Automotive sector grows despite inflation

CARACHI:

Despite rising inflation, rising commodity prices and shrinking public purchasing power, foreign auto brands are entering the Pakistani market to capitalize on the available opportunities.

Peugeot, a European automaker, on Saturday announced the launch of car manufacturing in Pakistan in partnership with Lucky Motor Corporation.

“The first stage of the partnership will begin with the introduction of the locally built Peugeot 2008,” revealed Asif Rizvi, CEO of Lucky Motor Corporation.

He added that a European car would be available to Pakistani consumers for the first time in history.

Lucky Motor Corporation came into being as a result of the government’s new entrants policy under the Automotive Industrial Development Policy (AIDP) 2016-21.

He called the policy a success because it offered concessions to new brands and products and created a level playing field between existing and new players in the market.

As a result of this initiative, 12 new automakers entered Pakistan, bringing the total number of automakers to 15, he pointed out. He added that the policy has also contributed to the introduction of 25 new vehicles in the country.

He revealed that the company has also ventured into auto parts manufacturing in partnership with other automakers and has established a manufacturing plant to produce seats, wiring harnesses, air conditioners and injection molded parts. for the car factory.

He reiterated his commitment to the indigenization of parts of the country.

The company has also entered into eight technical assistance agreements with four Korean auto parts suppliers for technology transfer to Pakistan, he added.

At present, all cars assembled in the country come from Japanese, Korean or Chinese assemblers. Consumer choice “is limited to cars designed from the Far East”, he said.

He added that automakers are aware of this discrepancy and are taking advantage of it.

Rizvi further stated that the expansion of Peugeot’s operations and network will create job opportunities in the market.

Electric vehicles (EVs) are the future of mobility worldwide and by 2025, 80% of all company vehicles will be electric,” he said.

Speaking on the occasion, Linda Jackson, CEO of Peugeot, said: “We are delighted with this partnership and what it means for the Pakistani market”.

“It will be the first time that a European car will be assembled in Pakistan,” she said, stressing that the partnership would create jobs, boost localization and develop the local automotive industry.

Insight Securities auto analyst Ali Asif told The Express Tribune that a slowdown in auto sales has started to appear due to multiple vehicle price revisions, coupled with rising auto finance rates. , higher inflation and fuel costs.

However, despite the difficult environment, “we believe this company will prove to be a success in the Pakistani market due to the growing popularity of SUVs.”

Automakers in Pakistan have predicted strong growth due to reduction in age of pay in Pakistan due to rapid digitalization.

“On average, the first salary was received by the previous generation at the age of 27, but now the threshold has fallen to 21, thanks to the opportunities arising from digitalization,” said Syed Shabbiruddin, Director of Sales and marketing of Changan Master Motors. the week.

The company targets customers in the 25-64 age bracket, a presentation given by the manager revealed.

Every year, a large part of the youth belonging to Generation Z enters the pool of car buyers.

These people start earning a living at an early age, around 21, and progress rapidly through the social classes of society, he said.

“The growing number of women in the business sector will also lead to a noticeable increase in the proportion of women buying their own car,” he said. “Every year, one in six affluent customers buys an average new car.” The wealthy class will expand to 21 million people by 2026, 27 million by 2031 and 29 million by 2036.

SI Global CEO Noman Ahmed Said told The Express Tribune that due to the rapid increase in online jobs, young people have a much better chance of earning a living than previous generations. The introduction of new manufacturers and government support have paved the way for increased car sales in the economy, he said.

Published in The Express Tribune, March 13and2022.

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