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Renault to start assembling cars in Pakistan by 2018, says Board of Investment
Renault, a French car manufacturing company, is expected to start assembling cars in Pakistan by 2018.
The government was wooing foreign car makers like Renault and Nissan with generous import duties earlier this year.
After approval of Prime Minister Nawaz Sharif's economic policy and vision, Special Assistant to the PM and Chairman of the Board of Investment (BoI) Miftah Ismail held meetings with stakeholders in Pakistan and foreign companies in the automobile sector, the BoI said in a statement released on Thursday.
Ismail earlier said it was expected one or two foreign investors would be coming to Pakistan.
He had said that new entrants would be able to import machinery for plants duty free. Customs duty for importing car parts has been set at 10 per cent, while existing players will have to pay 30pc.
"We want greater competition, and we expect with greater competition consumers will be offered better choices," he had said.
A source close to Renault told Reuters earlier this year that Pakistan was under consideration for new production investment, along with other potential locations, but added that discussions were at a very early stage.
Nissan chief spokesman Jonathan Adashek had said: "Pakistan is certainly a market of interest for us at present", but added no final decision had been made at the time.
Ismail met with foreign companies like Volkswagen, Peugeot, Renault and Nissan. During the Eid holidays, the BoI chairman and Finance Minister Ishaq Dar visited France and met Renault's top leadership.
The Economic Coordination Committee of the Cabinet headed by the finance minister constituted a committee to review the Auto Policy and recommend new measures for expansion, investment and consumer protection in auto sector of Pakistan.
The committee was headed by Minister for Water and Power Khawaja Muhammad Asif and included Ismail.
The committee held several meetings and interacted with all stakeholders and came up with new policy package to attract greenfield investment as well as revive existing closed auto units in the country.
Odds stacked against Pakistan, analysts say
Analysts say the odds are stacked against Pakistan finalising deals, despite the concessions on offer.
A major obstacle is the perennial concern about political stability in a country where the military has staged several coups since independence and attempted others.
The threat of militancy also remains high, despite the armed forces' long-running campaign against groups including the Taliban.
Foreign companies have been reluctant to invest large sums when the long-term outlook is so uncertain.
"There is potential in Pakistan. There is no doubt about that," said Puneet Gupta, associate director at consultant IHS Automotive said earlier this year. "(But) we really don't feel Pakistan is in a relatively stable condition, from a mid to long-term perspective."
Another potential turn off for investors is the size of Pakistan's car market, where 180,000 cars were sold in the 2014/2015 fiscal year.
That compares with more than 2 million passenger vehicles a year in neighbouring India.
Some Pakistanis are frustrated by high prices and the quality of locally produced cars, which tend not to have airbags, anti-lock braking systems (ABS) and other features considered standard elsewhere.
The cheapest Pakistani car, the Suzuki Mehran, sells for 650,000 Pakistani rupee ($6,200), or about double the price of a comparable model in India.
Comments (125) Closed
WOW
That is great. Pakistan must encourage more French car, truck and bus manufacturers to, initially, assemble their vehicles in Pakistan. This will lay the foundation for a robust vehicle industry, not to speak of spare-part manufacturers. The demonstration effect will be manifold.
Assembling of cars in Pakistan will be immense achievement and this effort will also be contributed in the economy.
CPEC is beginning to show effect, when fully realized it will take Pakistan GDP to more than 30 trillion dollars.
will it be Renault cars or Renault owned Dacia. Having said that its good to see plus the Dacia models would suite the Pakistani market
will get there soon.. job opportunities great for pakistan
Excellent. Thats what a govt needed to do a long time ago...but better late then never.
This is a positive step. It would creat many jobs in Pakistan - in the Assembly line, training of motor mechanics, and sales of cars and repair workshops.
@Zak why stop at 30 trillion brother,u don't need to back it up with any data,say 100 trillion,500 trillion,any amount,who cares.
