Pakistan Economic Recovery: Car Sales Up 72%, Cement Shipments Up 16.89%

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country.


Local car sales, excluding imported cars, jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% from 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

Pak Suzuki led the pack with 33,770 units followed by Indus Motors (Toyota) 14,767 cars and Honda Motors 6,184 units. Industry analysts at Topline Securities expect local car sales to reach 203,653 units during the current fiscal year.

Car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of just 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped, according to Express Tribune newspaper. “We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.

In addition to car sales, domestic cement sales have also jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

Car sales and construction activity are both believed to be driven by low interest rate financing available from banks and improved security situation across the country. With record low inflation, the State Bank of Pakistan (SBP), the nation's central bank, has cut discount rate to a 42-year low of 6%.

After its September meeting, the SBP said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Per Capita Cement Consumption Source: Global Cement


A dramatic decline in terrorist violence in the country since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive economic recovery in the country in recent months.

Related Links:

Haq's Musings

Pakistan Auto Industry

Record Cement Sales Raise Hope Of Pakistan Economic Recovery

Credit Suisse Bullish on Pakistan Cement Industry

China-Pakistan Economic Corridor

Pakistan Army Acts Against Terrorists

Pakistan Middle Class Larger & Richer Than India's

Top Global Investor Bullish on Pakistan

The Role of Cement Industry in Economic Development of Pakistan

Comments

Riaz Haq said…
From Global Cement:

Quoting a recent study, Alam said that the per capita cement consumption in Bangladesh was still low at 107kg, compared to 210kg in India, 265kg in Pakistan, 310kg in Sri Lanka and 570kg in Korea, indicating future growth of Bangladeshi cement consumption.

http://www.globalcement.com/news/item/3426-mi-cement-to-add-new-unit-soon

http://www.thedailystar.net/business/cement-makers-eye-turnaround-155098
Riaz Haq said…
North India's cement market, which currently accounts for 31 per cent of country's total consumption, is expected to make a recovery only by FY 2017-18 on account of demand revival in the infrastructure sector, according to a report.

Historically, North India is a well-balanced market with high capacity utilisation, low fragmentation and little inward dispatch threat from other manufacturing regions. But a large proportion of the cement market is dependent on rural or retail sales, Ambit Capital said in a report.

"A confluence of growth impediments - slowdown in rural sales, weak demand for organised housing and elusive infrastructure recovery - have further deteriorated cement demand/pricing in north India.

"North India's large share in major infrastructure projects exudes hopes of demand upcycle, but we believe it will take until FY'18 for a meaningful recovery," it added.

In 2014-15, North India consumed 79 million tonnes or 31 per cent of India's cement consumption, the report said.

"While 2015-16 was mooted to be a recovery year, demand has worsened, as rural sales decline sharply, real estate inventory has hit an all-time high and infrastructure recovery remains elusive with weak government tendering," it said.

Increasing prominence of regional manufacturers in a market with limited logistic challenges (largely roads) has led to price wars. Now prices in north India are at a 35 per cent discount to south India, it added.

Regional players accounted for 51 per cent capacity share in 2014-15 as against 45 per cent in 2006-07.

North India is facing growth challenges, on account of infrastructure recovery remaining elusive and rural demand deteriorating significantly in the last one year due to poor rainfall, low subsidies, wage growth and paltry MSP hikes.

Besides, real estate business is facing liquidity constraints due to government's clamp-down on black money, the report said.

It has projected that North India will be a key beneficiary of the infrastructure ramp up in India, given a majority share in large infrastructure projects (roads, Delhi Mumbai Industrial Corridor, etc).

"However, a strong and sustained volume growth will take till 2017-18 as retail demand will recover with a few quarters lag to infra demand," the report said.

Regional manufacturers with scale and cost efficiencies will benefit the most in an infra-led cement demand recovery, it added.

Pan-India players trade at rich valuations, run earnings downgrade risks and do not have the best cost efficiency to meaningfully improve RoCEs, as volumes might grow but chances of a sharp pricing recovery are scanty, it said.

http://timesofindia.indiatimes.com/business/india-business/Cement-market-in-North-India-likely-to-recover-by-FY18-Report/articleshow/47850451.cms
Riaz Haq said…
Can #Pakistan ride its tailwind to 'emerging country' status?- Nikkei Asian Review http://s.nikkei.com/1LgFSma

The country is enjoying a tailwind created by lower crude oil prices and growing remittances from overseas Pakistanis. It is also beginning to reap the fruits of the government's efforts to reduce subsidies and increase tax revenues in cooperation with the International Monetary Fund.

Macroeconomic indicators, including the budget deficit and inflation, have improved significantly. Terrorist attacks and organized crime have fallen off sharply thanks to persistent efforts by the military and security forces, drawing foreign companies back to the country.

The government has set an ambitious goal of achieving 5.5% economic growth in the current fiscal year, which runs through June 2016, and 7% growth the following year. It has laid out a road map for improving underdeveloped infrastructure and supporting the energy sector, including expanding the power grid. Insufficient tax revenues, however, mean only half of the projects meant to be underway have been implemented so far.

Coming back

On the Arabian Sea coast is Karachi, the country's commercial capital. It is not hard to spot signs here that foreign companies are returning. Every day, young people and families flock to Dolmen Mall Clifton, a large waterfront commercial complex that houses famous overseas fashion brands, U.S. fast-food restaurants and other retail outlets. Shiny new Toyota Corollas are not an uncommon sight along the city's major boulevards.

In April, Yamaha Motor resumed production in Pakistan after a seven-year hiatus. "European carmakers are ready to start operating in Pakistan," said Ghulam Murtaza Khan Jatoi, minister for industries and production. "Volkswagen is making contact with the government."

A steel-processing center for Marubeni-Itochu Steel, under construction on the outskirts of Karachi, will soon be operational. In January, German chemical giant BASF opened a new office in Lahore, the capital of Punjab Province. Coca-Cola, the U.S. beverage group, said it will make additional investments in factories and other facilities in Pakistan.

Bright spots

Power supply conditions are also gradually improving. "The government's economic policy is considerably better today than during the previous administration, when we didn't have any bright prospects. Public order has also been appreciably restored," said Shabir, 50, who runs a household goods store in the northern Pakistani city of Rawalpindi.

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"Pakistan can now receive assistance from both the U.S. and China. It is an unprecedented favorable condition," said an executive at a major foreign bank.


