Pakistan’s auto industry foresees a rise in the production capacity by 110%

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The capacity of Pakistan’s auto industry is expected to increase to 600,000 cars by 2021, according to the CEO Indus Motor Company Limited (IMC) Ali Asghar Jamali.

The local auto industry currently produces 285,000 cars with a fair amount of chance in an increase during the next two years. Indus Motor CEO told the Senate Standing Committee on Production and Industries that a wholesale-retail mechanism shall be adopted by the government to enhance the efficiency of the auto sector in Pakistan. He added that this is widely practised around the world for better working of the whole system. The wholesale-retail mechanism also rules out the illegal charging of premium on cars which as a result puts a huge burden on the potential buyers. The tax system in Pakistan doesn’t allow the auto manufacturing companies to sell their cars to the wholesale dealers. He quoted an example in this regard saying that if a buyer books a car in Islamabad, he is bound to wait for the car to be issued from the manufacturing company in Karachi. The process of the delivery of car to the buyer takes around a month and this particular time lag allows the dealers and investors to jump in and make money. These dealers book vehicles in their name and sell them to the customers at an additional price with the lesser wait time.

He further added that there is a huge potential for the auto industry in Pakistan as per the stats on the motorization rate in the country. At the moment, Pakistan has a motorization rate of 18 cars per thousand people which has a lot of room to grow. It is also worthy to mention here that the country will be a 5.35 million units market by the end of 2025.

The members of the standing committee asked the CEO regarding his future plans to cater to the increasing demand for vehicles in the local industry. He responded to the question with detailed information on the investment made by the company on increasing its plant capacity. IMC has invested $126 million which has made more room for producing nearly 60,000 cars per year. He assured that the plant has a capacity to produce 80,000 cars per year in the future which will play a significant role in meeting the ever-increasing demand of vehicles in Pakistan.

Mr. Jamali opposed the recently imposed federal excise duty (FED) on locally manufactured vehicles above 1700 cc engine capacity and requested the members to bring the matter under consideration. According to him, this policy is a clear deviation from the Automotive Development Policy 2016-2021. This will also negatively affect the sales of vehicles falling in this category, leading to revenue downfall.

That’s it from our side. Drop your thoughts on this story below. Stay with PakWheels to stay updated on all the latest news from the automobile world.

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