Pak­istan auto in­dus­try rides a high

The Pak Banker - - BUSINESS -

Pak­istan's auto in­dus­try is en­joy­ing a boom. All lead­ing brands such as Suzuki, Toy­ota and Honda have re­ported high prof­its.

The big­gest car pro­ducer - Suzuki - shot down the in­dus­try's pro­duc­tion record growth of 31 per cent by up­ping its own out­put by 54 per cent in 2015. Suzuki main­tained its lead­er­ship among the coun­try's Big 3. The sale of cars man­u­fac­tured and as­sem­bled in Pak­istan climbed to 179,953 units in 2015 from 136,888 units in 2014, In­dus­tries said.

What is push­ing this car buy­ing and pro­duc­tion spree? The yen stays weak against the green­back, help­ing car as­sem­blers to buy im­ported spare parts for cheap prices. Im­ported spares ac­count for around 75 per cent of the equip­ment which goes into as­sem­bling cars. Com­mer­cial banks' in­ter­est rates are now the low­est in 42 years, mak­ing car fi­nanc­ing cheap­est in decade.

New car mod­els are at­tract­ing buy­ers as Pak­ista­nis en­joy a higher



of pur­chas­ing power. "The lat­est growth in the au­to­mo­bile sec­tor con­firms a ris­ing per capita in­come in Pak­istan, im­proved eco­nom­ics of the auto sec­tor and over­all re­cov­ery of the econ­omy," said Tahir Saeed, a fi­nan­cial mar­ket re­searcher.

There is big scope of more in­vest­ment in­flows to ex­pand pro­duc­tion ca­pac­ity as com­pe­ti­tion among car man­u­fac­tur­ers in­creases. Auto is per­haps the only in­dus­try which is do­ing well at a time when oth­ers - rang­ing from tex­tiles to farm prod­ucts - are hit hard by stag- nat­ing ex­ports. Re­duced for­eign de­mand, dif­fi­cul­ties re­lated to the in­ter­na­tional oil price crash and en­ergy short­ages are key fac­tors hit­ting other in­dus­tries.

"The auto in­dus­try must now fo­cus on en­larg­ing out­put of its cars and ex­port more units to coun­tries in its neigh­bour­hood. It should also tap new mar­kets in Cen­tral Asia," Min­is­ter for Com­merce Khurrm Dast­gir said. Suzuki has un­veiled its op­er­a­tional and fi­nan­cial re­sults for 2015. The com­pany is jointly owned by Pak­istan Au­to­mo­bile Cor­po­ra­tion (Paco) and Suzuki Mo­tor Cor­po­ra­tion of Ja­pan (SMC). SMC owns 73 per cent of the joint ven­ture.

Paco said: "In Jan­uary to Septem­ber 2015, Suzuki tripled its pre-tax profit to Rs6.33 bil­lion as com­pared to Rs2.18 bil­lion in the like pe­riod of the pre­vi­ous year." Toy­ota cars as­sem­bled by In­dus Mo­tors is mov­ing up the lad­der fast. Its re­port said: "Toy­ota sold 57,000 car in 2015 - a record in the com­pany's his­tory. We have ex­ceeded pro­duc­tion ca­pac­ity which is usu­ally 54,800 units a year."

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