Imports of used cars jump 70pc in Pakistan!

[MenInG]

https://www.dawn.com/news/1385303/imports-of-used-cars-jump-70pc

KARACHI: Imports of used cars and minivans surged to 65,723 units in 2017, up almost 70 per cent from 38,676 units a year ago, latest data released by the auto industry shows.

The arrival of sport utility vehicles (SUVs) also increased 59pc to 7,758 units. Imports of pickups and vans registered a 9pc rise to 3,154 units.

The local industry maintains a record of each imported vehicle, whether new or old, through the Import General Manifest (IGM). Every imported car is logged in the customs’ IGM.

Toyota Vitz was most popular foreign vehicle in 2017

Toyota Vitz remained the most popular imported car in 2017. As many as 8,680 units arrived in 2017, up almost 40pc from a year ago. The volume of Daihatsu Mira swelled 73.1pc to 6,091 units.

Toyota Aqua imports climbed 96pc to 7,123 units from 3,622 units in 2016.

As many as 5,088 units of Suzuki Every were brought into Pakistan in 2017, up 14.6pc year-on-year. Imports of Daihatsu Hijet rose 34.5pc to 3,367 units.

The arrival of Suzuki Alto doubled to 4,158 units from 2,013 units a year ago. Suzuki WagonR imports surged 115pc to 3,574 units.

Imports of Honda Vezel and Toyota Land Cruiser stood 2,431 units and 3,301 units in 2017, up 57.5pc and 55.7pc, respectively, on an annual basis.

The overall volume of imported used vehicles grew 65pc to 76,635 units in 2017 from 46,500 units a year ago, data showed.

Low interest rates, increase in auto financing by banks and lifting of vehicles by investors for cab services like Careem and Uber boosted the imports of used cars as well as sales of locally assembled vehicles.

The government imposed regulatory duties on the purchase of foreign used vehicles in October, which largely failed to dent the overall annual import figures.

Sales of locally produced cars rose 20.4pc on a year-on-year basis to 103,432 units in July-December.

According to the Pakistan Bureau of Statistics, overall imports of cars increased 64pc to $276 million in July-December.

Pakistan Association of Automotive Parts and Accessories Manufacturers’ former chairman Aamir Allawala said the local vending industry lost estimated revenue of Rs23 billion last year.

The estimate is based on taking the average local content per vehicle of Rs300,000 on imports of 76,645 units in 2017. This is in contrast to a loss of Rs14bn in 2016 with imports of 46,500 vehicles.

He said imports of used cars were the biggest impediment to investment by existing assemblers, new entrants and part makers.

He said the government has modified the procedure for the payment of duties and taxes to curb imports of used vehicles.

“Time has come for the existing players to make prompt investment in capacity expansion, improve localisation, introduce new models and reduce delivery time to eliminate the menace of premium,” he said, adding that an increase in production will boost tax revenue and create jobs.

In the near future, Hyundai, Kia and Renault will set up plants in the country.

 

[DW44]

This needs to end immediately. Of all things, we absolutely can not be importing cars right now.

 

[Major]

This needs to end immediately. Of all things, we absolutely can not be importing cars right now.

? are you serious?

A locally assembled Mehran 2017 was costing 7-8 lakh last year. Now a Mehran doesn't even have an Airbag. Uses an old technology engine. The piece that is used to block the sun is just a card board. No AVS breaks. Its interior starts falling apart easily. THe seats themselves arn't even comfy.

The cars actual worth should be at 1 lakh to be quite serious with you.

Now a Toyota Passo 2012 which costs at 10-12 lakhs, comes with proper comfy seats. Its has airbags. AVS breaks. Good interior which doesn't fall apart. Eco technology in engine.

The reason why a Toyota Passo costs at 10-12 lakh is becuase its imported from Japan. Due to high tariffs and import cost this rate is charged.

You wana know the actual price of the Passo in Japan? 2000 US dollars. Which means 2 lakh in Pakistani ruppees.

Now a 2 lakh ruppees car offers airbags, avs breaks, good proper interior.
While a 8 lakh mehran can't even offer a quarter of that.

 

[Noman]

This needs to end immediately. Of all things, we absolutely can not be importing cars right now.

Why importing cars i bad for Pakistan? Actually hyundai And Kia are making better Car than Toyota, and Suzuki If We are talking b-segment Car. Kind og boring everybody is Pakistan have Toyota, Honda and Suzuki. 200 millions people.

 

[DW44]

? are you serious?

A locally assembled Mehran 2017 was costing 7-8 lakh last year. Now a Mehran doesn't even have an Airbag. Uses an old technology engine. The piece that is used to block the sun is just a card board. No AVS breaks. Its interior starts falling apart easily. THe seats themselves arn't even comfy.

