Author Topic: Auto Sector  (Read 76088 times)

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Toshi

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Auto Sector
« Reply #-1 on: March 10, 2010, 06:44:04 PM »
All about Auto Industry.
« Last Edit: February 01, 2012, 10:10:31 PM by M&M »

Pakinvestorsguide

Auto Sector
« Reply #-1 on: March 10, 2010, 06:44:04 PM »

Toshi

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Re: Auto Sector
« on: March 10, 2010, 06:48:24 PM »
February car sales up 73%YoY

Auto sales numbers for February 2010 have been released by the Pakistan Automotive Manufacturers
Association (PAMA).
???? Auto (Cars + LCVs) and car sales for February 2010 are up 90%YoY and 73%YoY, respectively. Pak
Suzuki (PSMC) is the primary determinant for this growth as its sales are up 246%YoY owing to
abnormally poor sales last year. In Feb 2009, PSMC witnessed its lowest sales since Dec 2001, due to
all time high car prices and interest rates. Indus Motor (INDU) also registered a YoY growth of 38% on
the back of impressive sales of Corolla. Moreover, Honda Car posted a growth of 15%YoY.
???? However, on a month on month basis, auto and car sales were down 7% and 10%, respectively. The
decline in sales is mainly owing to higher sales in Jan because of the New Year factor. Indus Motor
and Honda Car sales were down 16% and 11%, respectively while PSMC sales remained flat at 5,970
units.
???? 8M (Jul-Feb) FY10 numbers show a jump of 29%YoY and 42%YoY in auto and car sales, respectively.
The growth is primarily driven by a 79% growth in Indus Motor. The company sales jumped during the
period mainly owing to a low base effect carried over from last year (phase out of the previous Corolla
model) and a strong performance of Corolla. Moreover, PSMC also registered a 20%YoY growth
during the period.

         

Toshi

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Re: Auto Sector
« Reply #1 on: March 11, 2010, 12:17:48 PM »
Auto sales decline 7% MoM; up 29% YoY in 8mo FY10
Pakistan Auto Manufacturers Association (PAMA) has recently released auto production and sales numbers for Feb10:

    * In 8mo FY10, auto industry sold 86,016 units, which is 29% YoY higher than the comparable period last year. In Feb10 alone, car sales increased by 90% YoY to 11,797 units. However, on a MoM, auto sales declined by 7% MoM, with 11,797 units leaving the shelf in Feb10 as against 12,704 units in Jan10.
       

    * During the period, INDU continues to lead the growth with 52% YoY as the company managed to sell 30,020 units in 8mo FY10 compared to 19,761 units in the same period last year. The company operated at 85% capacity utilization during the period under review. 

    * PSMC showed a staggering growth of 246% YoY in Feb10 over the same month of last fiscal year. The growth is largely attributed to i) lower base in Feb09 and ii) the introduction of Suzuki Swift which managed a total sales volume of 505 units during the month of February. 

    * We are in the process of updating our valuation of the sector, and shall come up with an investment case shortly.


Toshi

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Re: Auto Sector
« Reply #2 on: March 11, 2010, 06:18:27 PM »
29% YoY sales growth in 8MFY10; MoM numbers reflecting an expected
decline
8MFY10 automobile sales have witnessed a 29% YoY increase to 85,300 units from
66,038 units in the same period last year. This increase has come despite poor law and
order situation and limited financing facilities in the country. INDU posted the largest
increase (52%) in its unit sales followed by HCAR (24%) and PSMC (20%). Growth
number trajectory was partly aided by a low base effect due to last year’s depressed
sales.
However, sales have shown a decline of 7% on a MoM basis in Feb10 to 11,703 units
sold compared to 12,574 units sold last month. Firstly, it can be termed a normal
phenomenon as sales in January are usually high and secondly, INDU and PSMC both
increased their product prices during this period which led to a decline in the number of
cars demanded. PSMC’s sales in Feb10 remained flat at Jan10’s level while INDU and
HCAR sold 16% and 11% fewer cars than last month.

Offline Mr.TOOL

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Re: Auto Sector
« Reply #3 on: March 11, 2010, 08:00:00 PM »
TRUST IN GOD AND DO THE RIGHT.

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Re: Auto Sector
« Reply #4 on: March 11, 2010, 08:00:59 PM »
TRUST IN GOD AND DO THE RIGHT.

Offline Karuli

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Re: Auto Sector
« Reply #5 on: March 12, 2010, 07:39:23 PM »
Except for decline in sales of light commercial vehicles, vans and jeeps, the sales of two and three wheelers, tractors, buses and trucks have shown positive growth in July-February 2009-10 as compared to same period of last fiscal year.
A total of 45,523 units of tractors (Fiat and Massey Ferguson) were sold in the last eight months of current financial year as compared to 34,841 units in the corresponding period of last fiscal.

