KARACHI: Car-makers eye 2005 as another year full of fortunes despite looming threats of rising import of second-hand cars under various schemes.
They anticipate car production in the range of 140,000-160,000 units and project over Rs2.5 billion investment for enhancing capacity expansion next year aiming at grabbing more market share, bridging the demand and supply gap and opening new job avenues.
General Manager Marketing Division Raza Ansari and Director Corporate Planning Shah M Saad Husain of Indus Motor Company say car production is expected to touch 150,000 units next year.
"The company has no plans to launch any new locally-assembled small car in the near future. However, IMC, as the distributor of Toyota and Daihatsu vehicles cum assemblers in Pakistan, is also planning to launch new imported vehicles in the luxury segment during 2005, they say.
After investing Rs700 million in capacity expansion during the last two years, the company now plans another Rs800 million in the coming year on plant expansion. Current total workforce strength stands at 1,400 as compared to 900 in December 2003. As capacity and production increase new job opportunities will be opened up, they add.
The IMC executives say that the liberalization of used car import will hurt the local industry, and effects of that are already visible as more cars have landed after the budget 2004-05 than did in the whole year 2003-2004. Compared to only 306 units for the second quarter of the current fiscal year, there has been a 300 per cent increase in import of new cars to 1,063 units in the third quarter 2004-2005.
They think that the proposed Tariff Based System (TBS) is not fully compliant with the WTO requirements. It is considered to be an interim measure to finally reach full tariffication within 2-3 years. The proposed system has several anomalies which need to be addressed.
On premium issue, they say with a wider choice to customers due to imported vehicles and higher production by local manufacturers, the gap between supply and demand will reduce next year. This will automatically reduce premiums. Delivery times will reduce in 2005 with the increased production and import of both new and used cars.
PAK SUZUKI: General Manager Marketing Pak Suzuki Motor Company (PSMC) Ashfaq Hussain says car production in 2005 is set to reach around 160,000 units as against 128,000 units in 2004. "We have already undertaken massive expansion plan with the investment of Rs2 billion to further enhance production capacity," he says adding it will further open new job avenues.
Regarding the premium issue, he says it has nothing to do with original equipment manufacturers (OEMs). The premium is because of the gap between demand and supply. Pak Suzuki has doubled its production capacity in just two years. In 2002 average production was 2,500 units a month, rising to an average of 5,500 units a month in 2004.
DEWAN GROUP: The Chief Operating Officer, Automotive Operation, Dewan Mushtaq Group, Farooq Mustafa, says that the market of passenger cars, one ton pick-ups, economy cabs and 4X4 SUVs is expected to touch 140,000 units in 2005 as against 128,000 units expected in 2004 and 92,976 units in 2003. In 2000 to 2004, the auto industry has grown at the compound annual growth rate of 32.28 per cent. On investment plans in 2005, he says in order to increase our market share, the company plans to further invest Rs200 million in its production facilities and Rs500 million in production facilities in 2006 and 2007. In 2003-04, additional investment into plant and machinery and infrastructure has been in excess of Rs187.11 million as compared to Rs160.55 million during the year 2004-05.
Mr Mustafa says the company has definitely got plans to introduce new models of Hyundai and Kia including the passenger cars, SUVs and pick-ups.
On import of used cars, he says import of used luxury vehicles above 1,800cc is still more attractive as compared to used vehicles below 1,800cc; used vehicles above 1,800cc enjoy a monthly depreciation allowance of two per cent as compared to one per cent allowed for used vehicles up to a maximum of two years.
On premium issue, he says the company needs a healthy competition thru increased number of players; whether thru CKD production or thru import of new CBU vehicles.
At present, Dewan Farooque Motors is employing around 1,050 people (around 225 working at the head office and 825 at the plant).
DMMC: Manager Marketing of Dewan Mushtaq Motor Company, Adnan Yousuf says DMMC has re-introduced the CBU Mitsubishi vehicles (fully imported) in the market.
"We definitely have plans to increase our presence and market share by introducing CKD models of our different vehicles offering value for money to our valued customers," he says and added that currently the company is discussing possibilities of local production of different Mitsubishi vehicles in Pakistan including the passenger cars, SUVs and pick-ups. "We will start manufacturing Mitsubishi vehicles within the 2005 and plan to invest Rs200-300m in production facilities," he says.
"Our target is to achieve at least 25 per cent market share," he adds.