Now that it is enjoying some forward momentum, the country is in a prime position to carry out structural reform. There is no disputing that Pakistan, with its population of about 190 million and more than 30 million middle-class citizens, is a major South Asian power. But whether it can finally claim the status of "emerging country" depends on the course it follows over the next several years.
Riaz Haq said…
Reduction in interest rates has caused increase in car financing in the country to 25% as compared to 70% in 2003-07 and 5% in 2008-12.
According to experts, it may not reach to levels that were seen 10-years back because of relatively stringent rules and regulations of banks now but it is expected car financing can reach 40-50% of cars sold.
Besides locally assembled Japanese cars, used and imported cars are also sold in Pakistan. On an average, local assembled cars make up 75%, while used imported cars are 25% of total sales. Imports of used vehicles have declined by 52% to 23,484 units in FY14.
To recall, government relaxed age limit of used imported cars from three to five years in Feb 2011 and amnesty scheme for smuggled cars was also introduced in April 2012. This decision caused a huge influx of used imported vehicles in the local market which affected local sales in FY13 and FY14. The imported figure reveals that major imports of used vehicles were in the category of up to 1000cc (26,525 units in FY13 versus 16,193 units in FY14).
However, after observing significant decline in the sales of local assemblers, Govt. reversed its decision of age limit from five to three years in Dec 2012. Currently, import of used cars is declining due to reduced age limit and increased duties/taxes. This is providing much needed support to the volumetric growth of local auto assemblers particularly to PSMC as major imports were in the category of below 1000cc.
According to data, car sales in March 2015 reached a record of 21,900 units, as Pak Suzuki sold 13,000 units (up 117% YoY), Indus Motor 5,500 units (up 36% YoY) and Honda Atlas Cars 2,400 units (up 22% YoY).
Pakistan has one of the lowest car per thousand of 11 cars providing room for growth with clear signs of economic recovery. Pakistan car sales grew at 5-year (FY10-14) CAGR of 6.6% to 136,888 units. It is estimated that sales of car assemblers will grow at 3-year (FY15-17) CAGR of 10% despite influx of imported used cars (approx. 40,000 cars per annum).
During 9MFY15, car sales are likely to grow 23% YoY to 123,542 units primarily due to the new model of Corolla and Taxi scheme delivery from Feb 2015. INDU is expected to post a significant volumetric growth of 50% followed by PSMC with growth of 20% during this period.

http://www.customstoday.com.pk/used-vehicles-imports-down-by-52-to-23484-units-car-financing-up-by-25-due-to-low-interest-rate/
Riaz Haq said…
Pakistan Telecom Operators add 2.22 mln 3G/4G users in September 2015

The mobile phone operators in the country have added 2.22 million 3G/4G users during last month, taking the total count of mobile broadband users to 18.04 million.

A month back (August), the total number of users, who opted 3G and 4G services, being provided by four operators was 15.76 million, the data issued by Pakistan Telecommunication Authority (PTA) showed.

As per details, 3G and 4G users grew 14.43 % month-on-month during September 2015 i.e. highest in past six months.

The experts on Monday said the growth in mobile broadband subscriptions is due to increased usage of portable mobile broadband devices including MiFi and Wingle.

Mobilink added most number of 3G users with 878,107 new mobile broadband customers that it acquired during the reported month.

Ufone stood second in terms of adding most 3G users as it grabbed 637,131 new 3G users during September 2015.

Telenor acquired 393,969 new 3G users during the month while Zong converted 316,908 of its customers on to 3G network. Zong, at the end of September 2015, crossed 200,000 mark for its 4G users. Warid had some 156,827 4G users at the end of reported duration.

http://en.dailypakistan.com.pk/technology/operators-add-2-22-mln-3g4g-users-in-september-289/

http://www.pta.gov.pk/index.php?option=com_content&task=view&id=269&Itemid=658
Riaz Haq said…
WB projects #Pakistan’s economic growth up at 4.8% in 2015-16 http://www.dailytimes.com.pk/business/02-Nov-2015/wb-projects-pakistan-s-economic-growth-up-at-4-8 …

The World Bank (WB) has projected Pakistan's economy will grow by 4.5 percent in Fiscal Year 2015-16 (FY16) and then further to 4.8 percent in FY17 supported by strong growth in industry and services, however, the country needs to implement energy and taxation reforms and increase investment.

The WB, in its latest economic outlook report stated that macroeconomic outlook of Pakistan for the next two years projects steady growth recovery-cum-low inflation, supported by fiscal consolidation and an improving external position.

Meanwhile, investment is expected to increase to 15.4 percent of Gross Domestic Product (GDP) by FY17 on account of operationalisation of China Pakistan Economic Corridor (CPEC) related projects, added the report.

Though, WB realizes that a mild recovery is underway, economic stability has largely been restored and key external risks are lower in Pakistan, but, some challenges may upset the projected growth as the slowdown in China, if protracted, could have adverse effects on investment and trade, and Pakistan may not have the ability to absorb external shocks in the absence of strong buffers.

Furthermore, WB mentioned in the report that realization of tax revenue targets largely hinges on steady implementation of tax reform agenda. Fiscal consolidation may also be negatively affected by delayed implementation of the government's privatisation agenda.

Moreover, for the economy to accelerate in the long run, key growth constraints like electricity shortages, cumbersome business climate, complex trade regime, low access to finance and security situation need to be addressed.

According to the report inflation is projected to stay low in view of low commodity prices, exchange rate stability and a prudent fiscal policy. The Pakistan's current account deficit is projected by the WB to increase slightly to 1.0 percent of GDP by FY17 but will remain manageable.

So far, remittances originating from Gulf countries have not been affected by the decline in oil price and are expected to stay robust in the near term. Exports are projected to contract in the first year owing to tapered global demand and then grow marginally the following year. Imports, however, are projected to post moderate growth due to CPEC-related investments and higher domestic demand. Fiscal consolidation is projected to continue over the medium term based on strong tax revenue efforts as well as gradual phasing-out of energy-related subsidies and of contingent liabilities on loss making state-owned enterprises.

Resultantly, the fiscal deficit is expected to decline to 3.5 percent of GDP by FY17. The reduced need for deficit financing should facilitate provision of bank credit to the private sector, leading to increased economic activity, the world financial institution concluded.

Widespread corruption and weak accountability have been long-standing problems, but there have been some improvements, especially in transparency and citizens' access to recourse for maladministration. Such improvements include the adoption of strong legislation on Right to Information in some provinces (KP and Punjab), the publication of increased budgetary information, and the growing role of ombudsman institutions - at both the federal and provincial levels - in resolving citizens' complaints of maladministration.

In terms of outcomes, there are some signs that petty corruption might be declining. The most recent Global Barometer Survey by Transparency International (2013) reports that 34 percent of citizens had paid a bribe in the past year - compared to 49 percent in the 2011 survey. Most survey respondents in Pakistan identified the police and the public administration as the most corruption affected institutions, followed by political parties.

Perceptions of corruption in public services such as education, health care, and the judicial system were considerably lower.
Riaz Haq said…
#Pakistan's new auto policy to boost output- http://www.khaleejtimes.com/business/auto/pakistans-new-auto-policy-to-boost-output …

Government plans to expand, modernise and diversify sector.


Car sales in Pakistan are surging and will get a further boost as the country launches its new Auto Policy 2015-18, which will help it to expand production significantly.

Car sales overshot all records and surged to 151,134 units in FY-15, ended on June 30, from 118,102 units in FY-14, Pakistan Automotive Manufacturers Association (PAMA) said.

To top it all, the car sales spree was another record breaking 44,372 units during July-September - the first quarter of FY-16, PAMA said his weekend. It was a record 60.59 per cent higher as compared to the like quarter of FY-15 when the sale was 27,630 units. The credit for this big boost in Q1 of FY-16 goes to Toyota Corolla which alone sold 13,512 units up from 8,546 units in Q1 FY-15.

In the longer term perspective, the government has been working on a comprehensive plan to expand, modernise and diversify the production plan for the entire range of auto production.

Khawaja Mohammad Asif, Minister for Water and Power, headed the Cabinet's Auto Policy Committee, which took two years to finalise the policy.

The committee consulted all the stake holders, including the existing manufacturers, the potential new entrants, car sales groups, and importers of used cars on behalf of the millions of overseas Pakistanis. Thousands of used cars are annually imported by these Pakistanis as the government-permitted personal baggage for use of their families or for sale.

Key changes have been incorporated in the new Auto Policy. It now lays down: "If the existing players invest in green field production, they will be offered incentives at par witt the new entrants." It will also push the present assemblers to modernise, expand and start production of latest model cars, incorporating new technological innovations. The existing and the new producers will be treated equally in terms of incentives, and provision of bank credit and infrastructure facilities.