Sale of Massey Ferguson tractors rose sharply to 26,078 units in July-February 2009-10 from 16,986 units in the same period of last fiscal while Fiat tractor sales increased to 19,445 from 17,855 units.

Sohail Bashir Rana, Senior Executive Officer of Millat Tractors Limited, talking to Dawn from Lahore attributed the increase in tractor sales to fetching of good support price by farmers followed by improved buying of tractors on cash.

He said that delivery of 10,000 units under Benazir Tractor Scheme (BTS) had already completed while the Punjab government was coming up with its own scheme next week to provide 10,000 tractors to farmers. He added production of tractors was also going good and were easily available.

Figures released by Pakistan Automotive Manufacturers Association (PAMA) showed increase in two- and three-wheeler sales to 468,856 units during the period under review as compared to 321,142 units.

Because of good crops of wheat, cotton, rice etc., the growers were encouraged to buy two wheelers. However, jeep sales plunged to 666 units from 731 while pick-ups to 10,078 from 11,429 units.

Overall sales of trucks surged to 2,312 in July-February 2009-10 from 1,928 in the same period of last fiscal, while sale of buses went up to 407 from 383 units.

During February 2010, the total market for commercial trucks and buses grew by 54 per cent to 462 units from 300 units in February 2009 due to increased demand created by the commercial transport activity.

The overall truck market showed a growth of 50 per cent from 265 units in February 2009 to 398 units sold in February 2010. The overall bus market also grew by 83 per cent from 35 units sold in February 2009 to 64 buses sold in February 2010.

Director Sales and Marketing Hinopak Motors Limited Muhamamd Irfan Shaikh said that in February 2010, the company sold 189 units of trucks as compared to 163 units in February 2009, up by 16 per cent. However, compared to January 2010 (253 units), sale of trucks decreased by 25 per cent (189 units) in February 2010.

The analysis showed that the sales in February 2010 fell due to instability in law and order situation during the month of November and December 2009 and also banks were not releasing money, the customers were reluctant in investing in the market during these months, which brought the sales forward in the month of January 2010

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Re: Auto Sector
« Reply #6 on: March 12, 2010, 09:45:09 PM »
TRUST IN GOD AND DO THE RIGHT.

Offline Farzooq

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Re: Auto Sector
« Reply #7 on: March 21, 2010, 12:09:07 PM »
Prices of locally-assembled cars continue to rise
 
Sunday, March 21, 2010
By Hina Mahgul Rind

KARACHI: At the beginning of every year the local auto assemblers tend to increase the car prices on pretext of rupee depreciation against yen and dollar, rise in steel prices and Complete Knock Down (CKD) and various other reason.

The year 2010 dawned with the popular Pak Suzuki revising its prices up by Rs10,000 to Rs25,000 on its various models in January. Indus Motor Company increased its prices by two per cent or Rs20,000 on the popular 1300cc XLi and Rs30,000 for the GLi in February 2010. Honda kept with the trend and upped the price tags by Rs20,000 to Rs35,000 on its various models.

Atif Zafar Auto Analyst at JS Research says that the rising prices of raw materials, utilities, and other inputs along with the weakening rupee has forced the auto assemblers to pass on the cost pressure to consumers.

He said that the price increase of local assemblers would not have much affect on the auto sales because Toyota and Honda cars are usually for people who can bear the price. However the increase in the prices of 800cc and 1000cc cars affects the middle-income groups.

The price rise follows demand for opening imports of used cars. All Pakistan Motors Dealers Association president H M Shahzad says that the price increase by local auto manufacturers is unjustified.

Lac of competition has given the local assemblers a free hand in the local automobile market, Shazad said adding, “people don’t have much choice.”

He further added that government should allow import of used cars, relax duty structure, allow two per cent depreciation, and used car import policy should be the same which was in the year 2006-2007. Taking these steps would give consumers more choice to select ave various range to choose from and it will break up the local assemblers monopoly.

While local assemblers’ stance is different on the issue and they justify the price increase and said that there is a misconception that the local auto industry is continuously and unjustifiably increasing prices.

This is unfortunate and far from reality. From October 2009 till date Pakistan rupee has depreciated over five per cent against yen and in addition, there have been increases in wages and utility prices. All these factors have forced the local OEMs (Original Equipment Manufacturers) to marginally increase car prices while absorbing most of the costs, which has squeezed their margins and reduced profitability.
 
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Offline Farzooq

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Re: Auto Sector
« Reply #8 on: March 28, 2010, 12:20:27 PM »
Auto financing picks up, but banks remain cautious  
 
Sunday, March 28, 2010
By Hina Mahgul Rind

KARACHI: After a two-year gap, banks have started reviewing their policy on auto finance and have slightly increased auto financing with stringent conditions, said Atif Zafar, auto analyst at JS Research.