The cars actual worth should be at 1 lakh to be quite serious with you.

Now a Toyota Passo 2012 which costs at 10-12 lakhs, comes with proper comfy seats. Its has airbags. AVS breaks. Good interior which doesn't fall apart. Eco technology in engine.

The reason why a Toyota Passo costs at 10-12 lakh is becuase its imported from Japan. Due to high tariffs and import cost this rate is charged.

You wana know the actual price of the Passo in Japan? 2000 US dollars. Which means 2 lakh in Pakistani ruppees.

Now a 2 lakh ruppees car offers airbags, avs breaks, good proper interior.
While a 8 lakh mehran can't even offer a quarter of that.

Don't care about any of that. This is a massive and completely unnecessary drain on an economy that is already teetering on the edge from years of running huge, and unsustainable trade deficits that it can't afford. At this point, consumers simply have to suck it up and buy local but since they can't be trusted to do that, there need to be government level legislation barring the importation of used vehicles and imposing crippling taxes on the import of new ones (300-400%, the kind that make would make an imported VW Golf cost the same as an E Class Mercedes). Pakistan needs to get its imports in check and expand exports big time and importing something completely unnecessary like cars is hardly the way to do that.

 

[Eagle_Eye]

Don't care about any of that. This is a massive and completely unnecessary drain on an economy that is already teetering on the edge from years of running huge, and unsustainable trade deficits that it can't afford. At this point, consumers simply have to suck it up and buy local but since they can't be trusted to do that, there need to be government level legislation barring the importation of used vehicles and imposing crippling taxes on the import of new ones (300-400%, the kind that make would make an imported VW Golf cost the same as an E Class Mercedes). Pakistan needs to get its imports in check and expand exports big time and importing something completely unnecessary like cars is hardly the way to do that.

What car do you drive .... or if you don't own one, your family ?

 

[DW44]

Why importing cars i bad for Pakistan? Actually hyundai And Kia are making better Car than Toyota, and Suzuki If We are talking b-segment Car. Kind og boring everybody is Pakistan have Toyota, Honda and Suzuki. 200 millions people.

Because it's a good that is produced locally and Pakistan is not in a position to be importing anything other than what is absolutely necessary. Consumers will have to take a hit but then aren't these the same consumers that want the country to develop? If you're throwing away precious foreign exchange importing something that is made locally, you don't get to complain about the state of the economy but knowing Pakistanis, they will find a way to complain about the government while driving their imported Rs.20 million LC.

 

[DW44]

What car do you drive .... or if you don't own one, your family ?

Honda Civic (me) and Toyota Corolla (family). Both locally made, one in Lahore, the other in Karachi.

 

[Syed1]

This needs to end immediately. Of all things, we absolutely can not be importing cars right now.

Ask Audi, BMW, VW etc to assemble in Pakistan then you won't have car imports. People are sick of buying Mehran, City, Civic or Corolla.

 

[Major]

Don't care about any of that. This is a massive and completely unnecessary drain on an economy that is already teetering on the edge from years of running huge, and unsustainable trade deficits that it can't afford. At this point, consumers simply have to suck it up and buy local but since they can't be trusted to do that, there need to be government level legislation barring the importation of used vehicles and imposing crippling taxes on the import of new ones (300-400%, the kind that make would make an imported VW Golf cost the same as an E Class Mercedes). Pakistan needs to get its imports in check and expand exports big time and importing something completely unnecessary like cars is hardly the way to do that.

you have a point from a BOP perspective.

But i'm talking from a consumer's perspective here.

As a consumer i would buy the imported car as it offers more.

but if we talk from an economist point of view, then its time the local govt bans the current locally manufactured cars that dont comply with a certain standard. ANd place maximum price limit on economical cars.

Mehran is over charging.

 

[DW44]

Ask Audi, BMW, VW etc to assemble in Pakistan then you won't have car imports. People are sick of buying Mehran, City, Civic or Corolla.

Audi, BMW and VW aren't about to setup manufacturing operations in a country where annual car sales total less than 200'000. Keep importing though and see if that ever happens. As I have said previously, producers should get precedence over consumers in a country like Pakistan even if that means the consumers get screwed over. If the people are too good for Honda and Toyotas, they can make their own cars.

 

[Slog]

Honda Civic (me) and Toyota Corolla (family). Both locally made, one in Lahore, the other in Karachi.

even these are assembled in Pakistan not manufactured here

 

[Slog]

Ask Audi, BMW, VW etc to assemble in Pakistan then you won't have car imports. People are sick of buying Mehran, City, Civic or Corolla.