Alongside the improved, pro-car policies incentives incorporated in the new policy, auto sales are going up, driving the industry to move ahead.

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But Honda Civic is facing stiff competition from Toyota Corolla's newly launched model. Honda Civic sale was down to 7,806 units in FY-15 from 9,933 in FY-14.

The Industry, market and the financial analysts, going forward, are upbeat about the surge in car production and sales. Topline Securities analyst Muhammad Tahir Saeed said: "Local car assemblers registered an excellent year on year growth of 31 per cent in FY-15 versus just one per cent in FY-14, and a compound annual growth rate (CAGR) of 5.3 per cent during the last five years - FY-11-15." Tahir attributes the higher sales of cars, and of jeeps and light commercial vehicles, to "rising consumer sector dynamics and an increase in car financing due to 42-year low interest rates in the country. Imports of use cars are still hovering around 25,000 to 30,0000 units a year. The imports make around 15 per cent of car sales market in Pakistan."

Tahir and other analysts project "a 13 per cent growth during the current FY-16. The healthy growth in the auto sector reflects increase in the per capita income, improved farmer economics and the overall recovery of the economy." The current foreign currency and trade market situation will also spur auto sector in Pakistan. The growth in production and sales in Pakistan will be helped by weak Japanese Yen against the greenback. "It will positively impact the auto sector profitability," said Tahir.

Who will gain, what? Suzuki is projected to be the biggest gainer in FY-16. A Suzuki spokesman estimates "a growth of 24 per cent to 122,617 units in FY-16."

----

The auto sector has been exporting spare parts totalling around $20 million annually. ...
Riaz Haq said…
#Pakistan on its Way to Growth Recovery: World Bank. Forecast: 4.5% #GDP Growth in 2015-16, 4.8% in 2016-17 http://www.worldbank.org/en/news/press-release/2015/11/11/pakistan-on-its-way-to-growth-recovery-world-bank …

Pakistan’s Gross Domestic Product (GDP) growth will accelerate to 4.5 in the current fiscal year and to 4.8 percent in FY2016/17, supported by strong services growth and a slight improvement in the industry sector, says World Bank’s newreport, “Pakistan Development Update”, launched today at the Quaid-i-Azam University in Islamabad.

The report discusses the important improvements of the external sector in Pakistan over the past few years. The foreign exchange reserves have increased from precariously low levels to appropriate level given the size of Pakistan’s imports. The current account deficit narrowed to US$2.6 billion in FY2014/15 compared to US$3.1 billion in the previous year, a result of record high remittances in the order of US$18.7 billion. External financial inflows continued strong, although lower than in the previous year. As a result, the balance of payments was positive for the second year in a row.

“There is an improvement in Pakistan’s overall economic environment. With macroeconomic stability largely restored, Pakistan can focus now on boosting development outcomes, which are not where one would expect, given the country’s income level”, says Patchamuthu Illangovan, World Bank Country Director for Pakistan. “To improve the country’s competitiveness, it is extremely important that the next phase of reforms is implemented and that Pakistan increases both public and private investment levels, which are among the lowest in the world.”

Several factors are contributing to low investment levels. Constrained fiscal space limits the government’s ability to make the necessary complementary public investments. A weak investment climate also affects private investment negatively. Another reason for the very low investment levels has to do with the low domestic savings rate in Pakistan at below 10 percent of GDP, which compares unfavorably with an average of around 25 percent in South Asia. Limited access to financial markets, high dependency ratio and low returns on financial instruments all contribute to this low rate of savings.

“Low domestic savings do not support higher investment levels”, says Enrique Blanco, Lead Country Economist. “The Government cannot make the required and complementary public investments, partly due to low revenue levels. The Government has embarked on ambitious program to improve tax policy and simplify tax administration, with the ultimate aim of increasing tax collection. There have been some improvements over the past few years – but results so far are not as expected and renewed efforts will be needed to address Pakistan’s very low revenue levels.”

This low saving-low investment trap has reduced Pakistan’s growth potential. The report also discusses the importance of increasing efforts to attract more Foreign Direct Investment from the current low levels of 0.3 percent of GDP, by improving the overall business climate and address regulatory weaknesses at the sectoral level that may be affecting the country’s ability to attract investment. The government is implementing a number of reforms to improve the country’s competitiveness. These include efforts to revive the privatization process, which will increase efficiency in management and improve service delivery, to improve access to and the quality of electricity, to promote financial inclusion and to simplify the trade regime and make it more transparent.
Riaz Haq said…
#Pakistan Keeps Interest Rate Unchanged to Support Sinking #Rupee. #SBP http://bloom.bg/1Sawrp2 via @business

Interest rate at 6% as state bank sees inflation rate rising
Move predicted by 21 of 22 economists in a Bloomberg survey

Pakistan kept its benchmark interest rate unchanged to support the rupee, which is among Asia’s worst performing currencies this quarter.
The State Bank of Pakistan kept the target policy rate at 6 percent, Governor Ashraf Wathra said in a statement in Karachi on Saturday. The move was predicted by 21 of 22 economists in a Bloomberg survey, with one seeing a cut to 5.5 percent.

“Headline inflation is expected to reverse its declining momentum,” according to the bank’s e-mailed statement. Average inflation will still remain below the target of 6 percent for the year ending June 30, with a subdued outlook for prices for oil and other major commodities, according to the statement.
A weaker rupee risks exposing weaknesses masked by Pakistan’s record foreign-exchange reserves, leaving the nation vulnerable to a balance of payments crisis. The currency has tumbled about 1 percent this quarter, extending the year’s loss to 5 percent. Even so, it’s overvalued by as much as 20 percent, the International Monetary Fund said on Nov. 6.
“If the central bank cuts rates now, it will only put excess pressure on the rupee,” Hamza Kamal, an analyst at Shajar Capital Pakistan Pvt., said by phone before the decision. “There is an expectation that the U.S. Federal Reserve will hike up its rate in December and that will have a depreciating effect on the Pakistani rupee.”
Prime Minister Nawaz Sharif needs to gradually start paying back the IMF for a $6.6 billion loan taken in 2013 to avert a balance of payments crisis.
Riaz Haq said…
Finding Value In Frontier & Emerging Markets: #Vietnam, #Pakistan, #India & The #Philippines http://seekingalpha.com/article/3698256-asias-response-to-the-federal-reserve-finding-value-in-frontier-and-emerging-markets?source=tweet … $EWM $THD $VCVOF $VNMHF
Summary

The increasingly strong USD and China's currency devaluation in August have resulted in substantial FX losses for a large number of countries in Asia.

However, the extremely high level of growth and future potential in Asia can offset this risk in certain cases.

As the Fed may increase interest rates soon, investment in Asia should be a strategic approach of investing in countries with high growth and a strong performing currency.

This article presents Vietnam, Pakistan, India, and the Philippines as superior options for investors.
Riaz Haq said…
Goldman Sachs Bullish on #Pakistan, #Vietnam, #Philippines, #India. #EM #FM http://seekingalpha.com/article/3706876-goldman-sachs-improves-outlook-for-emerging-markets-the-gloom-is-over?source=tweet … $EEM $PAK $VNM $VNMHF $VCVOF $INDY $EPHE

Vietnam, Pakistan, The Philippines, and India are superior destinations for investment in Asia.

A rebound in copper prices provides opportunity for Chile, which has a strong banking industry and is achieving moderate growth.