Car sales were improving and one of the reasons was that auto finance along with restoring economic confidence had reduced interest rates and seasonal effects, he added.

Auto finance was at its peak during 2006-2007 and its share in car sales was 70 per cent to 75per cent, however in the later years it was almost stooped due to higher interest rates, and most importantly, auto finance default rate was very high and recovery rate was very low which forced banks to do critical review of their auto finance product, he said.

After this some of the banks completely stopped auto financing and some opted very stringent policy, entertaining their reliable customers only. At present its share in the sales is 30 per cent.

The current market scenario of consumer car financing shows that only few of the banks are doing car financing and some of the key players are Meezan Bank, Dubai Islamic, Faysal Bank, MCB Bank, HBL and Bank Alfalah. On the other hand, Citibank, UBL Ameen and Standard Chartered Bank and leasing companies had completely stopped this product, said a market source.

At present, interest rates at which banks are extending auto finance ranges between 17 and 22per cent. Initially, minimum equity was 30 per cent but banks have reduced it to 20 per cent to attract more customers.

A market player said that though auto finance was slowly reviving and car sales were improving, there were other factors which would continue to be a hurdle such as mark-up rates which were still high despite the fact that discount rate had reduced by 250 basis points during the last one year. Another reason is the continued price increase of automobiles and increasing non-performing loans (NPLS).

The consumer finance market will remain stagnant unless and until the interest rate is not reduced. A banker said that to minimise the risk of defaulters banks had adopted a more cautious stance and they had restricted the idea of “NO DOCs (no documents).” Initially, when auto finance started it was easy to avail of auto finance product by providing the least number of documents. The “No Docs” policy costs banks heavily.

But at present complete evaluation and proper assessment of customers’ ability to repay is considered before a loan is sanctioned. It is mandatory to provide bank statements, pay slips, CNIC, references and the most important is the Credit Information Bureau Report which consists of the borrowers all previous loans’ details and capacity to repay.

Not only are banks cautious, insurance companies have also made it mandatory for customers to avail of car tracking system at the time of auto financing from banks to curtail their theft losses.

According to the data released by the Pakistan Automotive Manufacturers Association (PAMA), local car sales grew by 42 per cent in eight months FY10 at 68,307 units against 47,982 units in same period of last year. Volumetric sales of all assemblers are recovering from a pit of last year and continues to post double-digit growth.
 
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Offline M&M

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Re: Auto Sector
« Reply #9 on: April 11, 2010, 11:24:31 AM »
Car sales rise by 41% in 9M FY10

By Moonis Ahmed

KARACHI: Despite high car prices the consumers’ passion to buy cars remained positive as the total car sales increased by 41 percent during the first nine months of the current fiscal year 2009-10, latest data released by Pakistan Automotive Manufacturers Association (PAMA) said on Saturday.

According to the numbers released by PAMA, the car sales recorded appreciating numbers for 9M FY10 as they stood at 86,483 units showing an increase of 41 percent on yearly basis. The number of units produced during the period stood at 86,613 as against 63,273 recorded during the same period of the last fiscal year, witnessing an increase of 36 percent.

In 1300cc and above cars category, Toyota Corolla contributed most in the overall car sales as it recorded a substantial increase of 73 percent in sales to stand at 29,964 units during the said period. Honda City and Suzuki Liana remained second and third with 5,745 and 770 units, respectively.

In 1000cc cars, Suzuki Alto with highest 7,638 units stood up showing an increase of 53 percent in sales. Suzuki Cultus remained second with a surge of 20 percent in sales. However, in below 1000 and 800cc cars, Suzuki Mehran with 16,228 units showed an increase of 59 percent in sales.

Except, LCVs, vans and jeeps almost all segments of autos including passenger cars, trucks, buses, tractors and even motorcycles and three wheelers showed positive trends.

An analyst was of the view that some of the reasons for improved local car sales are higher taxes on imported cars and economic stability. The situation appears even more stable on yearly basis with strong improvements in the sector.

However, on monthly basis, the car sales’ performance was not up to expectations as it witnessed a bit of increase of just 8 percent. In March 2010 car sales stood at 11,208 units as compared to 10,310 units in February 2010.

Furthermore the increase in car prices by the assemblers during the month under review had made an impact on sales. Some of the leading carmakers had raised prices during the month citing appreciation of foreign currencies especially Japanese yen against the rupee and steel price hike.

Analysts said that almost after a two-year gap, banks have started reviewing their policy on auto finance and have slightly increased auto financing with stringent conditions.

Car sales were showing improvement and a reason was that auto finance along with restoring economic confidence had reduced interest rates and seasonal effects, he added.