@Zak that would be great considering that Pakistan's GDP of $30 Trillion would be more than the current GDP of the USA ($18 Trillion).....and China ($11 Trillion).....combined. Please lets not throw figures around willy nilly, we have enough lies to deal with on a daily basis living in Pakistan.
@kash . Dacia and Renault have now many things in common: Engine, technical instruments, and car equipments. The technical quality is identical. The difference is in the sophisticated comfort elements, and the internal space of automobiles, with a better edge for Renault.
@ Imran Khan See Nawaz Sharif is bringing change and what you have brought to country, is just darna culture.
Obviously when price is double compared to india the sales will be much lower.
Hundai and Peugeot can be great options. Hundai is a great company. I also noticed Audi selling a lot in Pakistan .
Good news, but I like Germans to invest here. They are the best in car manufacturing.
They should bring Mazda as well in the competition . They have good quality , better prices and more options in their cars .
Great News m Appreciate efforts of govt
Renault has started producing cars in India at fabulously cheap prices. Renault Kwid is priced on road in India at Rupees. 288,000, which is equal to about Rs. 480,000 in Pak currency.We must find ways and means to meet that price in Pakistan.
Due to right policies of pmln government
Make it happen! InshaAllah! Don't stop till you get enough. Pronto! Presto, Presto! Do your very besto!
Pakistan should never agree to an Assembly plant where the parts are manufactured overseas.Manufacturing of parts in the country brings manufacturing jobs with higher pay and transfer of technical knowhow.This is a very bad deal for Pakistan and the ministers finalising the deal are not looking at the long term affects of such deal.Why we are so desperate for an assembly plant?We should always negotiate keeping in mind our long term goals and wait for the company which agrees to our terms.We had a number of assembly plants in the country including General Motors and Mack to assemble cars/trucks in the 50s which stopped assembling after few years. Its a low cost option for car makers with almost nothing to lose.If the assembly plant is not profitable enough,they can pack up in few weeks and leave.The people who bought the locally assembled cars have to pay a higher prices for the imported parts.Our current demand may be low but it will increase with time.I like a good deal or no deal.
@Asif Germans are known for making only luxury cars. Even their lowest car variant would cost a fortune in Pakistan. I doubt any average Pakistani could afford those cars when a lowest car price in Pakistan is 650k.
Sir
With reference to above, wold like to say that yes Pakistan is the place of high investment but not only for the personal vehicles [cars] but also we are in need of local public transport as more than 70 percent population in cities are connected with local transport and around 95 percent depending at the same. Therefore I request dawn to pass our comments and high light the ministry for the development of long vehicle as per the user percentage it would also help the investor to invest in Pakistan.
Regards
Rao Zahid
@Asif germans cars are not best..only old 80s bmw n benz were good..nowadays german cars are garbage unreliable too sophisticated electronic junk....only japanese toyota honda mazda reliable....german car only look luxurious inside but mechanically theyre nitemares..for owners...even u open engine bay its all plastic..
Renault to start operation by 2018, in chichawatni huge deposit of copper found, in 3 months electricity problem will be solved and what else, did anyone remember anything else!
@ khan . Yes couple of hundred assembly jobs will make a big difference in a nation of 200 million.
@natey I don't know which German car you are comparing with Japanese cars. Japanese cars are half the price of German and they have no match from any point. Having said that Japanese cars suits Pakistani environment due to their cheapness and their spare parts are available in all type of qualities.
@Afzaal Ansari really we already have many assemblers Suzuki, Toyota, Honda, Hino, Nissan, FAW, etc so this is not revolutionary!
Pakistan need to look for transfer of technology and provide such tarrifs that any invester can export these cars to other countries creating more jobs in Pakistan.
@M.Saeed and kwid is far better than mehran
@Zak you must be using PMLN boasting calculator along with their education and knowledge!
Renualt is not really French when its owned 50% by Nissan!VW would have been great
When will Pakistani politicians invest in Pakistan?
