Automobile Industry in Pakistan
Ghauri, Akram M., Economic Review
Caught in a traffic jam in some major cities of Pakistan, one feels there are too many automobiles in this country. But the fact of the matter is that our country is heavily under-motorised. This is bad considering that in developed world, the automobile industry is the second largest one after the steel and iron industry. It contributes more than 10 per cent in the total output of the manufacturing industry of the developed countries, and employs 10 per cent of their populations, plus, it develops a whole chain of vendor industries.
The under-motorisation of this country is not just symptomatic of underdevelopment. A potential growth gap also exists in our automobile industry. The two factors responsible for this gap are a weak transport sector, and lack of government incentive for the general investor. For years and years, transporters had remained shy to invest in this sector. This was usually attributed to on one hand, increased operational costs and, on the other, absence of better and long-term policies for the automotive industries. The problems of public transport seemed to have become insurmountable and needed bold initiative on part of the government for solutions. This situation has shown slight improvement. Some barriers to development have now been removed and the automobile industry has started to hope for a better tomorrow.
Pakistan's automotive industry came into existence in 1950s the pioneers General Motors. Chryslers, and Ford Motors were all privately owned and still at an embryonic stage of their development. It was then that Ghandhara Industries were born Ltd. General (Retd.) M. Habibullah Khan Khattak bought major shares of General Motors, and gave the company a new identity.
The automotive industry like all others was badly affected in 1972 by nationalisation. The industrial stride in an ambitious direction was suddenly halted. This step threw the automotive industry in a black hole of stagnation. The assembling of public transport units was stopped while that of commercial vehicle stumbled down to a very limited scale. Such long-term policy decisions play pivotal role indecinding the after of an industry. In the case of the automotive industry it proved counter productive for an entire range of vendor industries.
All industrial growth is dependent on long term policy making. Every industry required certain amount of time span to root itself in the economic climate of a country, grow into maturity and then expand. Only then it provides for any basic structure for complex yet competitively productive network of vendor industries.
Automobile production involves manufacturing thousands of vastly different components. …