Auto finance was at its peak during 2006-07 and its share in car sales was 70 to 75 percent, however in the later years it almost stopped due to higher interest rates, and most importantly, auto finance default rate was very high and recovery rate was very low, which forced banks to do critical review of their auto finance product, he said.

After this some of the banks completely stopped auto financing and some opted very stringent policy, entertaining their reliable customers only.

“The industry may witness consistent growth of 4-5 percent by the end of the current fiscal year,” said JS Research analyst Atif Zafar. “The banks have again reviewed their auto financing policy and are most likely to focus on increasing their financing.”

He said that as compared to last year, banks are now lowering their interest rate on financing and the car financing percentage has gone up to 30-35 now. Pak Suzuki has also made an agreement with a bank for the auto financing and is likely to increase its sales in the coming months.

Source:
http://www.dailytimes.com.pk/default.asp?page=2010\04\11\story_11-4-2010_pg5_6
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Re: Auto Sector
« Reply #10 on: April 22, 2010, 10:06:28 AM »
Last 2 years Increase in car prices highest ever in history

By Moonis Ahmed

KARACHI: The local car manufacturers are exceeding the limits of increasing their car prices in parity with the local rising inflation to earn hefty profits, Daily Times learnt on Tuesday.

While compiling the data of nearly two years (January 2008 to March 2010) this scribe found out that the local car manufacturing companies have raised the prices of their products almost 10-15 times. During the said period the three leading automakers including Honda, Suzuki and Indus Motors have raised the prices by 15 times up to 68 percent.

Pak Suzuki Motor Company Limited has raised the prices 15 times on all of its models in the said period, as the company in 2008 had raised the prices 6 times, in 2009 it again raised the prices 6 times and till March 2010 the company raised the prices 3 times. Another leading auto manufacturer, Honda Atlas Motors Company Limited also raised the prices by 10 times in the said period up to 66 percent. The company had raised its prices 4 times in 2008, 5 times in 2009 and till March 2010 raised the prices once. Similarly, Toyota Indus Motors Company Limited, another market leader had taken its prices up by 13 times up to 60 percent during January 2008 to March 2010. It increased the prices 7 times in 2008, in 2009 the company increased the prices by 4 times and till March 2010 it raised the prices by twice.

On the contrary the car sales remained depressed in 2008 and significantly low in 2009, as sales fell by 28 percent to 107,704 units during CY 2009, which is said to be the worst performance during the last 10 years.

Topline Securities analyst Furqan Punjani said, “Inflation went up by 33 percent from the index of 163 in March 2008 to 217 in February 2010 and a 26 percent devaluation of the rupee against the dollar and 39 percent devaluation against yen.” In January 2008 the dollar was quoted at Rs 61.98 and the yen was at 55 paisas and now the dollar is being traded at Rs 84.00 and the yen is at 91 paisas. He said that the two years were very difficult for the auto industry amid global financial crisis coupled with severe pressure on the cost side.

“The soaring prices have badly affected the common man’s buying power, thereby affecting all segments of the industry,” he observed.

He said that the sales’ performance was affected due to slowdown in car financing, as banks were reluctant to issue fresh loans amid risk aversion and chances of higher non-performing loans due to the economic slowdown.

Besides this, higher mark-up rates, contraction in disposable income due to higher inflation and heightened security concerns restricted consumers to buy new cars. Interestingly, despite reduction in federal excise duty, car prices remained almost flat in 2009. This was primarily due to consistent cost pressures amid rupee devaluation, rebound in steal prices and increase in sales tax. In other regional countries like India and China the prices are comparatively 3 to 4 times lower than Pakistan.

All Pakistan Motor Dealers Association Chairman H M Shahzad urged the government to check whether these increases by the assemblers were really justified with the actual impact of the falling rupee, rising metal and steel sheet prices and petrochemical items.

Besides, these high prices on cars hefty amount of own money is also being charged from the customers, he said and added that on all models of Suzuki own money was ranging between Rs 40,000 to Rs 200,000. On IMC cars own money was between Rs 30,000 to Rs 60,000 and on Honda cars Rs 30,000 to Rs 80,000.

Shehzad said that semi-knocked down and completely knocked down kit prices all over the world had fallen. He was of the view that there had not been any check and balance over the price hike of the local manufacturers by the government. He urged the government to reduce the taxes on imported vehicles. “Importers are paying 360 percent overall duties as compared to 120 percent in 2007-08.”

He said that the automakers were taking full advantage of the customers as such high duty on import left the customers with no any other option than to buy locally manufactured cars during the last two years.

Source:
http://www.dailytimes.com.pk/default.asp?page=2010\04\22\story_22-4-2010_pg5_19
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Re: Auto Sector
« Reply #11 on: May 03, 2010, 10:50:38 AM »
KARACHI: Car-makers have unveiled an optimistic production plan to their vendors for April to August in view of on-going booming demand and orders in advance from buyers.

