AUTOMOBILE

INDUSTRY OF
PAKISTAN
Prepare By
Neelam Naseem khan, MBA In Supply Chain Semester 8th
Dadabhoy Institute of Higher Education

Analysis of Pakistan Industry

Assignment No 2nd

Submitted To

Professor Dr. Gobind Herani

Date: 17–August– 2k19
 LETTER OF TRASMITTIAL
Neelam Naseem khan Date: 17 – Aug – 2k19
Main Campus, SNPA-17/B,
Block 3, K.C.H.S.U
Lal Muhammad Chaudhary
Road Hill Park,
Karachi

Professor Dr. Gobind Herani

Dadabhoy Institute of
Higher Education
Karachi,

Dear Sir,
We feel immense pleasure in presenting to your good self, the term report as part of
our recourse requirement. We found this report to be truly challenging in many
aspects, indeed very interesting in relation to the various interpretational and
engrossing exercises. Writing this report itself was truly comprehensive learning
experience. The report mainly revolves around the four core management functions
of Planning, Organizing, Leading and Controlling that are being practically applied
by the managements at the two renowned corporate entities, effectively providing a
comparison of these functions between the entities. We observed that at both the
entities, Planning was mainly related to the Automobile Industry of Pakistan
We have tried our level best to complete the report with respect to the desired
requirements. However, if any explaining is required, we would be honored to
oblige. Kindly accept this humble effort of bringing forward our research and
findings on the AUTOMOBILE INDUSTRY OF PAKISTAN.

Sincerely,

Neelam Naseem
MBA Semester 8th
Dadabhoy institute
of higher education
 ACKNOWLEGMENT
We have taken efforts in the Report. However, it would not
have been possible without the kind support and help of many
individuals and organizations. we would like to extend my
sincere thanks to all of them.

Highly Thanks to my friends for guidance and constant

supervision as well as for providing necessary information
regarding the report & also for their support in completing the
report.

We would like to express my gratitude toward my Teacher guide

Professor Dr. Gobind Herani for their kind co-operation and
encouragement which help me in completion of this report.
We would like to special thanks to Dadabhoy institute of
higher education for giving this opportunity.

Neelam Naseem khan, MBA In Supply Chain Semester 6th

Dadabhoy Institute of Higher Education
 INTRODUCTION
Industry that produces automobiles and other gasoline-powered vehicles, such as
buses, trucks, and motorcycles. The automotive industry in Pakistan is the one of the
fastest-growing industries of the country, accounting for 4% of Pakistan's GDP and
employing a workforce of over 1.8 million people.

Historical Facts
 1959-72 Emergence of Pakistan’s economy at the take-offstage in Karachi
and the conditions of pre-take off stage in Lahore, as per W.W. Rostow’s
economic description of these stages. Bedford Rocket (GM) truck was under
assembly and progressive manufacture in Karachi, while Vauxhall Victor (GM
UK) car and Dodge Dart were also assembled. Daihatsu Tri-wheeler was also
assembled in Karachi. Tankers, bowsers and trailers were assembled on Volvo
and Mack truck chassis.

 1972 Nationalization saw the deterioration of the auto industry of Pakistan

 1980 Reemergence or progressive localization. A new class of automotive

vendors emerged on the national scene and through this the local tractor was
 indigenized to the extent of 92 % and the truck and car sector also saw high level
of indigenization.

 1983 Suzuki Motor Corporation entered Pakistan

 1990 Privatization with Mill attractor and Al Ghazi tractor reappearing but
industry stagnant thru the next decade. Toyota, Honda, Hyundai, GM entered.
ISDP introduced

 2002 Economic reforms and liberal consumer financing

 2006-07 Industry touched peak productions
 2007 Deletion programs eliminated, Used Cars import opened, consumer
financing reduced high markups.

GLOBAL CATEGORIZATION OF THE

TRANSPORT VEHICLES
LIGHT VEHICLE
 Car (small/medium/large)
 Pick up (medium/large)
 Motorcycle (two/three)
 Recreational vehicles
 Specialized vehicles
HEAVY & COMMERCIAL
 Trucks & Trailers
 Buses (mini / luxury)
 Tractors & other agricultural machinery
 Construction Equipment
 Utility Vehicles
 PAKISTAN AUTO INDUSTRY TODAY- 1
Presence of Global Auto Giants Through
Investments / Technical Collaborations -Assemblers

Suzuki Japan Cars / LCV

Toyota Japan Cars / LCV / SUV
Honda Japan Cars / Motorcycles
Massey Ferguson UK Tractors
Fiat Italy Tractors
FAW China Trucks, Cars, LCV
Yamaha Japan Motorcycles
Hino Japan Trucks / Buses
UD Nissan Japan Trucks / Buses
Isuzu Japan Trucks
Land Rover UK Jeeps

PAKISTAN AUTO INDUSTRY TODAY - 2

Local Assemblers
Master Buses / Trucks
Non-branded versions Making body only
Motorcycle Manufacturers 42 +
Local Parts procurement
Cars & HCVs up to 70%.
Tractors 96%.
Motorcycles 96%.
Three Wheelers 80%.
Countries where Auto sector is Exporting
Asian Countries Auto parts, CBU’s-Cars, LCV’s,
Tractors
African Countries Auto parts, Tractors
European Union Auto parts
USA Auto parts
 PAKISTAN AUTO INDUSTRY TODAY - 3
Auto parts makers
Tier one -670 units.
Tier two -900 units.
Tier three -1300 units.
Employment
Direct 400,000 skilled workers
Indirect 2 million
Total 2.4 million
Investment: Rs.280 billion
Revenue to national exchequer Rs124 billion
Import substitution US$ 2.8 billion
Exports US$ 700+ million