For me the issue isnt even that

the problem is that the cars we get for 18-20 lacs here is available for $10,000 or less globally

We pay as much for a freaking Civic with all features as I did for a BMW 3 series in the US

 

[DW44]

even these are assembled in Pakistan not manufactured here

That's as good as it gets though. No vehicles are actually manufactured here. I'm not too crazy about the entire automotive industry being foreign owned either. Long term success in that particular industry requires local manufacturers to be globally competitive.

Japan and Korea completely shut foreign automakers from their domestic markets (Korea still does to an extent) and invested a significant amount of time, money and energy in making those industries world class (Toyota used to be a silk trading company, Kia used to make bicycle parts, Hyundai was in the construction business). China, by contrast, invited foreign investment into their auto industry and its one of the few major manufacturing industries where China remains decidedly uncompetitive. At a similar point in their development cycle, Japanese automakers were beating GM and Ford black and blue on their home turf. Hyundai and Kia would go on to do the same 20 years later. You will not, however, see anyone driving Geelys or SAICs in North America or Europe anytime soon.

 

[Major]

For me the issue isnt even that

the problem is that the cars we get for 18-20 lacs here is available for $10,000 or less globally

We pay as much for a freaking Civic with all features as I did for a BMW 3 series in the US

THIS!

cars like mehran arn't even safe to drive.

 

[King-Misbah]

Its unreasonable to tell people to buy local when the local cars are crap and expensive. The consumers should buy quality at a cheaper rate and shouldn't mind importing. This mess is the governments fault.

 

[DW44]

Its unreasonable to tell people to buy local when the local cars are crap and expensive. The consumers should buy quality at a cheaper rate and shouldn't mind importing. This mess is the governments fault.

Its a developing country and making the consumers buy crappy products made locally comes with the territory. Short term pain for long term gain and all that jazz. If you keep importing, local manufacturers won't necessarily improve, they'd be driven out of business while you bleed precious foreign exchange. In South Korea in the 1960s and 70s, people were encouraged by authorities to report anyone they saw smoking foreign cigarettes, never mind higher value added imports.

 

[Pakistanian]

Honda Civic (me) and Toyota Corolla (family). Both locally made, one in Lahore, the other in Karachi.

People shouldn't be forced to buy ugly basic cars like hondas and toyotas. You need to offer the consumer an alternative or you can't blame for spending their money on cars they want. That's the free market, you can't force consumers to buy junk cause you want to balance the tade deficit.

 

[Syed1]

Its a developing country and making the consumers buy crappy products made locally comes with the territory. Short term pain for long term gain and all that jazz. If you keep importing, local manufacturers won't necessarily improve, they'd be driven out of business while you bleed precious foreign exchange. In South Korea in the 1960s and 70s, people were encouraged by authorities to report anyone they saw smoking foreign cigarettes, never mind higher value added imports.

Which local manufacturer has stepped up and taken upon themselves to provide the consumer a cheaper and better alternative to the garbage Mehran?

 

[Syed1]

Freaking Mehran has the same design as the 1970s and we are concerned about importing cars. Heck we should allow free import of cars this will force these monopolies to stop hoarding money and actually improve their products.


Why is it that Suzuki, Honda, Toyota always have their profits grow by a substantial amount year on year even when the economy is almost stagnant.

 

[DW44]

Which local manufacturer has stepped up and taken upon themselves to provide the consumer a cheaper and better alternative to the garbage Mehran?

So fix it. Force them to be more competitive by making their incentives conditional on improving their products. Manufacturers don't step up off their own accord, they have to be forced into doing so by government policy. I keep bringing up Korea because in them there's a textbook model to follow for all developing countries seeking to develop.

Making up for one policy failure (letting 'local' manufacturers run roughshod) with an even bigger one (allowing imports) is not how mistakes are fixed, it's how they're compounded.

 

[Syed1]

So fix it. Force them to be more competitive by making their incentives conditional on improving their products. Manufacturers don't step up off their own accord, they have to be forced into doing so by government policy. I keep bringing up Korea because in them there's a textbook model to follow for all developing countries seeking to develop.

Making up for one policy failure (letting 'local' manufacturers run roughshod) with an even bigger one (allowing imports) is not how mistakes are fixed, it's how they're compounded.

Let me give you an example. A buddy of mine was an electrical engineer at Honda Atlas. He said the company got tax incentives from the government for R&D...... you know what R&D they did? Changed colors of wire, moved stuff around. Minor house keeping changes.

This is the state of the country, unfortunately..... there is a reason why Mehran is still on the roads.