An extraordinary interest is being shown by buyers who are really not worried over surging prices, and many are even paying premium on spot buying.

A leading car vendor said that the Indus Motor Company (IMC) plans to manufacture 4,315 units of Toyota Corolla in April followed by 4,590 units in May and 4,700 units in June.

The company also aims to manufacture 4,460 units in July and 4,280 units in August. Corolla XLI and GLi hold a major share in overall production of various Corolla models.

However, the 2010-2011 budget in June may result in a change in auto production plan from July onwards depending on the budgetary decisions.

The vendor said that the IMC also plans to roll out 406 units of Daihatsu Cuore in April, 560 units in May, 490 units in June, 440 units in July and 440 units in August.

Production of Toyota Hilux in April is planned at 200 units followed by 170 units each in May and June and 200 units each in July and August.

Senior General Manager Pak-Suzuki Motor Company Limited (PSMCL) Ashfaq Hussain said the company had produced around 18,500 units of all models in January-March this year and “it plans to cross 20,000 units in April-June to cater to the huge demand.”He said vendors have been asked to maintain supply of parts and accessories.

He linked rising sales and production of cars to rising demand from growers after a good crop of wheat, cotton, rice etc.

Increase in home remittances in July-March 2009-2010, resumption of car financing by some banks and slight improvement in law and order situation have also boosted consumer confidence.

Car sales soared by 41.3 per cent in July-March 2009-2010 to 86,483 units as compared to 61,185 units in the same period of last fiscal year.

Trucks production and sales surged to 2,521 and 2,652 units in July-March 2009-2010 as compared to 2,169 and 2,175 units in the same period of last fiscal year.

Bus production and sales improved to 474 and 504 units from 408 and 451 units.

Director Sales and Marketing Hinopak Motors Limited (HML) Mohammad Irfan Shaikh said overall truck and bus sales and production is likely to improve by 10-15 per cent in April-June as compared to January-March 2010.

The economic situation in the country has retracted demand nearly from all sectors of economy and automobile sector in this respect is no different.

The bus and truck segment has specifically retracted by a considerable margin. This is evident from the fact that market demand from April 2009 to March 2010 decreased by 14 per cent compared to last year from 5,070 units to 4,351 units. However, HML sales have approximately stayed the same.

As a result, the market share of HML has grown from 51 last year to 59 per cent in 2010.

Irfan said demand in 2010 improved to a certain extent in the quarter January-March 2010, and the truck and bus segment grew an appreciable 45 per cent from 941 units to 1,369 units over the past year’s sales during the same period.

This increase is owing to improvement in economy which went into turmoil last year and is now showing signs of recovery.

The truck market grew by 47 per cent and bus market by 36 per cent over last year’s sales for the same period, reflecting demand from government authorities for bus units to run transport projects in the city.

Source:
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/business/demand-up-despite-surging-prices-carmakers-unveil-production-plan-540
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Re: Auto Sector
« Reply #12 on: May 18, 2010, 10:55:22 AM »
Auto industry wants stable policies

By Moonis Ahmed

KARACHI: The domestic auto industry needs government stable and consistent policies coupled with low duty on the high-tech parts that cannot be localised due to non-availability of technology and current low volume to achieve economies of scale, industry, officials said.

They said there is a dire need for a stable policy to allow the industry to plan effectively for future models and expansions and the ban on import of used vehicles to remain intact. A free hand in allowing the import of used cars would cause an immense damage to the local industry and would result in the drain of valuable foreign exchange and dumping of junk cars in the country, said Raza Ansari, Director Sales IMC, while talking to Daily Times.

He said this fallout would also aggravate the local scenario of economic uncertainty and the local OEMs would suffer huge losses on their investment in plants and infrastructures for automobile manufacturing. This would also result in layoffs on a massive scale, not only for the in-house work force at the automotive plants, but also for the large number of vendors, to whom certain automotive parts are outsourced for manufacturing.

Raza was of the view that the government should prepare long-term consistent policies to encourage other manufacturers to invest in the country. New cars are currently freely importable in Pakistan. Duties on cars with higher engine capacities (above 1800 cc) should be rationalised so that consumers have a choice to import these vehicles. It is worth mentioning that AIDP vision was around 500,000 units by the year 2012, however, realistically projecting the future market based on current volumes of 2008/09, the market size would be around 300,000 units. In order to achieve the same, consistent stable policies are required, which will impact positively on investment and enabling growth.