STRENGTH OF PAKISTANI AUTO PARTS

MAKERS
 Extremely Highly Value-added Business
 –An established and well-organized sector that is already working with world class
OEM’s like TOYOTA, HONDA, SUZUKI, MAZDA, HYUNDAI, NISSAN.
 –Awareness of good management practices, costing, technology and marketing
expertise.
 –Investment in Plant and machinery is being made as required by the local OEM’s.
 –In-depth knowledge of Parts Manufacturing attained already by the potential
export company.
 –Technologies Sheet metal, Forgings, Castings Machining, Rubber, Assemblies
available
 –Product quality is good and acceptable
 –Existence of a competitive pricing edge over competitive countries.
 –Willingness to work with low volume orders. In fact, the industry is tuned to low
volume production runs that automatically is the necessity of Developed countries
aftermarket.
 –For the Tractor components worldwide only three/four manufacturers exist.
Tractor parts being produced in Pakistan have an automatic worldwide
acceptability unlike car parts. A focused marketing must be developed for this sector
which has huge potential
 ITEMS ARE WE MANUFACTURING AND
EXPORTING
 Part of The Auto Vehicle, Rubber  Hub and Fire Wheel
 Tractors Agricultural  Saddles
 Part of AgirculturalTractors  Parts of Cycles
 Bodies for Vehicle, Care, Wagons  Seat Of Kind For Motor Vehicle
 Bodies for VanMeter, Tractors  Filters
 Gear Boxes  Forged Machined Parts
 Silencers and Exhaust Pipes  Heat Treated Steel Components
 Parts & Accessories of Tractor  Axle, Brake Discs
 Parts & Accessories of Motor  Molds (Steels)
Vehicle  Expansion Tanks
 Part/Accessory of Motor Cycles  Bottles / Tanks& Moldings
 Wheel Rims and Spokes  Engine Valves
 Gear Box Shafts  Motor Cycles-Capacity Upto50 cc
 Timing Gears / Transmission  Motor Cycles-Capacity 50 cc-250 cc
 Tractors Wheels Rims  Motor Cycles-/ Scooter
 Pistons/ Cylinder Liners  Bicycles
 Radiators Cop Assy
 Hand Brakes

PAKISTAN’S AUTO INDUSTRY NEWS

ANALYSIS
 Pakistan’s auto industry is off to a good start in 2018. According to a production
versus sales data compiled by Pakistan Automotive Manufacturer’s Association
(PAMA), local assemblers sold 23,700 units of SUV’s, Sedans and CUV’s in January
2018. This is a 13 percent climb compared in a year-on-year analysis with the
corresponding month in 2017.
 Commentators attribute this growth to taxation policies, buying power and the ever-
growing demand from online cab hailing services, Uber and Careem. Online cab
hailing services have made a serious mark on the auto industry in the past two
years. From Suzuki resorting to halt production of the Wagon R considering a
backlog of orders to a whopping 30 percent raise in 1000cc and below cars, Uber
and Careem seem to have affected a lot of areas. Cumulatively, industry sales during
the seven months of the fiscal year 2018 posted 29 percent growth to 147,838 units
 Sale of Honda Atlas Cars’ Honda Civic and Honda City went up from 2464 units in
December to 3,888. In a year on year analysis, there was a 33 percent climb.
Compared to January 2017 sales for Honda went down 28 percent in a month on
 month comparison. The 7-month fiscal year (from July 2017 – present) sales went
up by 50 percent in a year on year comparison to 24,780 units due to the success of
new models Civic/BRV.

 Toyota’s Indus Motors Company went down a notch with a decrease of 3 percent in
a year on year comparison and 14 percent in a month on month comparison.
Toyota’s Corolla, as reported earlier, was the most popular sedan in 2017. For
trucks and buses, sales remained strong, growing by 21 percent.

 Motorcycle/three-wheeler sales for December 2017 grew by a 9 percent year on

year comparison, due to rising disposable income of the lower middle class, while 7-
month fiscal year 2018 sales were up 19 percent in a year on year comparison.

 Pakistan Automotive Manufacturers Association (PAMA) recorded tractor sales in a

positive trend with sales growing by 5 percent in a year on year comparison in
December 2017. According to a local publication, Millat Tractors outperformed with
a 53 percent year on year growth. During the 7-month period, tractor sales reached
32,310 units and showed an upward trajectory with a 54 percent year on year
comparison.

CONCLUSION & SUGGESTIONS

It is reflected from the above analysis that Sales and Profit Margins of two of the above
major players increased with a lower percentage in 2016 from those of the previous years’
whereas one is showing the considerable decline just after the implementation of Recent 5-
year automobile policy in 2016. However, all the companies showed positive movement in
sales and net profit margin in 2017 again. Besides, Sales of all three companies showed
continuous rise from 2012 to 2017 even after the policy changes. Hence, it may be
concluded that the share of profit of the major players of the automobile industry those
were creating monopolies is not expected to decline even after the new policy. It may
because of the trust of people on the local makes or expected ease in maintenance than
those of the imported ones. However, the circumstances may change based on the
customers’ behavior that may cause the shift of their profit share to the New Entrants. In
view of the above, it is suggested to continue the relaxation provided in recent policy on the
import of automobiles and benefits for the Foreign Investors in order to encourage better
quality at relatively lower costs automobiles. Though, this policy is not showing to effect
monopoly of existing car manufacturers soon, however, consistent implementation of
policy may change the scenario.