Daily Times

The local auto industry has been promoting ‘Make in Pakistan’ for last 30 years, providing a huge boost to local engineering sector through technology transfer and in the process creating thousands of jobs opportunities for local Pakistani youth.

This was stated by Chief Executive Officer Indus Motor Company (IMC) Ali Asghar Jamali while speaking at 5thPakistan Automotive Industry Workshop.

Talking about the impact of ADP 2016-2021, he said that policy achieved one if its objectives of bringing in new players in auto industry. The IMC welcomed competition as it would give more choice to consumers who would eventually decide which brand offered best value for their money. IMC intended to compete with new entrants though Toyota’s QDR promise which was Quality, Durability and Reliability. We strongly believed that high localization level achieved by us was our biggest competitive advantage against all new entrants.

“However to support the local engineering base which is the true employment generator the government should also consider incentives for auto part makers to make them more competitive to produce parts for new entrants as well,” said the CEO IMC

He said that new entrant can imports CKD at 10% while local part makers import components at 10% and sub-assemblies at 20% – which makes them uncompetitive. Local auto part makers will further have to compete with high economies of scale of global OEMs as well. Therefore Gov must remove this tariff anomaly by reducing components duty to 5% and sub-assemblies duty to 15% to 10% – which will reduce cost of locally produced parts and will enable part makers to produce parts for new entrants as well.

“IMC has always encouraged local engineering base and has arranged 35 Technical Assistance and Technology Transfer Agreements between local vendors and foreign counterparts for various technologies and parts and has localized more than 170 parts since 2004 and procuring local parts worth over Rs200 million every working day, which shows our commitment to the localization,” he maintained.

He said that with every model change in Corolla, IMC has successfully localized more and more, despite significant advancements in parts sophistication, and resultantly achieve reduced dollarized cost of Corolla. For example, he added, the first Corolla cost more in USD terms with lower level of localization as compare to today’s Corolla which is 64% localized and costs is significantly lower in USD terms, whereas there are numerous advancements comparatively such as dual air bags, Power Steering, ABS Brakes, Immobilizer, etc. The existing Corolla is NCAP 4 star compliant vehicle.

He said that IMC increased its capacity by 20% and has invested around $126 million, without any incentives, for model introduction and improvement in production. Increase in production from 54,800 to 66,000 vehicles (with overtime 80,000 vehicles) has been witnessed after the capacity enhancement in Financial Year 2018.

The CEO said that the government has taken good steps to support auto industry such as lifting ban on non-filers, yet he added, the auto industry is facing many challenges which hampering industry from achieving its potential including the newly imposed 10% Federal Excise Duty that has been imposed on 1700 cc and above vehicles which includes our Grande and Fortuner, whose sales will suffer.