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Pakistan April 2016: Suzuki Cultus up 71%, changes ahead?

Suzuki Cultus Pakistan April 2016Suzuki Cultus

* See the Top 15 Pakistan-made models by clicking on the title *

Sales of Pakistan-made light vehicles are down 10% year-on-year in April to 17.201 units, bringing the year-to-date total down 4% to 72.379 units. The Toyota Corolla dominates once again with 28.2% share and follows the market at -10% to 4.859 deliveries, ahead of the Suzuki Mehran up 22% to 3.202 and the Honda City up 9% to an estimated 1.788 sales. Now that incentives have gone, both the Suzuki Ravi (-51%) and Bolan (-56%) continue their freefall whereas the Suzuki Cultus is up 71% to 5th place. The Pakistani car market has traditionally been dominated by three carmakers manufacturing locally: Suzuki (52% share in April), Toyota (32%) and Honda (16%). This may be about to change though as the Pakistani government wants to break this monopoly-esque situation to bring more competition in the market.

According to local publication arynews.tv, officials are touting a new auto policy, skewed in favour of new entrants, that includes offering foreign car manufacturers lower duties as an incentive to set up plants in Pakistan or revive shuttered ones. New entrants would be able to import machinery for plants duty free. Customs duty for importing car parts has been set at 10%, while existing players will have to pay 30%. “We expect that there will be one or two foreign investors coming into Pakistan,” said Miftah Ismail, chairman of Pakistan’s Board of Investment, who has been talking to car makers about setting up assembly plants for the local market. Ismail told Reuters he had held talks with Japan’s Nissan and alliance partner Renault for “some time”, last month met Fiat executives in Italy for the first time while previous discussions also involved Volkswagen. Analysts say the odds are stacked against Pakistan finalising deals, despite the concessions on offer.

A major obstacle is the perennial concern about political stability in a country where the military has staged several coups since independence and attempted others. The threat of militant attacks also remains high, despite the armed forces’ long-running campaign against groups including the Taliban who are opposed to the government in Islamabad. Foreign companies have been reluctant to invest large sums when the long-term outlook is so uncertain. The local manufacturing partners of Toyota and Honda did not respond to requests for comment. Ali said existing manufacturers felt aggrieved that the government was favouring new investors, and believed they should be similarly encouraged to build new plants and expand existing facilities.

Suzuki said it was prepared to invest $460 million in Pakistan, including setting up a new plant, if the government provided the right incentives. It called for changes to the new auto policy, which it said “may damage the tremendous investment potential in the Pakistan automobile sector”. Some Pakistanis are frustrated by high prices and the quality of locally produced cars, which tend not to have airbags, anti-lock breaking systems (ABS) and other features considered standard elsewhere. The cheapest Pakistani car, the Suzuki Mehran, sells for 650,000 Pakistani rupee ($6,200), or about double the price of a comparable model in India.

Previous month: Pakistan March 2016: Honda City on podium

One year ago: Pakistan April 2015: Suzuki Bolan and Ravi take off

Full April 2016 Top 15 Pakistan-made models below.

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