Magazine article Economic Review

Automobile Industry in Pakistan: History and Prospects

Magazine article Economic Review

Automobile Industry in Pakistan: History and Prospects

Article excerpt

Mobility has been an important objective for mankind since the beginning of time. The invention of the whell about the year 3000 B.C. was the first great achievement. Then in the 18th century the steam engine, one of the greatest gifts of the Industrial Revolution made a major impact on the life-style of the human race. The mating of the 'wheel' with the 'engine' made it possible to transform animal driven carriages into automobile.

From the 18th century to the 20th century the history of the automobile is a tale of human ingenuity and passion for comfort, fastness, safety and a better quality of life. In Pakistan, we cannot boast of any contribution in this vital sector as its development has been chequered. Like other areas, we lacked both vision and direction. Historically, the automobile industry can be divided into two periods: 1947 to 1972 and the period after 1972.

The Post-Independece

Period (1947 to 1972)

The firstt automobile plant was set up in May 1949 by General Motor & Sales Co. this plant had started on an experimental basis, but it rapidly grew into an assembly plant for Bedford trucks and Vauxhall cars. Witnessing this progress, the other three leading auto-makers of USA collaborated with Pakistani entrepreneurs to set up Ali Automobiles tto assemble Ford products in 1955, Haroon Industries to assemble Chrysler's Dodge cars in 1956, and Kandawalla Industries to assemble American Motor products in 1962. In addition, Hyesons established the Mack Trucks plant in 1963. All these plants were restricted to semi-knocked down (SKD) assembly operations only. In 1963 the General Motors plant was sold to Ghandhara Industries Limited and in 1966 it was granted permission to undertake the progressive manufacture of Bedford trucks and buses.

The absence of organised components' manufacturing facilities, lack of technical know-how and non-existence of proper ancillary facilities for the design and development of tools, jigs and fixtures retarded the pace of localisation. Besides, only half-hearted efforts were made for technology and the training and development of personnel. Moreover, the management of most of these companies lacked professionalism.

The Post Nationalisation

Period from 1972

The nationalisation of key industries, including automobile units, through the Economic Reform Order of 1972 brought in some rationalisation in the role of the then existing automobile companies. The units were renamed and their functions redefined: A Board of Industrial Management was constituted to formulate a national policy for industrialisation and also to oversee and coordinate the functions of the newly-nationalised units. This was a gigantic task and later various corporations were established to look after each major industrial sector, such as, automobiles, cement, fertilisers and engineering.

The step to formulate a national policy on industrialisation lacked the required conviction. The objective of the corporations appeared to show that the public sector could run industries better only if it earned higher profits. The desired national approach was missing and the targets remained undefined or obscure. Strategies and future plans were not made during the whole decade of the 70s and even the early part of the 80s.

This coincided with model changes by the principals and also shifting of consumers' preference to more updated and reliable products. This also coincided with the period when European automobiles gave way to Japanese products all over the world. Finally, it was realised that the integration of the public and the private sectors was absolutely necessary to achieve national objectives and that without healthy competition consumers and the national economy would continue to suffer.

This realisation resulted in the reorganisation of several existing units along with the addition of a few new undertakings in the public and private sectors. …

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