Automotive Industry in Pakistan

While we extensively cover Indian Auto Industry, we were amazed by the similarities/differences other Automotive markets has to cater. Previously, we assessed the US auto market and our quest to different markets landed us to study the Pakistan's Auto Industry. Though Pakistan's car sales currently is a modest ~15k units month, the reason we are highlighting the numbers is that it grew an impressive 54% over the same period last year. 

We are immensely surprised to see the similarities that the way neighboring countries (Pak & India) started off the Automotive Journey-

• o Suzuki entered Pakistan in September 1982 as a Joint Venture between government of Pakistan and Suzuki Motor Company, Japan. Does it ring a bell? (In 1982, a Joint Venture was signed between Maruti Udyog Limited (which belonged to Indian Government) and Suzuki of Japan).
• o Based on July'15-Oct'15 sales data, Pak Suzuki dominated the car sales in Pakistan with a market share of near to 51%. In India, Maruti Suzuki is the market leader with a share of staggering 52%!!! 
• o Honda Motor Company Limited, Japan and Atlas Group, Pakistan joined hands to form Honda Atlas Cars through a Joint Venture Agreement on August 5,1993. In India, Honda Motor Company, Japan and Usha International formed a Joint Venture in December 1995.  
• o Toyota entered Pakistan in 1990 as Indus Motors which was formed post a Joint Agreement with House of Habib. Later Toyota set foot in Indian market in 1997 with a Joint Venture with Kirloskar Group. 

While the aforementioned data highlights how the Pakistani and Indian Government initially were extremely similar in their policies of allowing foreign automotive companies to invest in their respective markets; the similarities ends just here! Indian market had caught up the fancy of global car makers and as on date almost ALL automotive brands could be found here; Pakistan has limited itself to 3 Japanese Car Makers and are generations behind the current technology these companies got to offer. But interestingly, the Number 1 selling brand is the Toyota Corolla with an average of ~4600 units/mth (Note: Corolla sold average 500 units/month in India in the same period). However, the numbers have a different story to project - the industry is reeled with outdated products and the companies are literally dumping aged brands here. Though Maruti 800's production was seized in Jan 2014, its Pakistani counterpart (Suzuki Mehran) still sells in good volumes and is the third best selling car of Pakistan! Let us look at the Top 10 selling cars of Pakistan:

​July 2015 to October 2015 brand-wise data:

In overall, Pakistan's car industry is carved up among just three brands, Suzuki, Honda and Toyota, assembling cars with imported parts in joint ventures with local players!

Sales Comparison for the similar period last year:

  

See why Pakistan's Car Market is extremely interesting and the potential it has to offer (if the Governments policy is friendly):

1. --Pakistan is world's 6 most populous country in the world (India stands second in this ranking and is almost 7 times the population of Pakistan).
2. --Pakistan Ranks 41 in cars productions vis-a-vis India's rank of 6 (India's car production is staggering 171 times more than Pakistan!)
3. --Pakistan's car sales is 1/20th that of India. Pakistan's monthly car sales currently stand at an average of 15000 units. 
4. --Last FY, around 1,16,000 cars were sold to a population of 19 crore people!
5. --Suzuki Mehran is the only entry level hatchback available and costs $6250 for the basic variant (which is hefty 3 times more than it would have costed in India!).
6. --Even the Honda Civics and Toyota Corollas available, it is years behind offering airbags, ABS and even power windows as standard.

Considering this years growth rate, Pakistan's car sales is all set to cross 1,50,000 units which will be its highest till date! Also the Industry is witnessing possibility of influx of new OEMs such as VW which can strengthen the growth plans.  

Source: PAMA, Economist, Wikipedia