@TechnoKraft. The price in India is lower because all the parts are locally manufactured. You could never come close to Indian price with imported parts . This is the reason I don't like the assembly plants and this reduces our chances to export these cars to foreign markets.
its anti lock braking system not breaking
I think that instead of inviting more car companies in Pakistan, we should invest in metro rail system (Not the stupid bus). It still shocks me that we don't have ANY proper intra-city metro rail system.
German cars are not on top now... Pakistan need Japanese type cars...
Well done, BOI!!
How can such investment bring prosperity? It could be a sign of economic development that such companies are planning to start assembling vehicles in pakistan but, assembling and selling vehicle is nothing to be proud of. It wont get pakistan anywhere. and what foreign investment? They will take profit, govt will get more ruthless taxes. that is how govt trying to loot average class. is this really what pakistan needs?
@Sukhera .a potian will always look for the negative.cant you be happy that you will have better cars to drive.
@natey .why dont you say that you cant affford the maintenance.you are one of those who want to buy a sophisticated car but cant pay for maintenance.stick to honda or toyota dear.
CPEC is here
French car are complete rubbish
@Shakil Khan ..VW is at the bottom now...
We are hearing all good NEWS after the announcement of new auto policy. The investors are not fools. They will only come once these politicians stop taking turns at each other. The common man should have the confidence that justice will prevail. Then only people will invest their billions in our economy which is presently sitting in off shore companies and Swiss accounts.
@Shakil Khan. I agree with you 100%. We don't need more assembly plants in the country. We need auto makers which totally manufacture the car locally and bring real higher paying manufacturing jobs to Pakistan. I think the govt should invite Hyundai, the south Korean auto maker to set up a manufacturing plant in Pakistan in collaboration with local investors and should provide incentives.The Hyundai cars have a bumper to bumper warranty of 10 years(highest)and they build nice looking cars at a very reasonable price. They are solid cars and are becoming very popular in US.The day this plant starts production, we will see a real competition in the market and most of these assembly plants will be shut down for good. The Hyundai plant can compete with other cars in foreign markets and that will be a great achievement for our economy. We have to make the right decision and bad decisions at the top can harm the country tremendously. Look at India, they want only locally made products.
@Zak You missed a zero over there.
Make an F1 Racing track too to favour and nurture most advance car market in pakistan.Renault,Volkswagan,Ferrari and many more are competing against each other in making better stuff.Though a long long way to go to achievd goal but fruitful
There is potential in Pakistan. There is no doubt about that," said Puneet Gupta, associate director at consultant IHS Automotive said earlier this year. " This tells the whole internal instinct of Guptas, shankars, vijays Kumars, etc towards Pakistan . After CPEC will be functional, all major players will rush to Pakistan market. no worries Mr Gupta.
About time, more competition will reduce car prices, it's sad Pakistanis are paying extortionate prices for a car such as mehran with no basic standard features such as abs breaking system.
There is acute need of new car manufacturing industry which may replace mehran suzuki.however, Nisan and Renault are cheap but spare parts are very expensive...
Assembly initially then 100% production that should the deal Pakistan should be seeking!!
@Sukhera Agreed !!!
@Javed: You can't ignore the value of opposition protests as these things put government under pressure to perform. This is democracy and that's how it is improved.
@Zak Really?
@M.Saeed To add to your genuine excitement, Renault recently added a one litre engine to the Kwid variants, and also a very unique AMT model. At INR 4.5 lakhs or about 8.5 lakh PKR, this is indeed a pathbreaking development.
@Asif European cars are for the elite !
Renault though a famous make from France does not compete with Japanese or German cars for Pakistan market. This choice could be from vested interest of local investors
@Zak you missed a Zero in the calculation....
A brand which is flop across the Europe ...
"Customs duty for importing car parts has been set at 10 per cent, while existing players will have to pay 30pc" WHY???????
@MIAN looks like you didn't read "BUT" part!!!
