Islamabad - Although Pakistan's auto industry is enjoying a boom as manifested by high profits being reported by leading brands, including Suzuki, Toyota and Honda, the new investors are still shy.

At a time when others - ranging from textiles to farm products – have been hit hard by stagnating exports, auto is perhaps the only industry which is doing well.

According to an official data, the sale of locally assembled cars jumped to 179,953 units in 2015 from 136,888 units in 2014. And despite that, the market has still lot of room for other car manufacturers.

Officials revealed to this scribe that the demand was so immense that Toyota had been advised to operate at its full capacity to clear the backlog of thousands of vehicles.

Many believe that major hurdles in the way of new entrants are three big car assemblers – who enjoy a monopoly in the market, namely

Toyota, Suzuki and Honda, which are amongst top 10 in the world’s car industry, with Toyota at number one.

If a new company comes to Pakistan now, it will have to start manufacturing on a large scale to be competitive enough,” said an official of Engineering Development Board, an affiliated department of Ministry of Industries.

He said Pakistani market had a lot of potential for Volkswagon and Fiat, but despite government to government request, both the companies had not given any positive response.

According to officials, the government is keenly inviting foreign car manufacturers to invest in Pakistan.During a recent visit to France, the Pakistani delegation had invited Renault and Peugeot to explore Pakistani market.

The representatives of French companies were told that recently announced automotive policy allowed them to pay fewer taxes on the import of parts and various other incentives that could help them and other new entrants to start their operations in Pakistan.Many believe presence in market, variant and large investments are the challenges new entrants are reluctant to take.

“It needs a huge investment. A new entrant will have to manufacture on a large scale to be competitive enough. He will need more than what have been offered in the auto policy,” opined another person from the local industry.

He was of the view that French car makers could not compete in local market as they had no presence, and it would take time to build their repo here in Pakistan. On the other hand, he said the German cars were expensive; therefore, these could not compete with locally assembled models.

But the industry insiders believe that these responses have come from those lobbying for three auto giants.

“If the government provides sovereign guarantee and tax exemptions to international car manufacturers, the newcomers will rush to Pakistani market. We have a lot of room to accommodate French, German and even American brands as a large segment of population can spend as per value of its money,” said Arsalan Ahmad, an auto industry professional.