22 October 2004	Friday	07 Ramazan 1425

KARACHI, Oct 21: Industries and Production Minister Jehangir Khan Tareen will meet local motorcycle assemblers on October 25 in order to solicit views from stakeholders on issues related to the two-wheeler industry.

A Chinese bike assembler, who also received the invitation from the ministry, said that two-wheeler manufacturers had been asked to make a presentation on the local industry. However, the letter did not mention any specific queries which the assemblers have been asked to arrange for the meeting to be held in Islamabad.

Besides, the Engineering Development Board (EDB) has also asked the Chinese bike makers to provide monthly production figures to the board.

Pakistani market has become over-heated soon after the entry of cheap Chinese bikes in the last two years. Consumers shifted their mood towards Chinese bikes because of low price factor but they had to compromise on the quality as compared to Japanese bikes.

Smelling changing market scenario and stiffening competition, Japanese bike makers had slashed prices in September to lure more buyers in order to maintain their market share.

The Japanese bike makers have been making downward adjustments in the prices for the last one-and-a-half years. Market leader Atlas Honda had reduced the price of CD-70 by Rs14,500 to Rs54,000 from Rs68,500, while CG-125 price was brought down to Rs71,000 from Rs78,500.

The Chinese bike makers are worried over the price cut move by the Japanese bikes makers as any further cut in price will definitely cause sleepless nights to the cheap Chinese bike makers.

The difference between 70cc bikes has shrunk to Rs15,000 which was Rs20,000-25,000 a year back. In case Honda comes out with another price cut of Rs5,000, then the difference will further come down to Rs10,000. A further price cut by the Japanese bike makers will attract more buyers.

A dealer said the demand for Chinese bikes had plunged following the price cut by the Japanese bike makers. He said it was hard to tell the exact percentage due to non-availability of production and sale figures of Chinese bikes. "But one thing is certain that a segment of buyers of Chinese bikes are gradually switching over to Japanese bikes particularly in 70cc segment."

He said some Chinese bikemakers had also cut the price by Rs1,000-2,000 in order to remain competitive in the market.

A price-war situation has now emerged between the Chinese and Japanese bike makers and the ultimate beneficiary of this war is the general public.

The dealer said it did not mean that the Chinese bikes had stopped selling in the market, but the demand is not so immense that used to be six months back.

The market has now become very price competitive and new Chinese makers will have to roll out bikes which are equally good in terms of quality, price and design, otherwise their investment as well as plan to grab the market share will prove futile.

The market is abuzz with reports that the Japanese bike makers are using low quality parts to cut costs. However, the Japanese bike makers denied the allegation and claimed that they had maintained quality and standards. Japanese bike makers had not reduced prices when they had monopoly in the market. They had literally kept the demand and supply gap in their hands. Besides, high prices of Japanese bikes were the main factor in keeping away the prospective buyers. Sales of Japanese bikes had picked up due to price cuts otherwise their balance sheets were showing negative sales figures.

Sales of Atlas Honda rose to Rs9.9bn in the year ended June 30, 2004 from Rs7bn in the corresponding period last year. Sales of Suzuki bikes surged to Rs867 million for the half year ended June 30, 2004 from Rs489 million in the same period last year.