MLN – According to a survey on Pakistan’s Automotive Industry, total registered vehicles in Pakistan have increased by around 250 percent during the last 18 years. The rising trend in auto ownership can be attributed to an ever increasing middle class, ease of consumer financing, and competitive marketing by auto manufacturers in Pakistan.
| Total Passenger Cars | ||
|---|---|---|
| Year | Total | YoY Change |
| 2016-17 | 185,781 | 2.56% |
| 2015-16 | 181,145 | 19.86% |
| 2014-15 | 151,134 | 29.61% |
| 2013-14 | 116,605 | -1.87% |
| 2012-13 | 118,830 | -24.47% |
[Source: PAMA, Mettis Global]
However, the last few years have seen a sudden spike resulting from the betterment of security conditions. A total of 1.63 million motorbikes and three wheelers were sold during the fiscal year 2017.
| Two and Three Wheelers Sales | ||
|---|---|---|
| Year | Total | YoY Change |
| 2016-17 | 1,630,735 | 20% |
| 2015-16 | 1,358,643 | 78% |
| 2014-15 | 765,195 | -1% |
| 2013-14 | 771,507 | -6% |
| 2012-13 | 819,556 | -1% |
[Source: PAMA, Mettis Global]
The long awaited launch of Automotive Development Policy (ADP) 2016-21 was announced in September, 2016 which paved way for international automotive manufacturers from the world to invest and setup assembly plants in Pakistan. The policy fetched investments from France (Renault) and South Korea (Kia, Hyundai) helping much needed foreign direct investment lift up to the economy.
On the other hand, financing needs required by consumers to take part in this automotive industry’s revival are being matched by the local banks. Total private sector consumer financing for transport during the month of January reached 175.039 billion; a jump of 256.5 percent during the last five years.
[Private Sector Credit: Consumer Financing for Transport]
Market Dynamics
Pakistan’s trio of auto producers maintain a strict oligopoly in the market. Suzuki, Honda, and Toyota continue to dominate the market in the passenger car segment.
Pak Suzuki Motors (PSMC) currently dominates the market share at 43.65 percent of the total market with emphasis on low priced cars targeted at middle-class population. Mehran – 796 cc engine – is the star performer under Pak Suzuki brand followed by WagonR.
Toyota (Corolla) and Honda Cars (Civic, City) follow PSMC follow Suzuki is sales at 17.09 percent and 15.06 percent respectively.
[Source: Mettis Global]
With the announcement of Automotive Development Policy (ADP) 2016-21, the manufacturing and sales landscape for Pakistan’s auto sector is bound to change in the coming days. The newcomers – Hyundai, Kia, and Renault – will bring in stiff competition for existing players. France and South Korea’s ambitious projects aimed at burgeoning population and ease of access to finance from local banks is bound to trigger a boom in auto related industries.