 

[shortbread]

Because it's a good that is produced locally and Pakistan is not in a position to be importing anything other than what is absolutely necessary. Consumers will have to take a hit but then aren't these the same consumers that want the country to develop? If you're throwing away precious foreign exchange importing something that is made locally, you don't get to complain about the state of the economy but knowing Pakistanis, they will find a way to complain about the government while driving their imported Rs.20 million LC.

The only thing keeping local manufacturers honest is the used car imports. If that is curbed the prices of the locally manufactured cars will simply go up and people who save enough to purchase such a big ticket item will be taken for a ride. The Mehran was discontinued 3 decades ago in international markets, why are they still continuing to produce it when they know fully well a newer model would be easily consumed by the market.

Why aren't local manufacturers producing newer, value for money, more appealing models that would entice people into buying local cars than importing used ones? Why cant the onus be on the seller rather than the buyer?

 

[carbon11]

Theres no need for local assemblers

Simply allowing imported vehicles without the huge tax duty will ensure manufacturers around the world will set up dealership showrooms and sell their vehicles . 1000s of brand new and used bmws and mercs are sold in uk yet BMW Mercedes don't have a car assembling or manufacturing plant in uk

Only BMW own mini

 

[DW44]

A great read for those arguing that poor quality of local products is a valid reason to let imports in:

Once upon a time, the leading car maker of a developing country exported its first passenger cars to the US. Up to that day, the little company had only made shoddy products—poor copies of quality items made by richer countries. The car was nothing too sophisticated—just a cheap subcompact (one could have called it ‘four wheels and an ashtray’). But it was a big moment for the country and its exporters felt proud.

Unfortunately, the product failed. Most thought the little car looked lousy and savvy buyers were reluctant to spend serious money on a family car that came from a place where only second-rate products were made.The car had to be withdrawn from the US market. This disaster led to a major debate among the country’s citizens.

Many argued that the company should have stuck to its original business of making simple textile machinery. After all, the country’s biggest export item was silk. If the company could not make good cars after 25 years of trying, there was no future for it. The government had given the carmaker every opportunity to succeed. It had ensured high profits for it at home through high tariffs and draconian controls on foreign investment in the car industry. Fewer than ten years ago, it even gave public money to save the company from imminent bankruptcy. So, the critics argued, foreign cars should now be let in freely and foreign carmakers, who had been kicked out 20 years before, allowed to set up shop again.

Others disagreed. They argued that no country had got anywhere without developing ‘serious’ industries like automobile production. They just needed more time to make cars that appealed to everyone.

The year was 1958 and the country was, in fact, Japan. The company was Toyota, and the car was called the Toyopet. Toyota started out as a manufacturer of textile machinery (Toyoda Automatic Loom) and moved into car production in 1933. The Japanese government kicked out General Motors and Ford in 1939 and bailed out Toyota with money from the central bank (Bank of Japan) in 1949. Today, Japanese cars are considered as ‘natural’ as Scottish salmon or French wine, but fewer than 50 years ago,most people, including many Japanese, thought the Japanese car industry simply should not exist.

This is how it's done, not by throwing a tantrum and, in true Pakistani fashion, demanding "fori relief" (immediate relief) by allowing imports. People don't understand that this is a process that takes decades and Pakistan is barely at the starting line. Action for the sake of action is not what's needed, calculated, targeted and precise action with clear long term goals is what's needed. For that, you need a government whose first priority is the economy and we won't get that because our people's first priority isn't the economy so by default they won't elect a government that focuses first on economic progress.

Source for quoted excerpt: Bad Samaritans - Ha Joon Chang (Bloomsbury Press)

 

[Noman]

A great read for those arguing that poor quality of local products is a valid reason to let imports in:



This is how it's done, not by throwing a tantrum and, in true Pakistani fashion, demanding "fori relief" (immediate relief) by allowing imports. People don't understand that this is a process that takes decades and Pakistan is barely at the starting line. Action for the sake of action is not what's needed, calculated, targeted and precise action with clear long term goals is what's needed. For that, you need a government whose first priority is the economy and we won't get that because our people's first priority isn't the economy so by default they won't elect a government that focuses first on economic progress.

Source for quoted excerpt: Bad Samaritans - Ha Joon Chang (Bloomsbury Press)

Pakistani Will never ever be able to make a Car Like Toyota. I believe in a free market and that do We not have because of Toyota, Honda, and Suzuki.

 

[DW44]

Pakistani Will never ever be able to make a Car Like Toyota. I believe in a free market and that do We not have because of Toyota, Honda, and Suzuki.

