Automobile Industry: Problems and Constraints

The market conditions for truck and bus industry have deteriorated during the past few years to a seemingly irreparable extent. The capital and operational cost of commercial vehicles has increased to an alarming limit while the revenue did not increase accordingly. The manufacturing of medium and heavy transport equipment has become an unprofitable business, according to an industrialist. Therefore, the capacity utilisation of truck and bus industry is less than 7 per cent as the production is 1000 compared to annual installed capacity of 15,000. Currently all passenger car plants' combined installed capacity is around 100,000, of which overall utilisation is 35 per cent.

The automobile industry is an oligopoly with seven major assemblers/manufacturers, mostly set up as joint ventures. The total auto market is over $1 billion, of which over half belongs to local production. Pakistan imports motor vehicles worth $300-400 million annually which is 3 to 4 per cent of total import bill. In a country where the foreign exchange reserves are low, any saving by expanding local production or earning through export would have salutary impact upon the balance of …

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Publication information: Article title: Automobile Industry: Problems and Constraints. Contributors: Not available. Magazine title: Economic Review. Volume: 31. Issue: 4 Publication date: April 2001. Page number: 32. © 1998 Economic and Industrial Publications. COPYRIGHT 2001 Gale Group.

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