@ABood .The question is do You want to pay the double price for the same product or care about the country to be self sufficient in manufacturing cars and at the same time provide jobs to the Pakistanis. When you buy impoted parts, you are providing jobs to foreigners and the profits are taken back to the foreign country.
@Zak i agree with you.Lets wish for another Quaid e Azam.
@Sukhera again setting up a manufacturing plant requires huge market size!!! Be pragmatic
The ministry people are heavily bribed by Japanese car maker , will have same fate as Korean and Chinese makers if they are not taken to task
Not a great motors but any investment welcomed. I want to see volks wagen in Pakistan. Very reliable cars.
Tired of listening assembly assembly assembly assembly plant, when will these companies start manufacturing all car engines and parts.
Well done . I like Renault cars especially Megane. Very beuatiful sports car. Renault produces also trucks.
@Zak Assembling means putting parts in place .
Nothing to be proud of.. Produce it in country
Good move by both countries. Pakistan has good relations with France.
Mr Dar is making a big mistake by inviting another assembly plant ( Renault)to Pakistan. The profits from the sale of the car will go to the parent company in France. The company will manufacture nothing in Pakistan, Only few hundred assembly workers.
@Sarwar, USA. what makes you say that?
This is just another pack of lie possibly a publicity stunt. Beyond any doubt, it is technologically impossible. They have not even made a final decision. In order to start an assembling plant, they will have to acquire land, construct manufacturing plant, hire staff and install the equipments. Even if expedited it requires three years at minimum. Its surprising that our top notch Govt officials do not refrain from spreading falsehoods.
@ABood . Do you care about the price or pay the double in price. How can you afford at any price if you don't have a job and the company takes the profits overseas.
Great but what in the world has Khwaja Asif got to do with this. Kickbacks for everyone?
About time. Suzuki can sit in the corner and cry.
I hope this is not like our water car..
PML-N toooooooooooooo strong. Parosis are jealous. TRUTH.
Rubbish cars, unreliable brand and quality.
@M.Saeed .its impossible without manufacturing the parts locally.
Take 1$billion a year away from the useless military expenditure that will never see the light of a combat, and invest it in bringing investors even if we have to pay them. Once the industry is set, it will open up many more doors for export, for we as a nation are smarter that many. When we lost East Pakistan, overnight our exports were reduced by 60% because of jute and tea. But within 5 short years we made up the deficit with other item. What I don't understand is, if you are begging the likes of Renault to invest, why 10% duty on parts? This is shortsightedness. Collect tax later by collecting income tax from the new jobs it will create. Would also be nice if our railways are resurrected again that has been long neglected. Make good and comfortable transportation available for all, not just the ones who can afford new cars. However cheap, they are too expensive for the masses and not good good for the environment.
Let's hope néw assemblers can easily enter Pakistan and Paksuzuki is not able to jeopardize this potential growth of the local industry.
@Sukhera .............You are 100 % CORRECT. Say " NO TO ASSEMBLY PLANTS ".......Say " YES TO MANUFACTURING PLANTS ". BRING IN HYUNDAI for cars and Home Appliances manufacturing plants. That's where the jobs are and technology.
@Natey. I completely agree with u.. i owned a BMW once and there was hardly anything that did not break down.. highly unreliable and cheap materials all around even the whole radiator assembly was made out of plastic.. buy German cars only if the money is burning a hole in your pockets, otherwise go for japanese ..
@Zak us GDP is 17 trillion and China GDP is 10 trillion for 2015. We should be optimistic but realistic as well. I respect your views. Please put fact based comments instead of emotional one. Hope you take it in the right sense. We are sensible and responsible citizens not politicians.
Excellent step
Its amazing how many commenter's here are assuming that Renault will invest in Pakistan. Read it carefully, they have not committed yet!
The solution is not foreign car manufacturers- who will be paying next to nothing for using our land and resources while making enormous profits- it is to improve our own auto-manufacturing industry.