That is exactly what was said about the "lazy" Japanese and the "fat and lazy" Germans before them. Both are powerhouses today.The Koreans were literally laughed out of every donor agency's office and every capital and embassy when they sought funding for setting up their steel industry. They ended up developing the most efficient steelmaker in the world bar none (POSCO) and icing on the cake, that steelmaker also controls one of the finest technical universities on planet earth. Free markets have a way of screwing over developing countries so to that, thanks but no thanks.

 

[waqar goraya]

DW believes way too much in protectionism, that it will enhance economic and industrial growth rate. Yes, protectionism will help the economy but for that innovation through quality education and related business laws are equally important. Similarly, monopoly is also a cancer for equitable economic growth. And in local car manufacturing's case these are not even indigenous in a true sense as they assemble parts originally made abroad and they have been exploiting consumers and enjoying monopoly over this business.

 

[Syed1]

A great read for those arguing that poor quality of local products is a valid reason to let imports in:



This is how it's done, not by throwing a tantrum and, in true Pakistani fashion, demanding "fori relief" (immediate relief) by allowing imports. People don't understand that this is a process that takes decades and Pakistan is barely at the starting line. Action for the sake of action is not what's needed, calculated, targeted and precise action with clear long term goals is what's needed. For that, you need a government whose first priority is the economy and we won't get that because our people's first priority isn't the economy so by default they won't elect a government that focuses first on economic progress.

Source for quoted excerpt: Bad Samaritans - Ha Joon Chang (Bloomsbury Press)

That is a good read.... but despite 70 years of independence and literally hundreds of colleges and universities churning out copy paste engineers our engineering capability is very limited at best. It's not that the people are not capable, or willing to work. It's just the business environment, government policies and cultural aspects have prevented any Tom, Dick and Harry from venturing into investing a product like a new car.


Also for every Honda or Toyota that made it, there were hundreds of companies across the world that tried and failed. It's not as simple as following the Japanese model for success. Heck China has such a big engineering base and all their manufacturers do is copy Japanese/American/European designs and sell it under their brand name for 1/5th of the price.

 

[waqar goraya]

Similarly, in Pakistan's case politics is a bigger hurdle to progress which includes internal disintegration, foreign interventions, wars etc. Policies come next after political stability.

 

[DW44]

DW believes way too much in protectionism, that it will enhance economic and industrial growth rate. Yes, protectionism will help the economy but for that innovation through quality education and related business laws are equally important. Similarly, monopoly is also a cancer for equitable economic growth. And in local car manufacturing's case these are not even indigenous in a true sense as they assemble parts originally made abroad and they have been exploiting consumers and enjoying monopoly over this business.

I believe in the scientific method (not the same as science). Protecting infant industries is a necessary first step towards building globally competitive industries. The case of automotive industry in Korea/Japan (protectionist) and China (foreign investment led) is a good example here.

Innovation doesn't come into the picture until you're past the copy-paste growth phase and Pakistan isn't anywhere near that nor is it likely to go there because predominantly Islamic countries get stuck in a middle income trap once they're past the copy paste stage into the innovation led one (that stage only works for relatively open societies). Turkey and Malaysia both are in such a situation (only Muslim majority states to complete the copy paste growth stage).

 

[waqar goraya]

I believe in the scientific method (not the same as science). Protecting infant industries is a necessary first step towards building globally competitive industries. The case of automotive industry in Korea/Japan (protectionist) and China (foreign investment led) is a good example here.

Innovation doesn't come into the picture until you're past the copy-paste growth phase and Pakistan isn't anywhere near that nor is it likely to go there because predominantly Islamic countries get stuck in a middle income trap once they're past the copy paste stage into the innovation led one (that stage only works for relatively open societies). Turkey and Malaysia both are in such a situation (only Muslim majority states to complete the copy paste growth stage).

Economics is not an exact science. I don't know how many more decades you want for reaching and passing copy pasting stage. Copy pasting also needs skill and education.
Pakistan's economic woes are not limited to protectionism.

Regardless, in fact huge taxes on these imported cars show that the industry is being protested. The taxes outweigh the original cost. In this way the government is doing its best to give an edge to local industry but they still overcharge and provide an inferior quality.

 

[DW44]

Economics is not an exact science. I don't know how many more decades you want for reaching and passing copy pasting stage. Copy pasting also needs skill and education.
Pakistan's economic woes are not limited to protectionism.

It is, to the extent that certain models can be shown to produce certain results over a large number of instances e.g. liberalizing trade prematurely, except in exceptional circumstances for small, highly specialized, economies like Hong Kong, almost invariably results in premature deindustrialization. Pakistan is essentially at year zero in its development cycle because whatever development has taken place in the last 70 years has been unplanned, haphazard and ineffective. Pakistan has never seriously attempted to industrialize on a scale that befits a country its size and some of most impactful policies have been of the kind that impedes development, not aids it. Signing an FTA with China, for instance, is responsible for the bulk of deindustrialization in Pakistan over the last decade and it was significant enough in its impact that it lowered the ceiling for Pakistan's economy for years to come.

