Before purchasing a car what a customer need from a car?

Drive quality Fuel efficiency Comfort

Value for money and safety.

More Durable Lower on the list of considerations

Features and Accessories

Car designResale value

better interior components and electrical parts

After sales service

Cost of ownership

Problems in Pakistan regarding Automobile Industry?

Locally assembled cars

Overpriced

Low fuel economy Occasionally

quality of local cars

Substandard parts.

 Khalid Rashid: A Auto dealer

• “Used cars are not a threat; the problem is that manufacturers do not listen to customers, they are not willing to face reality.”

• If that happens continuously than

• Many people prefer to buy a Japanese assembled used car

•The local industry produced just over 116,000 passenger cars (800cc to 3000cc) in FY 2013-14 and sold just over 118,000 cars in the same period (a mere 0.6% increase over last year).

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

What about Price?• http://www.paksuzuki.com.pk/automobile/pages/allpricesautomobile

.aspx• Can middle class Pakistanis afford a vehicle ?

What are the some other factors ? Local Cars

• New ones• lack of choices in every engine size• customer perception about locally

assembled cars is not good regarding Smaller engines• not good value for money after sale• Less affordable• 1000cc and below category are the

Mehran, the Cultus and more recently the Wagon R.

Japnese cars

• Used ones• More available choices in every

engine size• Perception about Japnese used cars

is satisfactory regarding Smaller engines• Good value for money after sale• More affordable• Mostly from 660cc to 1000cc Cars

are imported

VERSUS

Lack of Variations in Small Engines

Import of used car’s: from Japan

High Price’s of the Car’s

Government policy’s regarding Import of the cars

Three year old car’s age limit

Political uncertaint

y

Energy crunch and

Five year old car’s age limit

Financial crisis

Terrorism

Prices in the Other Countries?• Similar vehicles are 30 to 50% cheaper in • India, Thailand and Vietna• Why?• Because Local industry is unable to produce any electrical or

mechanical components locally• Because the manufacturing process and in the fact that the local auto

industry functions like a cartel(1An association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition).

Technological edge

Toyota Corollalogo

Auto industry is mother of all industries

Sales after Redesign:

2014 20150

5,000

10,000

15,000

20,000

25,000

Year

Uni

ts

2014:8085 units2015:20729 units

LCV and SUVs during the period spiked from

May, 2014 20150

5000

10000

15000

20000

25000

Year

Units

2014:15400 units2015:23081 Units

Export to Sri Lanka

13%

88%

Sales

2014 2015

2014:100 2015:700

Company’s Market Share:Sales

2014 2015

2015:28% 2014:22%

201440%

201560%

Revenue:

20142015

2014:Rs26.1bn

2015:Rs39.1bn

Profit-before-tax:

201421%

201579%

Sales

2014 2015

2014:Rs1.95bn 2015:Rs4.58bn

38%

62%

EPS

20142015

2014:Rs25

2015:Rs39.99

Due to higher sales:A.Director said:i. Margins increasedii. Treasury income increasediii. Control on fixed assets has been improvediv. 450 new jobs during FY14 has been generated

Toyota cars manufactured in the world:

Out of 52 countries

Pakistan 30th country

New, redesigned Corolla is being produced:

Pakistan as 13th country

Out of 52 countries

8%

92%

Growth

19932015

1993:20units/day 2015:230units/day

Auto industry as main drivers of:What?• Economic growth• Stability • Technological progress • Major employer • Taxpayer

What are the Economic factors?•Macro-Economics factors• low GDP growth•higher car prices due to the depreciation of the rupee•wealth disparities (reflected in the fact that 49% cars

sold in 2013-14 were priced from Rs 1.2 million upward)• lack of affordable car financing schemes as a result of

high interest rates.

Workforce in the other countries associated with Auto industry:

Japan America South Korean0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

Workforce %

Workforce %

Contribution in the taxes by the Auto Industry

Japan Us India Pakistan0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

10%

13%

8%

4%

0%

2%

0% 0%

Taxes contribution by the countries

Federal State Series3

Countries

Perc

enta

ge

Government role• lowered the age limit of used cars that can be

imported into Pakistan.• from five to three-year-old cars.• In result Automobile car’s became more expensive.• local auto industry is unwilling or unable to produce

cars that are in keeping with customer needs and demands• The result is that the consumer is the ultimate loser.

A. Government should quickly make new auto policy and decides how it wishes to pursue growth:

i. Through manufacturing ii. TradingA. “No auto manufacturing country permits liberal import of

used cars as Pakistan. The government will do well to tighten this policy if the domestic auto industry is to flourish.”

Import of used cars in other countries

•Ali Asghar Jamali said:•Countries like India and Thailand had restricted the import of used cars,•and using tariff and non-tariff barriers• In-order to ensure that domestic production is not hurt irretrievably(impossible to recover or get back).

Automobile Industry