Nigeria and Colombia should be considered as options to profit from a recovery in oil prices.

I am extremely bullish on frontier and emerging markets, which have quite frankly taken a beating in some areas. Filtering between what is good value in emerging markets provides ample potential, and this is achieved both through the selection of superior countries and superior funds or companies in these countries. Investors should generally only focus their attention on frontier and emerging markets with high growth and low FX losses, and consider the superiority of actively managed funds, which are able to outperform ETFs. Fundamentals are superior to price movement, and the irrational loss of investor confidence in emerging markets has created a large number of buy opportunities. Investors negative sentiment towards a country is fortunately not able to deter the strong economic growth of countries and the high earnings of international companies. The economic and earnings growth both present the ability for investors to construct a portfolio that is good value despite volatility, and to profit if willing to take a long term horizon.

The iShares MSCI Emerging Market ETF (NYSEARCA:EEM) has had a YTD loss of 10.59%, yet using this fund's performance as a representation drastically relegates the potential of emerging markets, as there are certainly superior approaches towards investing in emerging markets. One fund can certainly not represent an emerging market, and each emerging market has a strategic buy and sell time, due to the strong volatility and varying factors that are causing the funds to drop. Therefore, I respectfully suggest the most superior way to capture the growth of emerging markets is to buy into several funds or companies, and to choose actively managed funds when possible.
Riaz Haq said…
#Pakistan gets $8b in #remittances from overseas #Pakistanis in first 5 months of current fiscal year. Up 7.6% YoY http://tribune.com.pk/story/1007907/5mfy16-pakistan-pockets-8b-in-remittances/ … …

Overseas Pakistanis sent remittances amounting to $8 billion in the first five months of 2015-16, which translates into a year-on-year increase of 7.6%, according to data released by the State Bank of Pakistan (SBP) on Thursday.

Remittances amounted to a little less than $7.5 billion in the same months of the preceding fiscal year. They amounted to almost $1.6 billion in November alone, which is 3.3% higher than the remittances received in the preceding month, SBP data shows.

Pakistanis based in foreign countries sent home $18.4 billion in 2014-15, which translated into a year-on-year increase of 16.5%.

Inflows from Saudi Arabia were the largest source of remittances in July-November. They amounted to nearly $2.4 billion in the five months, up 11.2% from the corresponding period of the last year.

Remittances received in July-November from the United Arab Emirates (UAE) increased 12.3% to almost $1.8 billion on a year-on-year basis. Inflows from the UAE had registered the largest increase (26.1%) from any major remittance-sending country in 2014-15, SBP data shows.

In the last five months of the current fiscal year, remittances from Dubai have surged 45.8% year-on-year. But the figure for overall inflows from the UAE so far has remained subdued because of a 26% annual decline in remittances from Abu Dhabi over the same period.

Remittances from the United States and the United Kingdom remained $1.1 billion and $1 billion, respectively, in July-November. The year-on-year change in remittances from the US and the UK has been -1.5% and 4.4%, respectively.

Remittances from Gulf Cooperation Council (GCC) countries, excluding Saudi Arabia and the UAE, clocked up at $960.5 million in July-November, which is 11.8% higher than the remittances received from these countries in the same months of the preceding fiscal year.
Riaz Haq said…
#Japan's #Suzuki to manufacture two new car models in #Pakistan http://tribune.com.pk/story/1010654/660-and-1600cc-variants-suzuki-considering-two-new-models-for-pakistan/ …

Pak Suzuki Motor Company (PSMC), the country’s largest carmaker, is planning to introduce two fresh variants in the local market, besides setting up a manufacturing plant for spare parts at a total investment of $430 million.

Under the new auto policy – which has been pending for quite some time – the Japanese company will look to add to its existing fleet as it looks to tap a growing market. However, an official close to the development said the investment was contingent on the government extending a tax rebate similar to that being offered to new entrants in the proposed auto policy.

Corporate corner: Pak Suzuki introduces Inazuma Aegis motorbike

According to details received here on Tuesday, PSMC will introduce a smaller car in the 660cc engine category, while also introducing a 1,600cc compact SUV.

The two new variants will take up around $110 million of the total investment. The remaining amount will go in setting up the manufacturing plant for spare parts.

Details revealed that the global head of the Suzuki company shared the investment plan with the federal minister for industries in Islamabad.

PSMC has the largest share in the country’s car market dominated by three players.

Local auto sales amounted to 93,570 units in the first five months of the ongoing fiscal year, up 66% compared to the same period last fiscal year. PSMC’s share in the five-month sales stood at 58,098 units, owed largely to the Punjab government’s taxi scheme.

The auto policy

The government has been working on finalising the auto policy for some time. It is looking to attract investment, besides offering incentives to existing and new players. The ruling PML-N is also reportedly keen on bringing a German manufacturer in the Pakistani market.

While the industries ministry had forwarded the auto policy draft to the Economic Coordination Committee, the decision was deferred pending further consultation.

Pak Suzuki posts whopping increase in profit

PSMC’s plans

Kinji Saito, the global head of the Suzuki Motor Company, called on Federal Minister Ghulam Murtaza Khan Jatoi in Islamabad on Tuesday. Details revealed that Kinji informed Jatoi that the company was looking to introduce the two variants, but was hoping for a tax rebate similar to the one that could be offered to new entrants in the new auto policy.

It was further said that the price of the 660cc variant would be close to that of Suzuki Mehran’s. Jatoi, however, said its price needed to be less than that of Mehran.

It was also mentioned that Mehran and Cultus variants would be discontinued in the next five years, but are likely to be replaced with fresh models.

Jatoi, in a statement released after the meeting, welcomed the company’s plans, saying that Pakistan needed fuel efficient, eco-friendly and cheaper cars to cater to the market.

The minister said that PSMC’s share in the Pakistani market was significant, but emphasised that the company needed to bring its prices down.

“Pakistan is a big market for the auto industry, therefore special feature like safety measures, fuel economy, environment friendly and affordable prices range are particular needs of our country,” the minister said.

“We are rich in human resource while Japan owns the latest technology. We can benefit from each other’s strengths.”

Jatoi also assured the Suzuki’s Global Head that protection would be extended to all companies operating in Pakistan in the upcoming Auto Development Policy.
Riaz Haq said…
According to the latest figures from the IMF, Pakistan GDP reached $270 Billion mark in 2015, up from $246 Billion in 2014, an increase of $24 Billion.

Pakistan's PPP GDP increased from$884.231billion to $930.759 Billion, an increase of $46.528 dollar

Pakistan's per capita nominal GDP for 2015 i $1,427.085, up from $1,325.790 in 2014.

Pakistan per capita PPP GDP is $4,902 for 2015, up from $4,749 in 2014.

http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/weorept.aspx?pr.x=92&pr.y=13&sy=2014&ey=2016&scsm=1&ssd=1&sort=country&ds=.&br=1&c=564&s=NGDPD%2CNGDPDPC%2CPPPGDP%2CPPPPC&grp=0&a=
Riaz Haq said…
#Chinese #Trucks Market Share Could Surpass #Japanese Share in #Pakistan. #China #Japan #Pakistan #CPEC http://bloom.bg/1QVIzx3 @business

Chinese trucks may become a more common sight than Japanese rigs on Pakistan’s roads as rising infrastructure investment creates demand for cheap and durable commercial vehicles.
To benefit from their expected growth in popularity, Karachi-based Ghandhara Nissan Ltd. began assembling China’s Dongfeng trucks in 2013, in addition to Japan’s UD brand. Ghandhara forecasts its Chinese truck sales will more than double to about 200 units in the year ending June and surpass UD deliveries in the next two years, according to Muazzam Pervaiz Malik, senior executive director for marketing at the company.