Regardless, in fact huge taxes on these imported cars show that the industry is being protested. The taxes outweigh the original cost. In this way the government is doing its best to give an edge to local industry but they still overcharge and provide an inferior quality.

Protecting industries is not a solution in and off itself, protecting industries should serve a purpose. In Pakistan we have offered the carrot but never utilized the stick. Samsung didn't turn into a $320 billion behemoth because the Korean government protected it's fish selling business, it became one because the Korean government pretty much forced them to move up the value chain with all subsidies and protection conditional on meeting export targets and meeting other performance goals. Pakistan doesn't do any of that and simply protecting industry without direction results in cartelization which is what happened with Pakistan's auto industry.

 

[DW44]

That is a good read.... but despite 70 years of independence and literally hundreds of colleges and universities churning out copy paste engineers our engineering capability is very limited at best. It's not that the people are not capable, or willing to work. It's just the business environment, government policies and cultural aspects have prevented any Tom, Dick and Harry from venturing into investing a product like a new car.

As previously stated to Waqar Goraya, we're essentially at year zero so the past 70 years are meaningless. We could complain about lack of progress in 70 years if we had actually been pursuing progress. We were not and we still aren't. Producing engineers is meaningless if they're not being put to good use and that's a government failure and, by extension, a failure of the people who support military dictatorships and in times of democracy, third class parties who're about as economically literate as my 2 year old cat. They do so because their priority isn't the economy, it's their social agenda and when the economy takes a backseat to social issues, you end up with Pakistan. Putting those engineers to use requires well crafted government policy (as well as cash) targeted specifically at expanding manufacturing. Pakistan has never had that. Instead Pakistan has an FTA with China that makes it extremely difficult to actually make such policies in the future.

Also for every Honda or Toyota that made it, there were hundreds of companies across the world that tried and failed. It's not as simple as following the Japanese model for success. Heck China has such a big engineering base and all their manufacturers do is copy Japanese/American/European designs and sell it under their brand name for 1/5th of the price.

The difference between the Hondas and those that failed is that the Hondas and Hyundais are all concentrated in countries that followed a very specific set of policies. While there were failures there too, all of these countries (Korea, Japan, France, US, Germany, Italy, Sweden and the UK) had multiple globally competitive automakers because at some point they all had policies specifically designed to achieve that. In places like China - where they have joint ventures with we due to liberal foreign investment rules and the largest domestic market which resulted in their manufacturers never developing their own capabilities - or Pakistan (remember Adam?) there were few such policies so while failures existed everywhere, successful clusters were and still are only concentrated in a handful of countries (UK no longer an auto powerhouse btw).

 

[Slog]

Protectionism has generally been an admission of failure

Im for free market

 

[carbon11]

Protectionism in Pakistan means protecting industrities and rackets / mafia that are run by elite families who suck the country dry .

I may be wrong but the atlas group is owned by shirazi family whose members were involved in the pedo racket in kasur

 

[DW44]

Protectionism has generally been an admission of failure

Im for free market

And yet every developed economy today (bar HK, Netherlands and Switzerland) employed it from the beginning of their industrialization process until they were competitive with the most productive economy of the time, from Britain in the 17th and 18th century who were the first to perfect the model, to the US in the 19th century until the 1950s when they had already been the predominant economic power in the world for 60 years, to Germany in the 1870s all the way to Japan in the 50s, Asian tigers in the 70s and 80s, to China now.

While the specifics have been tailored for each country's unique circumstances and time period, the core model has remained the same from Britain to China over the centuries and it invariably involved protecting domestic manufacturers for prolonged periods with corruption rampant, the most egregious case being that of the US (where public offices where routinely auctioned) who built their economy behind literally the highest wall of protections and tarrifs in modern history.

 

[Syed1]

Countries find their own paths. For example take Canada. Canada has an indigenous airplane manufacturer, Bombardier. They have an indigenous jet engine manufacturer, Pratt & Whitney. They have big manufacturing plants of Boeing and other smaller airplane companies. Canadarm is a Canadian invention... I can go on and on.


However, Canada does not have an indigenous car manufacturer.

 

[Syed1]

What Pakistan needs is a government sanctioned project to build an affordable car from A to Z, down to the smallest nut and bolt. It could be a public-private partnership with the government providing the funds and the private partner(s) providing expertise and engineering skills.