Pakistani people need to stop this mentality of foreigners coming in and fixing our automobile/electricity/infrastructure etc. etc. problems. We need to learn to stand on our own feet and solve our own problems, keeping in mind the interests of our own people.
Why would these manufacturers assemble cars in our country. It's not to bring any betterment to our people but it is because this deal comes at no cost to them, but a large cost to us in terms of our resources, as well as our environment which our leaders are selling to them for pennies. Yet our own people are blind to this exploitation on the false hopes that any betterment will come to us. I hope this deal and all such deals are put to an end and our people can learn to have some self worth and belief in their own capabilities.
@Sukhera , First of all, it not Pakistan's call to have a full manufacturing or Assembling ! We should accept whatever investment coming in this Country. It will create some jobs and bring in lots of Goodwill . Any foreign investment builds confidence for Pakistan's economy throughout the business community.
Whatever happened in 50's and 60s with assembling plants we do not know. There could be dozens of reasons for their closures.
Volkswagen is too smart to enter here. the cheapest would be equal to Honda city in price
Fiat/Renault failed car world wide. Bad idea.
@Sarwar, USA. European cars are not suitable for USA and your opinion is based on US market. Pakistani market suits European cars just like in the past when we used to have all these brands like VW, Nissan, Hyundai, Ford et all. I used to own a VW Golf that I bought when it was already driven over 100,000 miles and drove it for more than 50k miles (80,000 km) for 6 years, serviced it just once and it broke down just twice during that time once due to dead battery and then due to a very minor fault.
The local sales probably are going to be less than a hundred thousand a year. The idea is to manufacture and sell locally as well as export. That is where the real money is and that is what Renault, Nissan and Wolks Wagon are counting on.
Ishaq Dar went to France to invite automobile company to make cars in Pakistan, in Eid Holidays. What a dedication. If given 1 more term in 2018, PML ( N ) will convert Pakistan into a european western country, I say it with full guarantee....true democrats
Renult is only going to come to Pakistan if we get rid of Nawaz Sharif. Think....if Imran Khan was in power the foreign investors will be lining up to invest in Pakistan...the most important thing for pakistan to do is the following,
@Sarwar, USA. As per the reports VW is worlds largest car manufacturing company. Also they settled the diesel issues now...
We should provide incentive to existing assemblers, Toyota, Honda and Suzuki to manufacture 100% in Pakistan. That will create basic industry for parts and engine manufacturing instead of doing what we already have. Please thing long term investment in Pakistan.
Just make in India and sell in Pakistan. Easy
Imran khan should do an other dharna to stop this.
Bringing in new players make sense only if these players make it for export within the region. That is the way a small country like Thailand produces more cars than India & creates a multiplier effect on the GDP with local vendors. This requires long term policy & a clear vision for this particular industry. Fracturing an already small market will deny any potential for economies of scale . It will not bring the cost down but achieve the opposite for the consumers while also keep the industry weak.
There are only 3 car companies in Pak. Honda, toyota, and suzuki. Both parties are on the take and no one else is allowed in. It is amazing that even with people willing to pay full price they cannot buy a car off a show room floor. The whole mark up thing is invredible corruption at work. Fat chance of any new car companies coming in.
@Zak yes 30 trillion and your corupt govt will leave it.Stop dreaming.
@Be Realistic .We are a nation of 2oo Million people. Let us divide the whole population by 5 and that's the number of cars we need in our country roughly 40 Million, so people who are less fortunate can also afford the car. Is 40 mil a small market. I know all Pakistanis share the same objective, a prosperous country without poverty, where every one lives without any fear, decent well paying jobs, best schools, best healthcare, best place to raise a family and a place we will proudly call home, the Pakistan .
First give answers regarding Panama and dawn leaks before december 2016.
@Zak 30 trillion $ should be Pakistan debt in coming years presently its about 19 trillion $
May be helpful to bring more competition and quality improvement. Current situation on quality controls is worst than ever in all makes in Pakistan, with ever high prices being charged. CCP should also look into this!