Talking about the recovery in local sales he said the sharp rebound in demand is mainly attributable to the combined effect of healthy agricultural income in the farming community and marginal increase in auto financing coming on top of the low volume base in the comparable period, which suffered from the dampened demand due to extraordinary difficult economic conditions in the country and the absence of Corolla which was only partially present due to running out of the old model last year. Though the volume growth has come as a welcome relief to the industry that had experienced two difficult years of consecutive market downturn, the operating environment for the automakers and parts suppliers alike remained volatile.

Inflationary pressures on account of rise in input costs and continued depreciation of the rupee severely eroded their profitability, while the disruption in part supplies caused by power outages posed a huge challenge in maintaining regular supplies and ramp up of the production to meet the rising customer demand.

Source:
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Re: Auto Sector
« Reply #13 on: May 20, 2010, 01:53:56 PM »
Tractor Industry: Monthly Update

Latest statistics revealed by Pakistan Automobile Manufacturers Association (PAMA) show a 42%YoY growth in production of tractors in 10MFY10. This resulted in a growth of 40%YoY in the local tractor off-take. We give credit for this growth to GoP's pro-agri schemes for farm mechanization which propelled the tractor volumes by ~20k tractors for the period under review. MTL continued to lead the local tractors market with its Massey Ferguson (MF) tractors capturing 57% market share. AGTL follows with its FIAT tractors capturing the remaining 43% market of local tractor manufacturers. Going forward, key factors to watch out include increasing steel prices, PkR/USD exchange rate and the possible introduction of VAT on tractors. We are in the process of initiating coverage on both MTL and AGTL and will update investors shortly.       
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Re: Auto Sector
« Reply #14 on: May 31, 2010, 09:48:00 AM »
Budget proposals: APMDA seeks fixed duty on above 1800cc cars

ZAHEER ABBASI
ISLAMABAD (May 30 2010): All Pakistan Motor Dealers Association (APMDA) on Saturday asked the government to impose fixed duty rate on the import of vehicles above 1800cc, sources told Business Recorder. They said that APMDA in its budget proposals for the next fiscal year, 2010-11, suggested to the government that fixed duty rate on the import of vehicles above 1800cc would help prevent revenue loss and would also eliminate the variation of taxes in various parts of the country.

They also proposed that the government should allow commercial import of used vehicles, in addition to existing import schemes of used vehicles under Transfer of Residence Scheme, (Gift and Baggage Schemes). It would bring the import of used vehicle business into the tax net and would help expand tax base. The APDMA said only its certified members should be allowed to import the used vehicles on commercial basis to ensure transparency. They said the import of used vehicles allowed in 2005-06 was restricted to import of used vehicles only up to three years of age under different schemes. The restriction on import of car to a certain age led to a monopoly of local assemblers on the prices.

The existing import schemes of used vehicles are primarily to facilitate the overseas Pakistani. Thus it is recommended that there should be no restriction of age limit on import of vehicles under Transfer of Residence scheme, they added.

They claimed that local assemblers have been charging exorbitant rate in the shape of 100 percent advance payment at the time of booking and the delivery of car takes three months to six months. The delay in delivery was providing opportunity to the black marketers to charge hefty amount as premium, they added.

They said the suggestions would lessen the problems the vehicle buyer is facing due to sharp increase in the price of vehicles over last few years. The APDMA has floated these proposals for being important stakeholder in Pakistan''s auto industry, they added.

Source:
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Re: Auto Sector
« Reply #15 on: June 01, 2010, 07:41:48 PM »
Import of used cars may be allowed

KARACHI: The government is considering allowing commercial import of used cars and the matter is expected to be put up before the Economic Coordination Committee and the cabinet in the next meeting, official sources disclosed on Monday.

Sources said the decision to allow import of used cars is being taken to check ever-rising prices of locally assembled cars, particularly when they are managed by controlling supply against demand.

For long the Ministry of Industries and Production (MOI&P) and Engineering Development Board (EDB) had been advising the car assemblers/manufacturers to protect interests of consumers by avoiding frequent rise in sale price of cars.

However, sources close to the ministry told Dawn from Islamabad that a summary is ready and would be put up before the ECC meeting expected to be held soon.

The government circles believe that enough time had been given to local manufacturers of cars to safeguard the interests of consumers but this did not work.

The sources said that it has been pointed out in the summary that supply is being managed by car manufacturers against demand and premium is being charged over and above the entire price of cars and taxes are being collected from buyers much before delivery.

Consequently, the government is seriously considering allowing commercial import of cars so that consumers’ interest is safeguarded and local manufacturers are also tamed, official sources added.

Within the government circles, the Ministry of Industries and Production had been facing a lot of criticism for not protecting consumers’ interests and that it had been not playing it's due role as a regulatory body.

On the contrary, the MOI&P had only been giving concessions to the industry and had also failed to implement Auto Industry Development Programme (AIDP), they added.