However, this is not Pakistani mentality. Pakistani mentality is "jaisa chal raha hai waisa chalnay do"

 

[waqar goraya]

It is, to the extent that certain models can be shown to produce certain results over a large number of instances e.g. liberalizing trade prematurely, except in exceptional circumstances for small, highly specialized, economies like Hong Kong, almost invariably results in premature deindustrialization. Pakistan is essentially at year zero in its development cycle because whatever development has taken place in the last 70 years has been unplanned, haphazard and ineffective. Pakistan has never seriously attempted to industrialize on a scale that befits a country its size and some of most impactful policies have been of the kind that impedes development, not aids it. Signing an FTA with China, for instance, is responsible for the bulk of deindustrialization in Pakistan over the last decade and it was significant enough in its impact that it lowered the ceiling for Pakistan's economy for years to come.



Protecting industries is not a solution in and off itself, protecting industries should serve a purpose. In Pakistan we have offered the carrot but never utilized the stick. Samsung didn't turn into a $320 billion behemoth because the Korean government protected it's fish selling business, it became one because the Korean government pretty much forced them to move up the value chain with all subsidies and protection conditional on meeting export targets and meeting other performance goals. Pakistan doesn't do any of that and simply protecting industry without direction results in cartelization which is what happened with Pakistan's auto industry.

So, this post quite clearly states that protectionism is only one aspect of building a robust local auto industry. Similarly, when your politics and consequently economics has been on the ventilator for much of the history it is unimaginable to build local auto industry. This auto industry can't excel in this general political and economic system.
Countries have progressed within few decades in this information age, you don't need half a century anymore for transfer, adoption and further innovation in that.
Those countries worked on higher education as well to enhance industrial growth as well.
No doubt, FTA with China has not helped few industries but given our precarious political, economic and energy situation we would have not made any tangible progress at all. Government is now trying to bring more balance to that agreement , lets see how much they can get from China.

 

[waqar goraya]

Countries find their own paths. For example take Canada. Canada has an indigenous airplane manufacturer, Bombardier. They have an indigenous jet engine manufacturer, Pratt & Whitney. They have big manufacturing plants of Boeing and other smaller airplane companies. Canadarm is a Canadian invention... I can go on and on.


However, Canada does not have an indigenous car manufacturer.

That's also true. It is not necessary to achieve excellence in every segment of manufacturing.

 

[DW44]

That's also true. It is not necessary to achieve excellence in every segment of manufacturing.

It is, however, necessary to achieve success in manufacturing to have long term economic success and the range of industries you need to he successful in grows as the size of your population does e.g. a country with a population of more than 100 million needs to be active across almost all major sectors and automotive is a particularly important one.

 

[waqar goraya]

And yet every developed economy today (bar HK, Netherlands and Switzerland) employed it from the beginning of their industrialization process until they were competitive with the most productive economy of the time, from Britain in the 17th and 18th century who were the first to perfect the model, to the US in the 19th century until the 1950s when they had already been the predominant economic power in the world for 60 years, to Germany in the 1870s all the way to Japan in the 50s, Asian tigers in the 70s and 80s, to China now.

While the specifics have been tailored for each country's unique circumstances and time period, the core model has remained the same from Britain to China over the centuries and it invariably involved protecting domestic manufacturers for prolonged periods with corruption rampant, the most egregious case being that of the US (where public offices where routinely auctioned) who built their economy behind literally the highest wall of protections and tarrifs in modern history.

Time and again you mention the example of US as deeply corrupt system, forgetting their separation of powers idea which keeps some check and balances that ensures a certain level of transparency. The other notable thing is vast resources of that country. America had resources vaster and more varied than any other people except possibly the Russians. In spite of corruption their leaders did not compromised on minimum standards. In third world countries like Pakistan leaders are not only corrupt to the core but also very unimaginative and poor decision makers.

 

[King-Misbah]

What Pakistan can do if sincere is to hire the top people around the world or even buy a medicore car brand. This can be any average car brand; use it as a learning process and then use it as a base to launch its own car brand.

 

[DW44]

Time and again you mention the example of US as deeply corrupt system, forgetting their separation of powers idea which keeps some check and balances that ensures a certain level of transparency. The other notable thing is vast resources of that country. America had resources vaster and more varied than any other people except possibly the Russians. In spite of corruption their leaders did not compromised on minimum standards. In third world countries like Pakistan leaders are not only corrupt to the core but also very unimaginative and poor decision makers.