“Initially they were scared about the quality, but China has improved,” Malik said in an interview. “With the China-Pakistan economic corridor, more dams and motorways, we expect truck demand to grow.”
South Asia’s second-largest economy is forecast to grow at the fastest pace since 2008 and is seen as a beneficiary of the $45 billion that China has pledged in infrastructure investment to more tightly link its economy with Europe through central and western Asia.
The spending may help drive a 50 percent increase in truck sales to as many as 7,000 units a year by 2020, according to Ghandhara’s estimates. The company’s revenue will rise about 10 percent in the year ending June 30, buoyed by higher Dongfeng sales, Malik said.
Ghandhara’s stock has surged more than threefold this year for the biggest gain among auto retailers globally, buoyed by the truck demand and expectations that it will begin producing passenger cars in 2017. The shares dropped 4.7 percent to 181.4 rupees in Karachi yesterday.
The local newspaper Dawn reported in August that Ghandhara plans to start assembling Nissan Motor Co.’s Datsun cars in 2017. Ghandhara declined to comment on its future plans, while Nissan said no decision has been made on production in Pakistan.
Riaz Haq said…
Volkswagen's #China Partner Plans to Build VW V2 Hatchback Cars in #Pakistan in 2016 http://bloom.bg/1kYVe3Z via @business

China FAW Group Corp., a Chinese partner of Volkswagen AG, plans to start assembling cars in Pakistan to tap growing demand as measures to curb terrorism boost growth in the South Asian economy.

The company seeks to sell 10,000 vehicles, including vans, cars and pickups, in 2018 after it begins local assembly of the V2 hatchback at the end of this year, Hilal Khan Afridi, chief executive officer of Al-Haj FAW Motors Pvt., said in an interview in Karachi. Al-Haj FAW is the Chinese group’s local venture and began selling imported V2’s in January last year.
FAW will be the first carmaker in a decade to start assembling in Pakistan, where the economy is set to grow at the fastest pace since 2008 as Prime Minister Nawaz Sharif’s government tackles power shortages and terrorism. China’s President Xi Jinping has also pledged to invest $45 billion in the country, boosting the outlook for expansion.
“Initially we had a lot of difficulty to convince them to help us with technical expertise,” said Afridi. “Now that the Chinese market has slowed down they have increased their interest in international markets. It’s a good sign for us.”

Chinese spending on infrastructure may help Karachi-based Ghandhara Nissan Ltd. double sales of Chinese Dongfeng trucks. Al-Haj FAW sold about 3,400 vans and pickups along with 535 locally assembled trucks last year. The company plans to invest 1 billion rupees ($9.5 million) to assemble cars in Pakistan.

“Things are looking up for the auto industry,” says Ahmed Hanif Lakhani, analyst at Karachi-based Arif Habib Ltd. “The economy is growing and consumer demand is rising with low interest rates making leasing more feasible.”
Pakistan’s economy is estimated to expand 5.5 percent in the year to June, according to the Ministry of Finance. Car sales in the nation increased 52 percent to 15,724 units in November from a year earlier, according to the Pakistan Automotive Manufacturers Association.
Riaz Haq said…
#Pakistan automobile industry booming with sales up 31% year over year - http://www.khaleejtimes.com/business/auto/pakistan-auto-industry-rides-a-high …

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, the Ministry of 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 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 stagnating 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."
Riaz Haq said…
#Pakistan steel industry booming with production of 4 million tons to meet rising demand last year

http://tribune.com.pk/story/1053741/local-economy-cpec-to-help-steel-industry/ …


The start of mega development schemes and power projects under the China-Pakistan Economic Corridor (CPEC) will boost the annual demand for steel products by more than 30% to 6 million tons from 4 million tons, said an industry representative.

Pakistan Steel Re-Rolling Mills Association (PSRMA) Vice Chairman Akhtar Saeed said that 475 steel making units (large and small size) were operating in the country and their annual production was around 4 million tons. The large units’ production share was around 1.2 million tons.

Saeed said that more incentives were needed to attract new investment to the steel industry in the country. “The government should come up with a new comprehensive and targeted policy for the important sector of steel and they should have a detailed consultation with PSRMA.

“As a result of the increasing demand, new steel units would be set up. Thus, more job opportunities would be created and the government would get more taxes.
Riaz Haq said…
#Pakistan woos Renault-Nissan in push for #automobile #investments http://reut.rs/1XbdcQR via @Reuters

With the economy growing at its fastest pace in eight years, the local currency stable against the dollar and interest rates at their lowest in 42 years, Pakistani officials believe the country is once again on the radar of investors seeking to tap into a market of nearly 200 million people.

Officials are touting a new auto policy, skewed in favor of new entrants, that includes offering foreign car manufacturers lower duties as an incentive to set up plants in Pakistan or revive shuttered ones.

"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 (7201.T) and alliance partner Renault (RENA.PA) for "some time", and last month met Fiat (FCHA.MI) executives in Italy for the first time.

Previous discussions also involved Germany's Volkswagen.

"I hope some people will bite," he said.

A source close to Renault said Pakistan was under consideration for new production investment, along with other potential locations, but added that discussions were at a very early stage. In an e-mailed statement, the company said it had "no news to announce at this time".

Nissan chief spokesman Jonathan Adashek said: "Pakistan is certainly a market of interest for us at present", but added no final decision had been made.
Riaz Haq said…
#Pakistan #automobile sales reach 184,099 units in 10 months, up 29% in July-April 2015-16 period http://www.pakistantoday.com.pk/2016/05/12/business/car-sales-reach-184099-units-up-29-in-july-april-2015-16/ …

Owing to the lower interest rates in the banking sector, Pakistan’s local car assemblers Tuesday showed 29 per cent year-on-year growth in July-April 2015-16. The local vehicle sales stood at 184,099 units versus 142,814 units during the same period last year.

An analyst of a brokerage house said that the main reason behind the rising sales of cars is auto financing as well as overall improvement in the country’s economic situation. The interest rates are at a 42-year low and below six per cent. The banks, investment companies and others are providing auto financing to use their excess liquidity.

PAK SUZUKI MOTORS COMPANY:

Pak Suzuki Motor Company (PSMC) sales increased by 41 per cent year on year to 109,628 units during the last 10 months of 2015-16 primarily due to Punjab government’s taxi scheme.

Volumes decreased by 18 per cent YoY (1 per cent MoM) in April 2016 (second month after the completion of the Taxi Scheme) to 8,965 units primarily due to completion of Taxi Scheme.

INDUS MOTORS:

Indus Motors (INDU) sold 52,987 units during the last 10 months of 2015-16 versus 45,978 units during the same period of last year. In April 2016, sales fell 6 per cent YoY to 5,483 units. On MoM basis, sales declined 5 per cent due to fewer working days in April 2016 compared to March 2016.

It is important to note that delivery time for the new Corolla model is still hovering in the range of 2-4 months depending on the variant.

HONDA:

The Honda Company is going to launch its New Honda Civic model, which is expected to hit the market in the 2nd half of this year. Volumes of Honda Civic are expected to dry out in the coming months in anticipation of the new model launch in the 2nd half of 2016.

Honda Cars sold 21,293 units in the first 10 months of 2015-16 compared to 18,781 units during the same period of last year. In April 2016, Honda sold 2,751 units, up 16 per cent YoY (flat MoM).

The analyst said that Honda City remained the major contributor in this growth during the said period.

