Automobile Industry in Pakistan

By Sharif, Kalim Ahmad | Economic Review, April 2001 | Go to article overview

Automobile Industry in Pakistan


Sharif, Kalim Ahmad, Economic Review


The industry is coming out of slump and during the year 1998-99, the production of all kinds of vehicles increased 9 per cent due to abolition of Capital Value Tax (CVT) rationlisation of duty structure and sufficient liquidity which led to increase in the production of Cars (11.3%), Buses (198.5%) and Tractors (68.1%), while the decline was recorded in production of Jeeps (8.8%), Light Commercial Vehicles LCVs (19.3 per cent), Motorcycles (3.5%) and Trucks (48.5%).

The automobile industry in Pakistan has great potentials and can move the wheel of economy if the necessary incentives are given to them by the government for the growth of the industry. The industry considered to be one of the most protected industry in terms of Effective Protection Rate (EPR) which is between 701 per cent to 5000 per cent.

The industry is coming out of slump and during the year 1998-99, the production of all kinds of vehicles increased 9 per cent due to abolition of Capital Value Tax (CVT) rationlisation of duty struture and sufficient liquidity which led to increase in the production of Cars (11.3%), Buses (198.5%) and Tractors (68.1%), while the decline was recorded in production of Jeeps (8.8%), Light Commercial Vehicles LCVs (19.3 per cent), Motorcycles (3.5%) and Trucks (48.5%).

Pakistan has produced 169,545 all kinds of vehicles during the year 1998-99, while in 1997-98 the country has produced 157,636 vehicles which shows an increase of 11,909 more vehicles produced over the year 1997-98. From July to December the country has produced 79,279 vehicles as shown in the table-1.

There are thirteen leading automobile assembler/manufacturers in Pakistan and foreign investment made by the Japan and now Korea entered into the automobile sector of Pakistan. Table 2 gives you the details of Joint ventures made by the local assemblers.

Deletion Programme

Pakistan automobile sector is producing / assembling 800cc, 1000cc, 1300cc and 1600 cc cars, Pickup, Trucks, Buses, Jeeps, HI-ACE, Mini Buses/Coaches, Motorcycles, and Tractors, while there is no hope in current scenario to produce a 100 per cent Pakistani car.

Deletion Programme is going very slow which is badly affecting our local automobile industry. The government should strictly implement this program so that transfer of technology can take place. Apart from Karachi, there is need to hold fairs and exhibition at national and international level. There should be permanent exhibition centres in Lahore, Islamabad, Faisalabad and Gujrannwala.

The Industry specific deletion programme for Motorcycles and Tractors has been prepared during the year 1998-99 and Central Board of Revenue (CBR) has been asked for its implementation accordingly. The deletion policy has attracted investment in many joint ventures and any technical collaboration for local manufacturing in the country. The varying degree of deletion achievement with technology in tractors 82%, trucks 58%, motorcycles 72% and other motor vehicles 64%.

Imports

Pakistan has spent Rs.25.23 billion ($541.30 million) on the import of 138,620 vehicles during the year 1998-99. The imports of motor vehicles for passenger and goods for transportation increased significantly during the year as compared to 1997-98. The table --3 gives you the details about the vehicles imports during the last fiscal year

The Federal Minister for Commerce, Industry and Production, Abdul Razzak Dawood has told the representatives of automobile industry that automobile industry is an important sector which could play a vital role in strengthening economic base of the country. He had also assured the assemblers/manufacturers that the government would try that no more CBU (Completely Built Unit) Buses duty free are allowed.

Unfortunately, after passing over half a century, the country has not been able to produce a 100 per cent Pakistani vehicles for which the Pakistan Association of Automotive Parts and Assessories Manufacturers (PAAPAM) claims to have a feasibility report. …

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