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Renault signs new agreement to assemble cars in Pakistan

Updated November 21, 2017

KARACHI: After suspending talks with Ghandhara Nissan Ltd (GNL) last week, French automaker Renault is making another attempt to assemble and distribute its vehicles in Pakistan in partnership with Al Futtaim, a Gulf-based business house.

Groupe Renault and Al-Futtaim have signed definitive agreements to assemble vehicles in a new plant in Karachi, a statement said on Monday. However, the transaction remains subject to a number of conditions mainly relating to regulatory approvals.

The two parties expect that the plant will be built starting the first quarter of 2018. Car sales will begin in 2019 and be ramped up in 2020.

The companies did not reveal the amount of expected investment. They did not state the number of vehicles that the plant will roll out every year.

Al Futtaim said it will “invest the amounts needed to make this project a great success, but as privately owned company, we do not reveal financial details.”

Renault suspended talks with GNL as per a notice that the former sent to the Pakistan Stock Exchange (PSX) last Friday.

GNL informed stock investors that the company, in collaboration with a potential partner, was in talks with Alliance (Renault-plus-Nissan). However, owing to commercial reasons, GNL’s arrangements with the potential partner could not materialise. From then on, Nissan has been in discussion with GNL while Renault suspended talks, it said. “They, however, shared their view that Pakistan is an alliance project and they aim to select only one partner for Renault and Nissan models in Pakistan,” it added.

It may be noted that nine Pakistani companies applied to the Engineering Development Board (EDB), Ministry of Industries, for greenfield projects by September to assemble cars, light commercial vehicles and sport utility vehicles (SUVs) in partnership with six Chinese, two Koreans and one Laotian partners. Prominent joint ventures were Kia Lucky Motors with Kia Motor Corporation of South Korea and Hyundai Nishat Motors with Hyundai of South Korea.

Sazgar Engineering Works Ltd informed investors through the PSX on Monday that it has signed a vehicle assembly cooperation agree­­ment with a Chinese auto­maker for manufacturing, assembling, sales and after-sales service of passenger and off-road vehicles.

Groupe Renault is extending its international footprint by entering Pakistan, a fast-growing market with a 10 per cent annual growth rate. By partnering with Al-Futtaim, a renowned automotive partner, Groupe Renault aims to become a major player in Pakistan, said the statement.

“We aim to bring our latest products and cutting-edge technology and set new benchmarks of safety and quality in the market,” said Fabrice Cambolive, company’s senior vice president and chairman of the Africa, Middle-East and India region.

“With a population of over 200 million, a fast-growing economy and a vibrant middle class, Pakistan is undoubtedly a very important strategic growth market for us. Groupe Renault is among the top automotive brands worldwide and a leading European car manufacturer is entering this market. We will endeavour to add real value to the Pakistani auto sector and consumer, and to create a world-class organisation in Pakistan. Al-Futtaim also looks forward to a very long and successful partnership with Groupe Renault,” said Len Hunt, president of Al-Futtaim Automotive.

The agreements will see Groupe Renault bring its latest products and technological know-how while Al-Futtaim, through its new subsidiary Al-Futtaim Automotive Pakistan Ltd, will establish a new manufacturing and assembly plant and exclusively distribute Renault cars.

Al-Futtaim has numerous businesses across 29 countries. Its global automotive operations extend to 11 markets across the Middle East, Africa and South Asia. Pakistan represents one of the most dynamic opportunities in these regions partly because of the new Automotive Development Policy, the statement said.

Published in Dawn, November 21st, 2017