MILLAT TRACTORS (MTL) & AL GHAZI (AGTL):

Pakistan’s tractor segment posted a decline of 31 per cent YoY during July-April 2015-16 to reach at 26,586 units. This decline is because of the delay in the launch of provincial tractor subsidy scheme of 25,000 to 29,000 per tractor which was announced by Punjab and Sindh governments in the budget for the fiscal year 2015-16.

Millat tractors (MTL) and Al-Ghazi tractors (AGTL) both witnessed a decline in their sales volumes during the last ten months as farmers were waiting for the execution of announced subsidy schemes by Punjab and Sindh governments. Tractor manufacturers demanded of the governments to either execute or shelve the announced scheme so that farmers may resume their normal purchasing.

MTL sold 15,974 units in July-April 2015-16 compared to 23,426 units during the same period last year. The company’s sales decreased by 29 per cent YoY to 2,440 units in April 2016 (down 4 per cent MoM).

During the current fiscal year, AGTL witnessed a decline of 30 per cent YoY in sales to 9,882 units. The company sold 1,935 units in April 2016, up 23 per cent YoY (7 per cent MoM). Farmers seem to have resumed regular purchases due to uncertainty in the subsidy scheme.

Trucks and buses segment of Pakistan’s automobile sector has posted an increase of 42 per cent YoY to reach at 5,076 units during the first 10 months of FY16. This surge in demand is because of China-Pakistan Economic Corridor and improving law and order situation in the country, the analyst said.
Riaz Haq said…
#Pakistan: 13% YoY surge in #cement sales boosts producers' profits http://www.cemnet.com//News/story/159199/pakistan-13-yoy-surge-in-cement-sales-boosts-producers-profits.html#.VzOJi7mb6Yk.twitter …

Pakistan's cement industry's profit rose 30 per cent to PKR45.169bn (US$431.6m) in the first nine months of the current fiscal year as there was a surge in sales, supported by soft oil and 11-year low coal prices, according to the Topline Securities Ltd brokerage.
In the July-March period of the last fiscal year, the local industry earned PKR34.847bn. The profitability growth was supported by 13 per cent YoY growth in sales as a result of higher local dispatches, firm local pricing, 802 basis points increase in gross margin to 40.9 per cent and 16 per cent decrease in selling and distribution expenses, said Topline Securities analyst Nabeel Khursheed.

The brokerage assessed the financial results of 15 cement markers, out of 19 players, representing almost 100 per cent of the industry's market capitalisation. The report said the industry's profit grew 26 per cent to PKR16.303bn in the third quarter (Jan-March) of 2015-16 on the back of 20 per cent increase in local dispatches and rise in gross margins.

Rising local volumes, stable local pricing and declining input costs (coal prices near 11-year low and falling power tariff) are likely to support margins of cement manufacturers, Mr Khursheed said.

"We downplay any risk of a price war amongst cement manufacturers as the industry is already operating at around 85 per cent of capacity utilisation. If the local industry continues to grow at the same pace, we expect demand to outpace supply in the near future," he added.

The brokerage report said local demand was strong because of a rise in housing projects and start of China-Pakistan economic corridor projects. Cement sales increased 9.93 per cent to 28.34Mt YoY for the period July-March 2015/16. Local dispatches rose 18 per cent to 24Mt and cement exports fell 19 per cent to 4.406Mt in period under review.
Riaz Haq said…
#Pakistan #cement industry continues growth. Per capita consumption to rise from 147kg in 2015 to 250kg in 2020.

http://tribune.com.pk/story/1122920/cement-industry-poised-continued-growth/

Pakistan’s cement industry will continue to grow over the next few years due to strong pricing power and contraction in supply and demand gap, a Topline Securities report said on Tuesday.

The capacity utilisation of Topline Cement Universe – a sample of cement companies listed on Pakistan Stock Exchange (PSX) – is likely to reach 96% in fiscal year 2018 from 78% in fiscal year 2015.

Gross margins of Topline Cement Universe will reach 47% by fiscal year 2020 (which were 34% in fiscal year 2015) while earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins will reach 46% by fiscal year 2020 (34% in fiscal year 2015).

Resultantly, Topline Cement Universe’s profitability is expected to grow at 4-year (fiscal year 2017 to fiscal year 2020) Cumulative Annual Growth Rate (CAGR) of 24%.

Pakistan’s cement industry has entered into a new paradigm. The turnaround in macroeconomic fundamentals, mega projects under the umbrella of China-Pakistan Economic Corridors (CPEC) and booming private sector spending are accelerating local cement demand.



“We believe economic recovery will continue to bolster domestic demand. Based on past trend, we have applied a factor of 2 times to our average real GDP growth forecast of 6% during fiscal year 2017 to fiscal year 2020 in order to arrive at average local cement growth forecast of 12% during the same period,” the report said.

This should take per capita cement consumption of Pakistan from 147kg in fiscal year 2015 to 250kg in fiscal year 2020.

Major capacity additions of 19 million ton (42% of current capacity) worth around Rs192 billion are in pipeline (from fiscal year 2017 to fiscal year 2020) in Pakistan. “Despite these additions, we see no price war risk as additional capacities will easily be absorbed due to buoyant cement demand.”

The government in budget for fiscal year 2016-2017 has changed the federal excise duty (FED) on cement bags from variable 5% of retail price to fixed Rs50 per kg while duty on imported coal is reduced from 6% to 5%. “Thanks to strong pricing power, we believe that, the net impact of Rs33 per bag will be gradually passed on,” the report added.

However some developments can change the present scenario including price competition, imported cement, higher than anticipated rise in gas tariff, delay in construction projects and change in economic policy

Riaz Haq said…
#Pakistan #Suzuki to invest $460 million to set up 2nd #automobile manufacturing plant http://www.pakistantoday.com.pk/blog/2016/12/15/pak-suzuki-motors-plans-to-invest-460m-on-second-plant/ …
After the announcement by the Korean and French auto giants to invest in Pakistan’s auto sector, the major incumbent Japanese player Pak Suzuki Motors has unveiled a plan to invest $460 million to set up a second assembly plant in the country.

Pak Suzuki Motors Managing Director Hirofumi Nagao called on the Finance Minister Ishaq Dar on Thursday and discussed his company’s plan of future investment in Pakistan.

The MD said that his company was ready to invest $460 million in Pakistan to set up a second plant. After completion of formalities, the new project would be completed within a period of two years and may start production by the end of 2018, he informed.

The minister asked the Pak Suzuki Motors MD to submit a complete plan with all the details to process the request in accordance with prescribed codal formalities and procedures. He said the government was committed to providing a level playing field to all the prospective investors.

The government has implemented a new auto policy from this fiscal year that provided tax incentives up to three years for the new players in the sector. The incentives were not offered to the existing three Japanese players. However they were provided incentives for modernization and expansion.

Japanese auto giants are demanding the similar policy incentives for making new investment in the country. The government may provide similar incentives to Japanese auto makers if they make investment in setting up new plants, an informed source said.

A week back a big Pakistani conglomerate announced that they planned to assemble autos in the country with the help of Korean auto giant Kia Motors. While a delegation of French company Renault formally informed the Finance minister in Paris that they planned to set up an auto manufacturing plant in Pakistan.

The minister said Pakistan has been projected by JETRO as the second best place for investment in the world. He said that the turnaround of Pakistan’s economy, macroeconomic stability, improvement of energy and security situation in the country has provided a conducive atmosphere to foreign direct investment.

