Govt planning to end domination of Japanese automakers


ISLAMABAD: The government is considering on a plan which, if finalised, would end the domination of Japanese players in the local automobile sector and pave the way for entry of leading European, Korean and Chinese auto manufacturers into the country. According to official sources, the plan devised by the Engineering Development Board, a subsidiary organisation of Ministry of Industries, is held up due to the pressure exerted by Japan, which is one of the major donors to the country. It had announced an assistance of $ 500 million at the Pakistan Development Forum, while $ 1 billion were pledged at the Friends of Democratic Pakistan (FoDP) Forum in Tokyo last year.
The government, sources said, is undecided as in case of any such move, Japan could either withhold or impose strict conditions for these pledges. Japanese were already annoyed at the government plans to allow import of reconditioned cars, which they think would their investment. At present, Japanese vehicles have a share of 99.6 percent share in the local market, resulting in lack of competition and complete monopoly to charge higher prices with surcharge for inferior-quality vehicles. This could be curtailed only by encouraging European, Korean and Chinese investment in the auto sector, the sources said.
To keep vehicles’ prices artificially high, the Japanese assemblers produced only 121,790 units during 2009-10 against the installed capacity of 269,000 units. The assemblers are not interested in enhancing their production as there was no chance of exporting their inferior quality vehicles.
The sources said Mehran brand has been phased out globally except in Pakistan and India which also plans to phase it out. The Alto brand in the same shape was available in 660-CC capacity in Japan while it was sold in Pakistan in 1000-CC capacity which was more expensive. Toyota car is available locally in 1300-CC capacity whereas internationally it was available in 1500-CC capacity.
The sources said the local truck fleet operators and transport companies too have many reservations about the locally assembled trucks and buses of the Japanese manufacturers which they say were far inferior to those available internationally.
They are demanding permission to import second-hand vehicles to improve their services in the country. Under this scenario, the development of automobile sector needs attention to produce affordable quality vehicles domestically that could also be exported.
The plan, if implemented, would significantly reduce prices of locally assembled vehicles, improve their quality and would make complete manufacturing of automobiles in the country possible, the sources said.