Auto Industry Flourishes
Major global restructuring is on the move in manufacturing. There is a dire need to ensure sustainable growth in the manufacturing sector in a rapidly changing and challenging international competitive environment. This requires a shift in the production paradigm to technology and knowledge-based industrialization with a focus on the quantitative and qualitative growth of an integrated and competitive industry in the private sector. This is an opportune time for investment in the engineering industry, particularly in the component-manufacturing sector, where a number of opportunities are available for the private sector.
The growth in Pakistan's domestic engineering sector has propelled the growth momentum of several engineering goods sub-sectors. In particular, the auto sector of the country has shown unprecedented growth during the last few years. The economy survey of Pakistan depicts that the overall growth in the automobile sector was 29.76 per cent while the basic metal industry grew by 58.6 per cent during FY 2006-07.
The home appliances sector has also shown an outstanding performance during 2001-02 to 2007-08. For instance, air-conditioners registered a remarkable growth, from 32,000 units in 2001 to 363,000 in 2007; refrigerators 272,352 in 2001 to 861,604 in 2007; deep freezers 77,616 in 2001 to 185,684 in 2007 and TV sets 97,404 in 2001 to 966,468 in 2007. However, great potential still lies un-utilized as there is a huge demand-sup¬ply gap in the local consumer market.
The auto industry has become the fastest growing industry of Pakistan. It consists of 72 assembly plants and 600 component manufacturers. During 2007-08, one million units of cars, buses, trucks, LCVs, motorcycles, and tractors were manufactured in Pakistan. Car production, which reached 161,000 units during the last financial year, is poised to touch the mark of 500,000 in 2012. Automotive products achieved a compounded growth rate of 50 per cent, during the last five years, out of which cars registered a growth rate (41 per cent), motorcycles (58 per cent), LCVs (37 per cent), trucks (41 per cent) and tractors (20 per cent). Pakistan is an emerging market for the auto sector, with potential to develop certain components. A conducive business environment, such as zero duty on import of all kinds of inputs for parts manufacturing and the availability of infrastructure, including human resources, is an advantage.
Some important world-class auto companies, like Toyota, Honda, Suzuki and Hyundai, are active in the car sector, while truck manufacturers, like Hino, Nissan, Isuzu and Daewoo, have manufacturing plants in Pakistan. Likewise there are good companies in the tractor and motorcycle segment.
The Pakistani engineering industry has reached a point where component manufacturing has become viable. The auto industry, due to its multiplier effects and strong backward (materials such as steel, copper, aluminum etc., plastics, glass, paint, electronics, capital equipment, trucking ware¬housing and logistics) and forward linkages (dealerships, credit and financing, advertising, repair and maintenance, petroleum products, goods stations, insurance, service parts), is considered a key industry.
Growth in the auto sector in Pakistan has resulted in sizable growth and investment in the downstream vendor industry. The local manufacturers of parts and accessories are adding manufacturing facilities as well as creating new employment opportunities and generating demand for several types of services. Currently, about 192,000 people are employed in Pakistan's automotive sec¬tor and it is expected that the sector employment would touch the figure of 250,000 in 2010.
As the car production increases from the current 200,000 to 500,000 units per year, along with the corresponding increase in production of light commercial vehicles, trucks, buses and tractors, a looming gap is beginning to appear in the component-manufacturing sector.
The component manufacturing sector is the backbone of the engineering industry as a whole. It facilitates automobiles, home appliances, machinery and electronics sec¬tors in terms of supply of components, needed for assemblies, employment generation, human resource development and transfer of technology.
Currently, the automobile sector is facing shortages of component supplies, high prices and under-utilization of its capacity hence; opportunities have emerged for investment in the component manufacturing sector to utilize the uncapped potential of the auto sector and unsatisfied demand for cars. Automotive OEMs operating in Pakistan will now find it feasible to encourage joint ventures between their native vendors and Pakistani counterparts. Pakistan continues to be a low-cost manufacturing destination as compared to several other countries and has the potential to become an export hub for auto-parts and sub-assemblies.
The government is on course to provide a long-term auto policy with a pre-announced, five-year tariff plan for the auto sector. With this platform, Pakistan is on its way to develop two automotive clusters, one each in Lahore and Karachi, to achieve a 500,000 car production target by 2011-12. Investment opportunities exist in the field of casting, forging, plastics and rubber, fasteners, sheet metal, machining, brake assemblies, glass, die and mould, gearbox, suspension and power steering etc.
The home appliances sector has also shown an outstanding performance during 2001-02 to 2007-08. For instance, air-conditioners registered a remarkable growth, from 32,000 units in 2001 to 363,000 in 2007; refrigerators 272,352 in 2001 to 861,604 in 2007; deep freezers 77,616 in 2001 to 185,684 in 2007 and TV sets 97,404 in 2001 to 966,468 in 2007.