He said that a number of new entrants have shown keen interest to invest in automobile manufacturing sector as well. The meeting was attended by senior officials of the Ministry of Finance and the members of the delegation of Pak-Suzuki.
Riaz Haq said…
#Pakistan Market Fertile Ground for #Renault mfg initial $100 m investment in #Karachi #CPEC #FDI http://wardsauto.com/industry/pakistan-market-could-be-fertile-ground-renault … via @wardsauto

Renault soon could start producing vehicles in Pakistan, a government official says.

The French automaker is negotiating with the government of the Southwest Asia country to build cars in a joint venture with Gandhara Nissan, Renault’s global partner, Miftah Ismail, chairman of Pakistan’s Board of Investment, tells WardsAuto.

Renault proposes initially investing $100 million to expand manufacturing capacity at the currently mothballed Ghandhara Nissan Motors plant in Karachi, which has not produced vehicles since 2010. The plant is located near the capital city’s deep-water port terminal, Port Qasim. Ismail says a Renault technical team visited the plant Nov. 3.

Renault proposes assembling 16,000 vehicles a year in three shifts at the site and raise annual production capacity to 50,000 per year in two phases. Should the project go ahead, Ismail says, the JV would build both SUVs and sedans at the site, with production starting as early as 2018.

A Renault spokesperson confirms the automaker’s interest in Pakistan production to WardsAuto, adding it also is in talks with Al Futtain, an industrial conglomerate based in the United Arab Emirates.

The automaker’s application follows a September visit to France by a delegation of Pakistani government and business officials led by Finance Minister Ishaq Dar, who urged Renault and rival automaker PSA Peugeot Citroen to consider investing in Pakistan. Dar discussed the government’s new industrial policy regarding the automobile sector, which includes waiving duties on imported assembly plant equipment for foreign automakers locating in the country.

The new policy, in effect since March, envisions doubling yearly production of cars, vans, utility vehicles and light-commercial vehicles to 429,000 units over the next five years. Automakers active in Pakistan in 2015 manufactured 146,024 cars and 82,889 trucks of all types, according to WardsAuto data.

Pakistan wants to diversify a car market currently dominated by Toyota, Honda and Suzuki, whose locally assembled cars are sold at relatively high prices but lag behind imported vehicles in terms of quality and specifications, government officials contend. Customers have complained about having to make payments up-front for new vehicles, then wait up to four months for delivery. Consumer activists note quick delivery often carries a 15% surcharge.

The Ministry of Industries and Production says only 13 of 1,000 Pakistanis own or operate a car, Southwest Asia’s lowest rate of penetration. But with the economy expanding at its fastest pace in eight years – growth in 2016 could reach 4.7%, according to the World Bank – interest rates at a 42-year low, the Pakistan rupee’s stability against the U.S. dollar and an inflation rate of 5.2% and falling, officials believe their country successfully can attract major industrial investors.

South Korean automaker Kia has expressed interest in producing cars within Pakistan, according to Pakistan brokerage firm BIPL Securities.

A delegation from German automaker Volkswagen visited Pakistan in August 2015 and held talks with government officials. However, company spokesman Christoph Adomat told reporters that while “Volkswagen is constantly evaluating market opportunities on a worldwide basis (but) there are no decisions for an investment (by) Volkswagen side in Pakistan.”

Car sales in Pakistan – limited exclusively to Toyota, Honda and Suzuki – totaled 145,820 in 2015, up 32.9% from prior-year, WardsAuto data shows. Deliveries of 78,427 light trucks – all but 912 of them Suzukis or Toyotas – were up 135.3% year-on-year.

Riaz Haq said…
#Automobile companies eye production in #Pakistan as local market accelerates. #manufacturing #economy https://www.ft.com/content/328ca8ae-f34a-11e6-8758-6876151821a6

When Naeem Khan went into his local automobile dealer in Karachi to replace his five-year-old taxi with a rickshaw, he was not expecting to leave with a brand new air-conditioned car instead.

But after getting a financing package that was cheaper than he expected, Mr Khan became one of an increasing number of Pakistanis who have recently bought vehicles they previously only dreamt of owning.

The national surge in sales has prompted three global carmakers to commit in the past few months to starting production in Pakistan, potentially doubling the number of foreign carmakers in the country.

“The dealer told me it was the right time to get a loan to buy a car,” says Mr Khan. “Five years ago he said he would have told me to buy a second-hand car or a rickshaw, but today I could afford to buy a new car.”

Pakistan’s car market is still small, and dominated by the three Japanese brands that have local manufacturing plants: Toyota, Honda and Suzuki. The trio made all but seven of the country’s domestically manufactured cars in 2015-16, according to the Pakistan Automotive Manufacturers’ Association, though the figures are just a fraction of their total global car sales.

In the past, analysts say, manufacturers have been put off by the country’s relative poverty, as well as political instability and concerns about security.


But in the past few months, France’s Renault and both Hyundai of South Korea and its affiliate Kia have announced they will soon start assemblies in Pakistan, in partnership with local companies. It marks a return for Kia and Hyundai, which left in the previous decade when their local partner suffered financial problems.

The new and returning entrants are being drawn in by several factors.

The first is both the scale of the potential market in a country of 200m people, as well as the rate at which it is already growing. In 2012-13, carmakers sold 118,830 cars in Pakistan. By 2015-16, that had risen 52 per cent to 181,145.

Analysts say the surge has left Toyota, Honda and Suzuki struggling to meet demand with their customers sometimes forced to wait as long as five months before their cars are delivered.

Yong Sohn, general manager at the Hyundai group, says: “Population and growth-wise, Pakistan is very promising.”

Renault declined to talk about its plans while it is in negotiation with local partners.

Part of the reason for the rise in car sales is that Pakistanis are getting richer. Between 2010 and 2015, the amount each person earned per year rose from $4,370 to $5,320 as measured in gross national income per capita at purchasing power parity.


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That trend is expected to continue, partly helped by China’s plans to invest more than $52bn in Pakistan’s infrastructure under the “One Belt, One Road” project. Hyundai forecasts that, consequently, car sales in Pakistan will hit 300,000 a year by 2020.

Just as importantly, say analysts, has been the corresponding fall in interest rates. Since September 2000, the rate at which banks can borrow from the Pakistan central bank has fallen from 13 per cent to 6.25 per cent.

Saleem Memon, who sells finance packages for carsin central Karachi, says: “A few years ago, customers sometimes paid 16 or 17 per cent in annual interest rates. Now, if they are lucky, they can get a good deal for around 11 per cent.”

Another factor drawing carmakers to Pakistan is that security has begun to improve thanks to a two-year campaign by the army. Mr Khan remembers days when he and other taxi driverswere routinely stopped at gunpoint by armed extortionists. “The streets are now safe and people feel comfortable driving till late at night,” he says.

Third, the government has drawn up policies aimed at attracting carmakers, such as cutting the duties applicable to parts shipped from abroad and making it easier to find a site to build a plant.
Riaz Haq said…
#Pakistan #Auto Show 2017: Auto part manufacturers gear up for biggest ever exhibition in #Karachi

https://tribune.com.pk/story/1343197/pakistan-auto-show-2017-auto-part-manufacturers-gear-exhibition/


Pakistan’s auto part manufacturers are bullish on future growth of the industry due to growing sales of locally-assembled vehicles and planned investments of new companies.

“A record number of foreign exhibitors are going to participate in the Pakistan Auto Show (PAPS) 2017,” Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Mashood Ali Khan told reporters at a local hotel on Wednesday.

