intake manifold, tends to look like a plumbing project. An electric car is definitely a wiring project.

Our future is depend on electricity, no wadays all the equipments need electric to work, even in foreign country’s buildings are generating there own electricity by solar energy, wind power etc., because they know that there future is n ot d epend on just gas oline.

In order to make our environment better, to safe money, to safe time, to grow with the world, we should use new technologies Remember that “Your Place In The World Is Where You Decided It Is”...

Visite our website for latest news, articles and events www.automark.pk

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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST

70cc Motorcycle

Sr./ No. 1.

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

Retail Price Rs. 42,500/= Rs. 38,000/= Rs. 38,000/= Rs. 38,500/= Rs. 38,000/= Rs. 45,300/= Rs. 38,000/= Rs. 39,500/= Rs. 41,000/= Rs. 38,900/= Rs. 46,000/= Rs. 47,000/= Rs. 41,000/= Rs. 62,900/= Rs. 40,000/= Rs. 40,500/= Rs. 37,500/= Rs. 38,500/= Rs. 38,000/= Rs. 38,500/= Rs. 42,900/= Rs. 38,000/=

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

Retail Price Rs. 42,500/= Rs. 47,000/= Rs. 43,000/= Rs. 38,000/= Rs. 39,000/= Rs. 42,500/= Rs. 39,000/= Rs. 40,000/= Rs. 39,000/= Rs. 39,900/= Rs. 41,500/= Rs. 42,400/= Rs. 39,500/= Rs. 39,500/= Rs. 40,500/= Rs. 45,000/= Rs. 38,500/= Rs. 38,500/= Rs. 41,000/= Rs. 42,000/= Rs. 38,000/= Rs. 40,500/=

Price updated Oct-2010

AUTOMARK | October-2010

50

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MADE IN PAKISTAN MOTORCYCLES RETAIL PRICE LIST

125cc Motorcycle No. 1.

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

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

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

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

100cc Motorcycle No. 1.

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

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

Suzuki Motorcycle Sr./ Product & No. Model Name 1. Suzuki Sprinter ECO 2. Suzuki Sprinter STD. 3. Suzuki GS-125 4. Suzuki GS-150 5. Suzuki Shogan

AUTOMARK | October-2010

51

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

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