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Thursday, February 15, 2024

Competitors vie for niche SUV spot in Pakistan automobile market

The Pakistani automobile industry is transitioning, it is the fastest growing auto-industry in Asia and competitors are vying for a piece of the expanding market

The Pakistani automobile industry had been stagnant for the majority of the country’s life, dominated by only a few car manufacturers. However, in the last ten years, the industry has seen phenomenal growth. It has surpassed the growth rate of its neighbours and is the fastest growing automobile market in Asia.

The demand is not for need-based SUVs but is for the better engine, suspension, drive comfort and feel of being elevated. This market is likely to grow in years to come, and Lucky Motors is thinking to dominate niche SUV market. The company is planning to launch 2-3 SUVs models by June 2021 (to reap the benefit of automotive policy 2016-21), and may later come up with SUVs in EV (as a separate 4-wheeler SUV policy is in the development process).

Pakistan’s auto market fastest-growing in Asia

There are many new car manufacturers that are vying for a piece of the growing market. Renault Pakistan has acquired an industrial land in Faisalabad to set up the assembly plant to manufacture vehicles in the country. The expected five cars that Renault will launch in Pakistan are Duster, Captur, Lodgy, Pulse and Kwid.

Hyundai Nishat Motors had an agreement with the government to enter the Pakistani market. The company is setting up a 66-acre assembly plant in Faisalabad. After the plant is set up, Hyundai plans to launch locally manufactured cars in Pakistan by March 2020

The South Korean automotive giant Kia, collaborated with Pakistan’s Yunus Brothers Group to launch the vehicles in the country. The company has already launched Grand Carnival and K2700 pickup in Pakistan.

Chinese automaker Chongqing Changan Automobile Limited inked an agreement with Master Motors to manufacture vehicles in Pakistan. Changan will establish an assembly plant in Karachi. In the initial stage, passenger vehicles will be introduced.

The target market of Changan Automobiles will be middle and higher class. The Chinese competitors are expected to break the dominion of the three Japanese assemblers that have so far remained unsuccessful in localizing car production in the span of last three decades.

VW project at its full potential is expected to produce up to five hundred million euros yearly in exports and two hundred million euros in duties and taxes for Pakistan. These figures indicate that the world’s largest automotive group is keen in exporting vehicles to the regional nations from Pakistan.

In the initial phase, VW would be manufacturing 28,000 units of Amarok and T-6 light commercial vehicles (LCVs).

This project is expected to generate 5,400 jobs including 1,400 direct jobs. Volkswagen has the target of having at least 40 dealerships in Pakistan. The car maker has got the aim of making use of the same plant that Audi plans to build for assembling its own automobiles in Karachi.

The Greenfield status has been granted complying with the auto policy 2016-21. Dollar 50 million will be invested in the auto sector of Pakistan in collaboration with the Chinese company KA Hanteng Motors.

Chinese companies entering the market

There are many Chinese companies that have shown eager interest in the Pakistani market as well.

KA Hanteng will manufacture passenger vehicles and SUVs in Pakistan after it has built its assembly plant. The assembly plant will have the capacity to manufacture 15,000 vehicles annually in Pakistan.

Chinese FAW group already has a joint venture with Al-Hajj group in Pakistan and they are producing Al-Hajj FAW motors cars in Pakistan.

The automaker is focused on assembling FAW cars locally in Pakistan and they would push the car production to 15,000 units per annum by 2020. Al-Hajj FAW V2 Car is gaining momentum in Pakistan gradually and the company has received a positive feedback from the market. The group already has strong JVs with global brands including Toyota, Volkswagen, and General Motors in China.

Another Chinese auto manufacturer JAC Motor is planning to launch electric vehicles in the Pakistani market. They are looking forward to introducing new vehicles particularly focusing on electric vehicles in Pakistan as part of their long-term development program.

Electric vehicles in Pakistan would be totally novel market and expand the diversity in which the Pakistani market can indulge themselves in.

SsangYong Motor Company (SYMC) is entering the Pakistani market with the plans to launch sports utility vehicles (SUVs) in Pakistan by early 2019. The delegation of SsangYong Motor Company has visited Pakistan and will roll out vehicles in collaboration with Dewan Farooque Motors Limited (DFML) located in Sindh.

United Motors, the second-largest bike manufacturer in the country has launched its first car in Pakistan. United Bravo, will give direct competition to Suzuki Mehran, with its affordable price.

Pakistani automobile-makers struggling to keep up with demand

It faces a delivery lag of 2-3 months for AWD and 1 month for FWD. The company wants to deliver cars within a month of booking – that can potentially take away the infamous ‘on money’ out of the equation.

The ‘on money’ is directly proportional to the time of delivery. For example, Sportage and Tucson are almost similar cars, but instant delivery ‘on money’ on Tucson is much higher. The production capacity of Tucson is of making 10-15 cars a day, but they are struggling to reach that level. There are teething problems.

Read more: Affordable Crown Electric Cars Introduced in Pakistan

The delivery time is May 2021, if the car is booked today. Estimates are that anywhere between 1,000-2,000 cars are being booked.

Nisan is also surprised by market demand. It is importing additional kits and planning to go in the double shift by January 2021. The company is resolving the bottlenecks in the paint job. It is confident to produce 20-25 Tucson a day by January and may reach 800-900 cars per month by June 2021.

Kia on the other hand has 60-65 cars per day production capacity right now. The nameplate capacity of Lucky Motors is similar to Indus. The company is planning to reach 20,000-25,000 cars a year in 12-18 months. This can double in 2-3 years if the demand grows, as it has the capacity to absorb.

Kia has launched two cars – Sportage and Picanto. There is an overwhelming response on Sportage while Picanto is facing tough competition from similar cars that Suzuki is producing. Compact SUV is a virgin territory and Lucky motors are all set to capitalize on it. As the saying goes, once a customer moves to SUV, he does not pull back.

Competition in the ‘Sedan’ category growing

The competition in the sedan category is growing. There are three models – Civic, City and Corolla. Toyota has introduced Yaris and it is the hot cake – 1,883 cars being already sold in July. Hyundai is planning to launch two models in Sedan –Elantra (in competition to Corolla and Civic) and Sonata (high-end sedan – in competition to Camry and Accord globally, while no such car is assembled in Pakistan), before June 2021. The market is becoming saturated. Lucky is taking smart and bold steps to become big in SUVs.

The buzz is that the company may launch a 7-seater SUV in December 2020. This will compete with the existing Toyota SUV: Fortuner. The company may launch Kia Sorento. Experts say that it has better specs than Fortuner and this will probably be launched at 10-15 percent discount to Fortuner. With panoramic sunroof and other features, at a discount to Fortuner, the product placement may succeed in making a killing, provided 2020-21 model is launched.

Read more: 4 Best Underrated New Cars in Pakistan: Best Features & Price

In 2017-18, on average, 275 Fortuners were sold per month while the sale of Toyota Hilux was 593 units during the same period. This is the SUV market where buyers look for off-roading features. Military and politicians are big buyers of SUVs and trucks (Hilux). Kia Sorento will create competition here.

GVS News Desk