Pakistan, Thailand: PAAPAM expresses concern over inclusion of auto sector in FTA

Paapam officials expect over 65 international exhibitors in PAPS 2017, being held from March 3-5 at the Expo Centre, Karachi. Relative improvement in security, macroeconomic stability and the announcement of the new auto policy in 2016 has created an ideal condition for global car manufacturers to invest in Pakistan.

Current conditions are particularly beneficial for the local auto part making industry, which is expected to provide auto parts to new automobile entrants that need their partnership to produce economical cars in Pakistan.

“New auto players like Kia and Hyundai are setting up their plants in Pakistan and this is a huge opportunity for us,” former Paapam Chairman Aamir Allawala commented.

“Last year, only six international exhibitors participated in the event, but this time the response is overwhelming. We are pleased to entertain a large complement of dignitaries from across the globe,” added Khan.

This time a total of 85 local exhibitors, 17 sponsors, six universities and 17 support organisations are going to take part in the show. This comes to a total of 192 exhibitors this year, as against 104 last year. In PAPS 2013, a total 15,000 visitors and 100 exhibitors were part of the show while in 2014 the number of visitors was 25,000 and there were 150 exhibitors. In 2015, the visitors increased to 30,000 and exhibitors were 200.

Government officials, local and international buyers and manufacturers, machinery manufacturers, raw material providers and service providers are expected to visit the show.

International visitors from Afghanistan, Bangladesh, China, Japan, the Netherlands, Sri Lanka, the UAE, the UK and African countries have attended the past events, but this year visitors from other countries as well are expected in this show, Paapam Senior Vice Chairman Saeed Iqbal Ahmed Khan said.

“We would like to strengthen our international relationships, which have been developed after years of hard work. Export orientation will be the key to introducing new and upgraded technology,” he said.

Paapam Vice Chairman Syed Mansoor Abbas commented that an additional important objective is to strengthen relationships with OEMs and strive to increase localisation content.
Riaz Haq said…
#Volkswagen in Talks to Make Big Push Into #Pakistan With #Audi luxury cars & VW Commercial vehicles http://wardsauto.com/industry/volkswagen-talks-make-big-push-pakistan … via @wardsauto

ISLAMABAD, Pakistan – Volkswagen has made significant progress in talks to establish manufacturing operations in this South Asian port city of Karachi, a top government official says.

“Volkswagen Commercial Vehicles is in final talks with Premier Systems, the authorized importer of Audi vehicles in the country, to set up a manufacturing/assembly plant for its Amarok and T6 models and Volkswagen,” Tariq Ejaz Chaudhary, CEO of Pakistan’s Engineering Development Board, confirms to WardsAuto.

A senior official at Premier Systems adds VW is considering establishing production of Audi luxury vehicles in the country.

“Volkswagen Commercial intends to use the same plant Audi intends to build for the assembly of its own vehicles in Karachi,” the official says, adding VW plans to open about 40 dealerships across Pakistan to accommodate rising demand for its Amarok pickup and T6 vans.

The possible launch of the three vehicles in Pakistan’s market of 190 million people follows forecasted demand arising from the China-Pakistan Economic Corridor program of development projects backed by the Chinese government. A VW manufacturing presence also would be among the latest results of the business-friendly policies pursued by Prime Minister Nawaz Sharif.

The Amarok is a direct competitor to Toyota’s HiLux Revo and the T6 is a multipassenger van.

Wilhlem Kramer, a spokesperson for Volkswagen Commercial Vehicles, says no firm decisions have yet been made about an investment in Pakistan, saying only, “A global corporation such as Volkswagen continuously explores market potential – including in South Asia.”

Federal Commerce Minister Khurram Dastgir Khan confirms to WardsAuto that VW “is in talks with government of Pakistan to launch its passenger/commercial plants in Pakistan,” although he doesn’t comment on the status of the negotiations.

Another possible motive for VW to enter Pakistan is the scheduled July launch of refineries able to produce high-quality diesel fuel.

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Other automakers considering production in Pakistan include Hyundai, which may form a joint venture with textiles manufacturer Nishat Mills; Kia, which may partner with Lucky Cement, one of the country’s largest cement makers; and Renault, which is in talks with India’s Ghandhara Nissan Motors to use its Karachi plant for car assembly.
Riaz Haq said…
#Honda Atlas launches BR-V, first locally produced subcompact SUV, in #Pakistan, starts from Rs2.23m. #automobile

https://tribune.com.pk/story/1390278/honda-atlas-launches-br-v-pakistan-heres-everything-need-know/

Honda Atlas launched its first locally produced subcompact Sports Utility Vehicle (SUV) on Friday, comprising 45% local components, stated the company.


The Bold Runabout Vehicle (BR-V) – which seats seven people – costs about Rs2.23 million and Rs2.33 million for its i-VTEC and i-VTEC S variants, respectively. It features a 1.5litre engine.

According to the company, the low price is courtesy local components used in the manufacturing. Additionally, through this price, Honda is looking to boost its sales by attracting existing as well as new customers who are willing to enter the SUV family.

“SUVs in Pakistan are too costly and are mostly out of range for many customers,” said Honda Atlas Cars Pakistan Limited General Manager Sales and Marketing Nadeem Azam. “With the price range we are offering, about 90% of customers can now afford the new variants, which will attract new as well as existing customers of other companies too.”

The company is also looking to tap rural as well as urban markets with the newly-launched SUV. “We are confident that BR-V will strongly appeal to the urban and rural customers and accelerate our growth while strengthening our brand presence in the country,” said Honda Atlas Cars Pakistan Limited President and CEO Toichi Ishiyama. “Pakistan is a key market for Honda and as part of our business expansion; we are focusing on increasing our customer base and will be bringing a lot of new and innovative products in the future.”
Riaz Haq said…
Chief Engineer Yoshiki Konishi: #Pakistan is top market for #Toyota #Corolla cars in #Asia and 4th in the world.

http://nation.com.pk/business/08-Aug-2017/pakistan-has-4th-highest-corolla-sales-globally

Remarkable success of Corolla in Pakistan has made Pakistan number 1 in Corolla sales in Asia Pacific and number 4 in the world,” said Yoshiki Konishi, Chief Engineer for Corolla, Toyota Motor Corporation at the 26th IMC Dealers Conference held at a local hotel here recently.

The theme of the conference was “Race to Ace”. Dealership CEOs, executives from Toyota Motor Corporation, Toyota Tsusho Corporation, senior management from the House of Habib, dealer management and teams and the IMC management attended the conference.

In his video message, Yoshiki Konishi appreciated IMC’s efforts in successfully promoting Toyota in Pakistan for the last 26 years. He added that since its inception 44.1 million Corolla cars have been sold globally.

“Technology is changing the entire landscape of business. Big names which fail to change according to the environment soon become part of history and we have to acknowledge the technological change happening in our country,” said Chairman Indus Motor Company (IMC), Ali Habib. “We have gone back to the basics, that is, Toyota Way,” he added.

The new facelift model of 11th generation of Corolla was unveiled in the event, which will be available in Pakistan from August. “The most beautiful Corolla is here to excite Pakistani market with new features like Push Start, Smart entry, 16 inch Alloys, 9 inch infotainment, new interior, Vehicle Stability Control etc.” said the Chief Executive Officer, IMC, Ali Asghar Jamali.

He said their special emphasis is on ‘best in class’ safety features to standardize Dual SRS Air Bag across all the variants of Toyota Corolla, ISO Fix Seat Anchors, Front seats 3point ELR with Pre-Tensioner and Force Limiter seatbelts in all variants.

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