VW's Entry To Challenge Asian Dominance In Pakistan: Fitch Research

November 29, 2018 (MLN): Fitch Solutions Macro Research, says in its research report that, VW’s entry into Pakistan's LCV manufacturing industry will progress the country's competitive landscape and force producers to be more competitive in terms of both quality and affordability.

According to their research report, booming LCV market in Pakistan would provide an attractive sales environment for VW to come into with its new domestically produced vehicles.

As currently, there are three Asian automakers who dominate the LCV manufacturing industry in Pakistan, namely Suzuki, JAC and Toyota. The entry of new LCV manufacturers in the country will give consumers greater bargaining power.

As per the research house forecasts, LCV production will expand by 20.0% in FY2019, following a 19.7% expansion in FY2018.

Beyond this, the growth is expected to remain robust over the medium term leading up to 2022, averaging annual growth of 10 .9%, and in the longer term, the growth is expected to slow to average an annual contraction of 1.8% as the demand for LCVs in Pakistan normalizes, says the report.

As per the document, LCV sales in the country is predicted to increase with average annual growth of 8.7% over FY2019-FY2022, reaching a total of around 40,400 units by the end of FY2022.

In November 2018, Pakistan Board of Investment (BOI) announced that Volkswagen AG (VW) and Premier Motors Limited signed a partnership agreement to assemble completely knocked-down (CKD) light commercial vehicle (LCV) kits in Karachi.

According to the agreement, VW will assemble 28,000 units of Amarok and T-6, in the second phase their assembly line will expand to include the Caddy LCV and in the final phase VW will expand its range offering to include Skoda branded vehicles in order to target a wider consumer base and to compete with the low cost Chinese LCVs being offered in Pakistan, the report stated.

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