Automobile Industry of Pakistan - an Overview

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Automobile Industry of Pakistan - An Overview

The automotive industry rightly prides itself on being recognized as the “mother of all industries.” In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While they may appear to be simple machines, their design and manufacturing have much deeper roots in all the known technologies. In-depth knowledge and skillful application of mechanical, electrical, electronics, chemical and a host of other technologies culminate in achievement and improvement of the manufacturing base of a country, by focusing on a single product “the automobile.” This then provides an opportunity to produce a large number of goods and services for consumption of the entire international community. Use of the word “mother” for automotive industry is therefore the most appropriate description to define the nature and importance of the industry. In recent years, we have witnessed that the industrialization of South East Asian countries greatly depend on the development of their automotive industry. Similarly, automotive industry acted as a catalyst in the overall growth of the industry in Japan and Koreas and the consequent wellbeing of their citizens. It is indeed heartening that the mother has once again smiled at Pakistan. Fortunately the last 3 years have witnessed phenomenal growth in the industry in terms of technological advancements and production/sale volumes with the local contents rising as high as 90%. The industry is already employing 120,000 people, contributing more than 12 billion rupees to GDP, contributing more than Rs. 30 billion to the national exchequer in terms of duties and taxes, attracted investment worth Rs. 52 billion including a substantial foreign investment. Today the customers have choice to pick from a wide range of products including motorcycles, trucks, buses and cars of premier Japanese and Korean brands at internationally competitive prices which has only become possible due to local contents and availability of highly productive and inexpensive human resources. An automobile has over 2000 components and parts out of which the assemblers usually concentrate on the manufacturing of small but critical parts while the remaining parts are supplied by the vendors and the subcontractors. In Pakistan the automobile component manufacturing industry consists of mainly units producing original components for assembly under delegation program and units producing reconditioned and original components for local use. These units are in three types which include the original equipment manufacturers, independent equipment manufacturers and the ancillary (auxiliary) industry producing small parts and non-automotive items. There are more than 800 vendors in the country with a total investment of over Rs. 8 billion; they are engaged in the manufacturing of original components for the assembly operation under the delegation program as well as producing reconditioned and original components for sale in the local market. They manufacture and supply the local car assemblers with auto parts such as pistons, engine valves, gaskets, camshafts, shock-absorbers, struts, steering mechanism, cylinder heads, wheel hubs, brake drums, wheels, bumpers, instruments and instrument panels, gears of all types, radiators, cylinder liners, blinkers, lights, doors and door locks as well as auto air conditioners. Critics say that the local vendor industry though still in the process of development, have not achieved the delegation targets by producing low quality components which are not acceptable by the local assemblers, it is said that the Pakistan Association of Automotive Parts & Accessories – which represents the auto parts manufacturers – have not in a way been fully able to contribute its share to the development of this sector. The vendors on their part however put the blame on the policy makers and partly on the assemblers who have not been encouraging the...
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