There is growing realisation amongst government decision makers in general and the MOI&P that local manufacturers have ganged up to increase car prices of all makes and models, official sources maintained.

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Re: Auto Sector
« Reply #16 on: June 02, 2010, 01:51:23 PM »
Government relaxing rules for import of used cars

MUSHTAQ GHUMMAN
ISLAMABAD (June 01 2010): The federal government is relaxing rules for import of used cars, as talks between the Minister for Industries and Production Mir Hazar Khan Bijarani and local cars manufacturers did not yield desired results, sources close to Secretary Industries told Business Recorder. "A comprehensive proposal is ready to allow import of five-year used cars instead of three years," the sources added.

Almost a year ago, Ministry of Industries was directed by the ECC to take measures to bring down car prices in line with neighbouring countries, but the Ministry failed to implement the decision despite a number of meetings with the manufacturers.

Former Minister for Industries, Mian Manzoor Ahmad Wattoo had held two meetings with the car manufacturers to convince them to reduce prices, however, car manufacturers did not respond positively. Like his predecessor, incumbent Minister for Industries, Mir Hazar Khan Bajarani, also held two meetings with the manufactures but the result of these meetings was not different from the meetings held by Mian Manzoor Wattoo.

According to sources, car manufacturers are of the view that they cannot decrease price per unit until the government provides relaxation in taxes. According to sources, Prime Minister Syed Yousuf Raza Gilani while chairing a meeting of the ECC in April had also directed the Industries Minister to take measures to bring down car prices or propose measures to import used cars.

Minister for Industries on May 3, 2010 revealed that he would hold a meeting with the car manufacturers at the end of the first week of May and thereafter, a summary would be submitted to the ECC. The ECC, however, took serious note of delay in settling the issue. The ECC directed the Industries Ministry to ensure submission of requisite summary to the ECC, in its forthcoming meeting.

On May 11, 2010, Bijarani held a second meeting with the car manufactures in which car manufacturers apprised the Minister about the various socio-economic problems confronted by the auto industry.

Industry is of the view that the most serious and severe among the problems it faces are rupee depreciation, non-availability of bank financing and latest technology for manufacturing high-tech parts of cars at domestic level, law and order situation of the country and on going electricity shortage.

According to PAMA, auto industry has financially suffered a lot due to these problems and has requested the Minister for urgent help and support for its survival, otherwise, hundreds might lose jobs with the closure of Auto Companies.

However, the car manufacturers assured the government that if duties/tariff on import of auto parts is reduced they would definitely pass on this relief to consumers. The sources said Industries Ministry has prepared the summary for the ECC but hinted that rules for import scheme can be relaxed in the federal budget.

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Re: Auto Sector
« Reply #17 on: June 03, 2010, 02:20:11 PM »
Govt may give carmakers tax incentives to cut prices

Industries Ministry proposes up to 20pc cut in duty on CKD kits

Thursday, June 03, 2010
By Israr Khan

ISLAMABAD: The government is likely to slash import duties duty by 20 per cent on automobile assembling components in the Budget 2010/11, a senior official in Ministry of Industries and Production (MoIP) told The News.

The MoIP in a summary to the Federal Board of Revenue (FBR) has proposed 10 to 20 per cent reduction on import duty for completely knocked down (CKD) kits and five to 10 per cent duty cut on completely build-up units (CBU) in the budget, the official said requesting anonymity.

Market experts say that if the import duty on CKD kits - the components that are assembled to make a car - is reduced from existing 32.5 per cent to 20 per cent the price impact would be about Rs30,000 on the finished product.

The Federal Minister for Industries & Production Mir Hazar Khan Bijarani had earlier hinted at possibility of reducing car prices.

“We would try to take measures in budget that would help reduce car prices. There are possibilities of taking tax measures or relaxing conditions on import of used cars,” Bijarani had told The News last week.

The MoIP official said that the government has now rejected commercial import of used cars and was considering the possibility of reducing import duty on components used by auto assemblers.

Assemblers import about 30 per cent parts including engine, transmission, and alternative self-starter, the remaining 70 percent components of the cars were locally produced, the official said.

Manufacturers attribute the rising cost of automobiles to depreciation in the value of rupee against dollar and yen that is pushing up the cost of imported components and the price of cars, he said.

A cut in import duty on assembly line components would facilitate reduction in prices of the vehicles, he said.

A representative of the car manufacturing industry opined that if the government allows import of used cars, they might start refurbishing and sale in the market. However, opening up of used cars’ import would badly hurt the sales auto-parts vendors and original equipment manufacturers catering to the automobile assembling lines, he said.

The major car assemblers of the country - Honda, Pak Suzuki and Indus Motors in the last few months had increased prices twice on plea that the Pakistani rupee had depreciated against dollar and yen.