The growth in Pakistan's domestic engineering sector has propelled the growth momentum of several engineering goods sub-sectors. In particular, the auto sector of the country has shown unprecedented growth during the last few years. The economy survey of Pakistan depicts that the overall growth in the automobile sector was 29.76 per cent while the basic metal industry grew by 58.6 per cent during FY 2006-07.
The home appliances sector has also shown an outstanding performance during 2001-02 to 2007-08. For instance, air-conditioners registered a remarkable growth, from 32,000 units in 2001 to 363,000 in 2007; refrigerators 272,352 in 2001 to 861,604 in 2007; deep freezers 77,616 in 2001 to 185,684 in 2007 and TV sets 97,404 in 2001 to 966,468 in 2007. However, great potential still lies un-utilized as there is a huge demand-sup¬ply gap in the local consumer market.
The auto industry has become the fastest growing industry of Pakistan. It consists of 72 assembly plants and 600 component manufacturers. During 2007-08, one million units of cars, buses, trucks, LCVs, motorcycles, and tractors were manufactured in Pakistan. Car production, which reached 161,000 units during the last financial year, is poised to touch the mark of 500,000 in 2012. Automotive products achieved a compounded growth rate of 50 per cent, during the last five years, out of which cars registered a growth rate (41 per cent), motorcycles (58 per cent), LCVs (37 per cent), trucks (41 per cent) and tractors (20 per cent). Pakistan is an emerging market for the auto sector, with potential to develop certain components. A conducive business environment, such as zero duty on import of all kinds of inputs for parts manufacturing and the availability of infrastructure, including human resources, is an advantage.
Some important world-class auto companies, like Toyota, Honda, Suzuki and Hyundai, are active in the car sector, while truck manufacturers, like Hino, Nissan, Isuzu and Daewoo, have manufacturing plants in Pakistan. Likewise there are good companies in the tractor and motorcycle segment.
The Pakistani engineering industry has reached a point where component manufacturing has become viable. The auto industry, due to its multiplier effects and strong backward (materials such as steel, copper, aluminum etc., plastics, glass, paint, electronics, capital equipment, trucking ware¬housing and logistics) and forward linkages (dealerships, credit and financing, advertising, repair and maintenance, petroleum products, goods stations, insurance, service parts), is considered a key industry.
Growth in the auto sector in Pakistan has resulted in sizable growth and investment in the downstream vendor industry. The local manufacturers of parts and accessories are adding manufacturing facilities as well as creating new employment opportunities and generating demand for several types of services. Currently, about 192,000 people are employed in Pakistan's automotive sec¬tor and it is expected that the sector employment would touch the figure of 250,000 in 2010.
As the car production increases from the current 200,000 to 500,000 units per year, along with the corresponding increase in production of light commercial vehicles, trucks, buses and tractors, a looming gap is beginning to appear in the component-manufacturing sector.
The component manufacturing sector is the backbone of the engineering industry as a whole. It facilitates automobiles, home appliances, machinery and electronics sec¬tors in terms of supply of components, needed for assemblies, employment generation, human resource development and transfer of technology.
Currently, the automobile sector is facing shortages of component supplies, high prices and under-utilization of its capacity hence; opportunities have emerged for investment in the component manufacturing sector to utilize the uncapped potential of the auto sector and unsatisfied demand for cars. Automotive OEMs operating in Pakistan will now find it feasible to encourage joint ventures between their native vendors and Pakistani counterparts. Pakistan continues to be a low-cost manufacturing destination as compared to several other countries and has the potential to become an export hub for auto-parts and sub-assemblies.
The government is on course to provide a long-term auto policy with a pre-announced, five-year tariff plan for the auto sector. With this platform, Pakistan is on its way to develop two automotive clusters, one each in Lahore and Karachi, to achieve a 500,000 car production target by 2011-12. Investment opportunities exist in the field of casting, forging, plastics and rubber, fasteners, sheet metal, machining, brake assemblies, glass, die and mould, gearbox, suspension and power steering etc.
The home appliances sector has also shown an outstanding performance during 2001-02 to 2007-08. For instance, air-conditioners registered a remarkable growth, from 32,000 units in 2001 to 363,000 in 2007; refrigerators 272,352 in 2001 to 861,604 in 2007; deep freezers 77,616 in 2001 to 185,684 in 2007 and TV sets 97,404 in 2001 to 966,468 in 2007.
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1 Comentário:
Very interesting Article, it's great to read about other parts of the world how the economy goes around,
So basically as i can see they are based on Japanese made?
P.S visit feel free to visit The Science of Getting Rich
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