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Analysis of Pakistani
Industries
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ECONOMY OF PAKISTAN
AND TREND OVER THE
YEARS OF MACROECONOMIC VARIABLES
ACCORDING TO THE ARTICLE PUBLISHED BY DR ISHRAT HUSSAIN (ECONOMY OF PAKISTAN: AN OVERVIEW), THE SALIENT FEATURES OF PAKISTANS ECONOMIC HISTORY ARE:
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UNEMPLOYMENT
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RATE OF INFLATION
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BALANCE OF TRADE
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FOREIGN DEBT
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HISTORICAL ANALYSIS OF
AUTOMOBILE INDUSTRY
INDUSTRY ANALYSIS
Manufacturing sector takes up to 18.5% of
total GDP.
Growth in GDP from 2000 to 2010 by 8.5%
The automobile industry is considered to be a
fast growing industry within the
manufacturing sector.
In the 2010 survey, the automobile industry
contributed to 5.3% of the manufacturing
sector.
Increase in production of 44.1% for
passenger cars, 19% for tractors and 50.5%
for motorcycles
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CURRENT ECONOMIC
CONDITION OF PAKISTAN
ECONOMIC INDICATORS
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FOREIGN TRADE
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PRIVATE
INVESTMENT
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CURRENT STATE OF
INDUSTRY
CAR MANUFACTURERS
10 major automakers out of which 5 produce
cars namely Honda Atlas, Indus Motors, Pak
Suzuki, Ghandala Nissan and Dewan Farooq
The Japanese companies have an
overwhelming majority
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RICKSHAW MANUFACTURERS
3 major companies
1.
3.
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Non Japanese
Master Motor
Corp
Japanese: 80%
share (Trucks)
74%
share(Buses)
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Hino
Sind Engineering
Sigma Motors
Two smaller local manufacturers include Afzal
Motors and Bibojee Services
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TRACTOR MANUFACTURERS
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Al Ghazi
Millat Tractors Ltd
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SALES TRENDS
General Trends
Total sales have increased more than 4 times
from 2096 to 9768
Sales for every category of vehicles have grown
by at least two fold
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2003/04
2004/05
2005/06
2006/07
Total Sales
2007/08
2008/09
2009/10
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160000
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TRACTOR MANUFACTURERS
2 major companies with 100% mkt share
Sales have grown steadily from 43578(04/05)
to 71512 (record sales)
Both firms are operating close to capacity
ADBP has helped boost sales greatly
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IMPORTED CARS
Around 3000-4000 b/w 2000-2003
Grew nearly 10 fold in 2006 due to loosening
govt restrictions
Restrictions loosened further in 2007
Restrictions tightened once again to protect
domestic industry (imports fell to about 5600
in 09/10)
Illegal imports from Afghan Transit around
2000 cars per year
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OBSERVATIONS
Domination of Industry by Japanese
Companies
Large inclination towards certain models
Passenger cars mostly bought by high
income group (contrast to trends in India and
China)
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PARTS INDUSTRY
The assessed quantities of Automotive parts
suppliers working in Pakistan is at around 1,600
1,700 organizations, larger part of them are
occupied with generation of repair parts.
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Number of employees
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Annual Sales
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PORTERS DIAMOND
MODEL
FACTOR CONDITIONS
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Infrastructure
Massive expansion in road networks is expected
with collaboration with Chinese companies.
Projects include :Karakorum Highway (RaikotIslamabad via Mansehra), Karachi- Lahore
Motorway (Multan-Sukkur section) and Gawadar
East Bay Expressway.
Labor force
Pakistans population has a low literacy rate
Labor costs own comparative advantage but
may not be as competitive interms of
productivity
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FACTOR CONDITIONS
Transfer of technological and managerial
skills will make the labor force competitive.
Technology
Pakistan lags behind in technology, mostly in
assembly parts.
Raw materials
Incapable of producing high quality auto
parts and mechanisms such as engine,
transmission
57% of raw materials are imported from
Japan
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FACTOR CONDITIONS
Pakistan is changing from its basic factor
competitiveness to an early stage of
advanced factor conditions.
Improved infrastructure, labor force,
technological advancement are key
competent factors.
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DEMAND CONDITIONS
Sales of cars over and above 1,300cc engine
category have shown upward growth over
the last five years
Sales of smaller engine vehicles have shown
unstable growth
Produced 303,383 motorcycles units in year
2003-04 that rose by 154% to 771,507 units
in 10 years in 2013-14 (PAMA)
Pakistan produces over 1.8 million
motorcycles annually including all the
Chinese assemblers.
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DEMAND CONDITIONS
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DEMAND CONDITIONS
There is a massive growth in the import of
1,000cc or below category cars reflecting a
tremendous opportunity
The government should provide special
incentives, which will result in greater
volumes, and will decrease prices of these
economical vehicles.
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3.
4.
5.
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Passenger Cars
Commercial Vehicles (LCVs/Vans/Jeeps, Trucks,
Buses, Pick-ups
Two Wheelers
Tractors
Rickshaws
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FSS&R (TRACTORS)
Dominated by two firms (Al- Ghazi and Millat)
Rivalry intense b/w but restricted to them
In 2013 OMI entered however it is v small
compared to the other two
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FSS&R (RICKSHAWS)
Moderate rivalry amongst top 3 firms
50 smaller companies ( however too small
right now to pose substantial threat)
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3.
4.
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KEY ISSUES
Inconsistent developmental
programs/policies
Obsolete technology and inefficient
production processes
Lack of trained and competent managerial
staff
Failure to meet international quality and
safety standards
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RECOMMENDATIONS
Banning imports of used cars will help
domestic automobile industry to flourish.
Establish the strategic tariff policy for
automotive parts.
Exploring new markets for automobiles and
automotive parts.
Development of supplier base and stable
electricity supply.
Government should take effective action to
increase local supply of industrial materials
used in the automotive industry.
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QUESTIONS
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