Increase in rates has cut down car sales, said an automobiles dealer. High car prices, huge premium and late delivery were the main reason for downtrend in car sales.

He said that cut in import duties for assemblers would improve their margins of profit, “it would be up to the manufacturers to pass on the benefit to the buyers.”

Market experts say that government should enforce the Auto Industrial Development Policy (AIDP) - a protective tariff policy for safeguarding investments against auto-assemblers commitment for indigenisation of imported parts from 2007-12.

The policy envisages that by 2012 the car manufacturers would increase their production to 0.5 million, but they are still far behind the target. Currently, the combined out put of all vehicle manufacturers is around 0.13 million a year. The absence of economy of scales was also one of the reasons for rising prices of cars, experts said. If a car manufacturer increases its production from 40,000 cars to 60,000 cars their overhead production cost per car declines approximately to the tune of Rs20,000.

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Re: Auto Sector
« Reply #18 on: June 04, 2010, 10:16:50 AM »
Localisation or penalisation?

IQBAL MIRZA
KARACHI (June 04 2010): The auto industry which has invested more than Rs 3.8 billion in its operations in Pakistan during 2008-09 would be crippled in case import of used cars is allowed by the government. Besides having direct impact on industry, it would also harm hundreds of parts vendors and thousands of sub-vendors who have invested more than Rs 100 billion in trade.

In a sharp reaction to reports that the issue of commercial imports of used cars would soon be put before the Economic Co-ordination Committee (ECC) of the Cabinet, Pakistan Automobile Manufacturers Association (PAMA) said that adverse effects of such a policy will not only hurt the consumer but will seep down the entire value chain supplying to Original Equipment Manufacturers (OEMs).

As the relevant authorities have reportedly failed in their efforts to persuade the auto manufacturers to cut prices, deemed to be on an unfairly high side in the eyes of the government, the industry now appears to be ripe for penalisation. Simple as this may seem to the common man, one expects the well-versed and well-informed authorities to look a little beneath the surface and identify the factors contributing to the recent increase in car prices, PAMA said.

Since June 2008, Pakistani rupee has depreciated by an overall 42 percent against the yen and 25 percent against USD. Further, increase in gas price (13 percent), electricity price (34 percent), and international steel price (77 percent); other basic metal prices (over 80 percent) and increase in overhead cost per unit, have further aggravated the situation. All these factors have forced the OEMs to marginally increase car prices (by about 4 percent) in the recent past, while absorbing most of the costs themselves. It can very well be understood that with constant increase in input costs it is becoming increasingly difficult for OEMs to maintain car unit prices at the desired level.

Without due attention to the practical implications of their policies, the authorities, on the one hand, are bent on relaxing policies regarding import of used cars and on the other are showing a scrupulous concern for development of the local industry by forcing it to enhance the localisation process under the Auto Industry Development Plan (AIDP) through levy of additional 17.5 percent duty on high-tech parts (already under 32.5 percent customs duty. Such contradictory approaches clearly hint at a lack of clarity at the highest policy-making level.

There are indications that the government intends to relax its policy on import of used cars. For all practical purposes, rather than benefiting the people, such a move will only be an invitation to importers of used cars to dump junk automobiles into the local market, creating unhealthy and unfair competition for local manufacturers.

Moreover, levy of additional duty on high-tech parts for which local alternatives of required quality are not available, will further increase the input costs of the manufacturers. This approach will serve to further repress the already suffering local auto industry by reducing its market share while increasing their input costs, forcing them to increase prices to sustain, their business.

Local manufacturers are under constant pressure to import the technology to manufacture these high tech parts. This unfortunately makes no business sense given the low volumes of different makes or vehicles, which does not justify heavy investment. The OEMs would certainly welcome localisation as it will cut their costs, but given the economies of scale required to justify the cost of transfer of such technology, they have no option hut to import these parts.

The domestic auto industry is the driving engine of the LSM sector as it contributes billions of rupees to the GDP. Over the years, the industry has taken several key initiatives to support transfer of technology to Pakistan. With the help of local OEMs, parts manufacturers/vendors now have joint ventures (JVs) and technical assistance agreements (TAAs) with major component manufacturers around the world. There has also been a healthy increase in indigenization levels since July 2006 after implementation of Tariff Based System (TBS) by local OEMs, with all localisation decisions being based on cost, merit and feasibility.

Time and again, local manufactures have requested the policy-makers to formulate balanced policies which would help develop the local industry in a reasonably protected environment while offering it room for healthy competition. The auto manufacturers have been urging the government to address their problems by offering them due support so that they can bring their operations to a level that would warrant transfer of better technology and would result in shifting the paradigm for the whole industry. Whether the policy-makers will act proactively in the best interests of the auto industry - and the national economy is a question that still begs for an answer, PAMA said.

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