The minimum wage in Pakistan for unskilled worker is Pak Rs. 13,000 per month (US$ 125) and in India Ind Rs. 160 per day (US$ 2.30). Higher wages in Pakistan are reflected in the manufacturing cost of the car too.
@Sukhera Few people knew about the car vendor industry in Pakistan, it is quite big now worth 200 billion Rs. Medium size sedans like Corolla, different variants and Honda Civic and City has a local component, also called deletion, of upto 65%.
Small cars have a deletion, local parts manufactured in Pakistan, of 7o-75%. Two wheelers has a local component of 90%. Pakistan produced 2 million [20 lacs] bikes last year, on the increase.
So this is a myth and wrong perception that all parts are imported by local assemblers. Also there is no such thing as a car manufacturing plant...it is always a car assembly plant.
A car has about 10,000 components and parts, not possible to make them in a single plant, or even in 10 plants. Hundreds of vendors supplies different parts to the car assembly plants where they give it the final shape. Check the link below of local car parts manufacturing in Pakistan.
http://www.paapam.com/
Why is the government involved in this type of free-trade ventures? Let anyone come and compete in the market place without any subsidiary or tax breaks. I think this type of controls and invitations is full of greed and corruption.
Pakistan has to do its own research, and develop its own car from scratch. A nation of nearly 200 million, 69 years post independence, cannot / does not stand on its own two feet is indeed not at all independent. Pakistan policy should be to encourage local entrepreneurs, from all professionals, all walks of life, from students to business people, to prepare and encourage ideas, on how vehicles can be made locally. All big and successful firms like Toyota etc started small, therefore there has to be a beginning no matter how modest. This is what Pakistan should aim for.
@Sane . Just make in Pakistan and sell to India, would be more like it.
Great! this will create competition within Pakistan
@Javed Bahi The job of BOI and MOP&I done by MOF the NS sumdhi and front man. Do not forgot French Augusta sub marine and saviem trucks cases of corruption of past While the captive investors are deprived of incentives New comers are are lured through "special" concessions
Leave the market forces to decide, till today 99% of vehicles on Roads are Japanese whether New or used. EU vehicles are not only costly but have performance issues
The vehicle should be manufactured in Pakistan that would create abundant job opportunities on permanent basis. Government must consider the long term viability of such agreements, simply assembling won't be benefited to the country as well as the buyer, because assembling costs higher prices.
In the last fiscal year, sales of locally assembled vehicles rose 12% to 257,752 units, according to data compiled by the Pakistan Automotive Manufacturers Association.
In comparison, the import of used vehicles increased around 67% last year. Around 53,600 used vehicles were imported in fiscal year 2015-16 compared to 32,100 units in 2014-15.
So the total car sales figures in Pakistan of both the locally assembled and the imported cars is in excess of 300,000 last year, and not the 180,000 quoted in the above article...huge difference in the actual and the quoted figure.
More reasons for new players in the market. They premise that car sales is low in Pakistan will change if more variants with better options and prices are introduced...instead of waiting for sales to increase as reported above. It not always about demand and supply...can be about supply and demand.
Will never happen!
@mayank skoda and seat would be well suited , these are VW owned cheaper marques but sharing much of the engine, gearbox and chassis with previous generation vw and Audis. even the first generation Audi and VW are better than the crap suzuki is giving us.
It's a great news, finally Pakistanis will have more and better options for buying cars which are locally manufactured
hate renault.. would like to see more Korean cars and German cars
This is what happened 15 years back in India, we have all of top brands manufacture, assemble and sales&service.
Only Chinese cars will be more competitive than any other make.
Bye Bye Japanese Car Mafia !
@PATRIOT. I say Ameen to that.
Excellent, good job government.
What will happen to us is because of our good or bad deeds. So don't worry about presidents of pak or USA. Worry about making a country without sins and bad deeds. At least control yourself.
A very good news for Pakistan bright future, Government is now looking serious to attract big companies for investing here .