Car sales in Pakistan increased by 217% in 10 years

Car sales in Pakistan have increased by 217% between 2001 and 2011 and the sales of three manufacturing company mainly contributed towards this growth.

The Competition Commission of Pakistan (CCP), as part of its on-going programme of sectoral research, has released the updated draft study on Automobiles sector and has uploaded it on the website for soliciting public comments and suggestions.

The primary purpose of CCP’s research programme, titled, Competition Impact Assessment Studies, is to assess the competition vulnerabilities in various sectors. The draft study on auto sector assesses the relevant laws and their impact on the sector; market share of the players; concentration levels of the market; and the behaviour of the players affecting competition.

In the Study, the competition assessment of the passenger cars in the automobile sector in Pakistan has been analyzed, which shows that there are currently three major car manufacturers/assemblers in the car industry in Pakistan namely: i. Pak Suzuki Motor Company Limited, ii. Indus Motor Company Limited (Toyota) and, iii. Honda Atlas Cars Limited.,

Currently, in the 800 cc and 1000 cc market segment, Pak Suzuki is the sole local manufacturer/assembler while in the 1,300-1,800 cc cars, the state of competition is slightly better with Honda, Suzuki and Toyota competing amongst each other for market share. Parallel increase and decrease in prices by manufacturers in the last 3 years from 2010-12 may be a cause of concern from a competition perspective.

In all the three market-segments, the manufacturers/assemblers have excess installed capacities and by not utilizing their excess capacities, the incumbent firms signal their inward looking approach towards the domestic industry.

The study also states that Pakistan automobile industry is inward looking and it tries to protect itself through the use of regulatory instruments.

Pakistan needs to develop the automobile industry instead of protecting it and in this regard, imports have a disciplinary impact on domestic firms. Currently, the import of cars is allowed only under the Gift, Personal and Baggage Schemes with restriction on allowable age limits.

The policy for import of cars with an allowable age limit of 5 years remained in practice from December 2010 to December, 2012. This policy was changed and the allowable age limit was again reduced to 3 years in December, 2012. Furthermore, on 31 August, 2012, the depreciation rules were also changed. If the cumulative effect of both these policy changes is taken into account, a further protection was landed to protect the domestic automobile industry at the expense of consumers.

For enforcing safety and quality standards, the government established Pakistan Standards and Quality Control Authority (PSQCA) in 2000 which has so far developed standards for only 2 wheelers. Due to the absence of regulation, the domestic automobile manufacturers do not offer safety features, such as anti-lock breaking system (ABS), airbags and lower CO emissions along with quality specifications such as alloy rims, power steering and windows in all their vehicles.

In addition, Pakistan has an aging automobile population which is an increasing burden to the economy due to increased emission levels and a growing safety hazard. The current dealership/supply chain structure in the industry does not allow for meaningful competition as Dealerships are behaving merely as agents of the manufacturing companies and have no real incentive to compete in the market. Due to delay in deliveries, premiums are charged in the secondary markets.

Short URL: https://www.newspakistan.pk/?p=38388

Posted by Tahir Khan on Feb 19 2013. Filed under Latest News, National, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.