LAHORE - The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman Mumshad Ali has said that growth of auto industry is linked with increase in consumer purchasing power which is dependent on economic growth, GDP expansion, consistent policies , low interest rates & consumer financing. Whether automobiles are produced with imported parts or local parts is of no relevance to the growth in demand. Auto industries in China & India grew rapidly on the basis of consistently high GDP growth of 7% ~ 11% during last 15 years.
All cars made in Pakistan, even those at entry level, conform to Euro II emission standards adopted by the government. Furthermore, most of the models produced in the country are based on technologies & features similar to those in India, Indonesia or Thailand. Examples of such locally assembled cars (using up to 60% local parts) include Honda Civic, Toyota Corolla, Honda City, Suzuki Swift, Suzuki WagonR, FAW Carrier & FAW XPV.
The quantum of cars produced in Pakistan remained stagnant at 150,000 units over the last 10 years and implying that it is somehow a fault of the auto industry or its governing policies is seriously misleading. The reason for this stagnation was the patch of economic depression which Pakistan went through during 2008-2013. On the other hand, cars production underwent a 500% growth from around 50,000 units in the year 2000 to nearly 210,000 units in the year 2007.
Chairman PAAPAM stressed that one of the biggest casualties of economic mismanagement in Pakistan during the tenure of previous government has been the domestic auto sector . Assemblers & parts manufacturers, who had invested billions to expand their capacities, had to face 60% drop in demand in 2009. This led to shutdown of 4 local assemblers (Hyundai, Nissan, Chevrolet & Adam), massive layoffs & unemployment and huge losses to surviving Assemblers & parts manufacturers.
He highlighted that it is misleading to construe that the list of localized parts (under SRO 693) has not been updated due to lack of new localization. The fact is that PAAPAM has been vociferously demanding updating of the list since 2009 by way of addition of new components developed after 2006.