Like I said, tailored for their unique circumstances but following the same core principles. Japan had no resources, Britain was a semi monarchy, Germany was barred from importing several value added products that they could then counterfeit. Your premise that the corruption or challenges in Pakistan are unique or somehow more severe than what other countries have overcome has no basis in fact. I doubt you can make that claim with any sort of certainty or authority. Herein lies the problem with Pakistan though, this false perception that the hurdles to Pakistan's development are somehow greater than those of other countries at a similar point in their development and inherently insurmountable.

Edit: One more thing I should add is that while the separation of powers was there, the laws were as effective there as they are in any third world country today. Having laws on paper and them actually meaning something are two different things.

 

[Syed1]

Time and again you mention the example of US as deeply corrupt system, forgetting their separation of powers idea which keeps some check and balances that ensures a certain level of transparency. The other notable thing is vast resources of that country. America had resources vaster and more varied than any other people except possibly the Russians. In spite of corruption their leaders did not compromised on minimum standards. In third world countries like Pakistan leaders are not only corrupt to the core but also very unimaginative and poor decision makers.

On top of that I have serious doubts that half our politicians even know how to work a computer or send a simple email. For more imaginative decision making we need younger people to be in office

 

[Pakpak]

On top of that I have serious doubts that half our politicians even know how to work a computer or send a simple email. For more imaginative decision making we need younger people to be in office

Our law minister didn't even know what Calibiri font was, he thought it was a person.

 

[DW44]

Thread has been derailed enough but even if we disregard the development side of things, imports of vehicles still need to he halted immediately in light of the near term economic health. The gap between imports and exports needs to be closed and for that, imports need to slow down and be limited to essentials only, not something as discretionary as cars which should quay as luxury goods.

 

[waqar goraya]

Like I said, tailored for their unique circumstances but following the same core principles. Japan had no resources, Britain was a semi monarchy, Germany was barred from importing several value added products that they could then counterfeit. Your premise that the corruption or challenges in Pakistan are unique or somehow more severe than what other countries have overcome has no basis in fact. I doubt you can make that claim with any sort of certainty or authority. Herein lies the problem with Pakistan though, this false perception that the hurdles to Pakistan's development are somehow greater than those of other countries at a similar point in their development and inherently insurmountable.

Edit: One more thing I should add is that while the separation of powers was there, the laws were as effective there as they are in any third world country today. Having laws on paper and them actually meaning something are two different things.

Never claimed that circumstances are the same everywhere in terms of resources, politics and its systems or economic conditions. Malaysia, Korea, China made progress with authoritarian regimes.
But yes, there is a difference in severity of corruption and political acumen of leadership. A nation's resources don't run dry with corruption but when its extreme form leads to pathetic justice system and polity it can't help economics. This is a simple math that if there is less corruption then people will get better access to education, health and infrastructure. With America i have explained my understanding but can you say with authority that all the leadership which transformed countries in the later half of the 20th century were as corrupt and inapt as Pakistan's? Were the rulers of China, Korea, Japan, Malaysia, Germany etc as corrupt as are the leaders of some of the third world countries.

Let me remind you that i don't believe that ending corruption is the panacea for everything but it does have a significance impact. Because corruption not only leaks public money but also prompts policies, decision making , laws and practices which harm governance. As i believe the journey towards progress starts from politics and not economics.

 

[waqar goraya]

Thread has been derailed enough but even if we disregard the development side of things, imports of vehicles still need to he halted immediately in light of the near term economic health. The gap between imports and exports needs to be closed and for that, imports need to slow down and be limited to essentials only, not something as discretionary as cars which should quay as luxury goods.

What do you suggest? A complete ban or further increase in taxes?

 

[DW44]

What do you suggest? A complete ban or further increase in taxes?

Ban on imports of used vehicles. Taxes on new ones are high enough ($100,000 baseline Accord/Camry ROFL) so leave them as is. Allow small quotas for test run imports of models not produced domestically at lower tax rates (500 units a year for five years maybe with a limit on how many models a company can claim such exemptions for. Lets say 3.) If they're successful, incentivize local production.

 

[Eagle_Eye]

So people who are producing cars that would be deemed unsafe in most part of the world will somehow magically compete to produce cars that would be wanted elsewhere in the world the government incentivise them and ban cars from outside ..... how about the government first start with regulation and enforcement and then assess the performance of the local manufacturers

 

[King-Misbah]

Can someone please tell me of why the likes of Toyota, Suzuki and Honda have such a high market share in the Pakistani market? Is it due to deals with the government?

 

[Couch Cricketer]

I agree with DW44 that local manufacturing should be protected but at the same time no government minister or diplomat should be allowed to import or use foreign cars. India ministers for years used to ride in Maruti's but our ministers have always travelled in bmw and mercs.

 

[carbon11]

I agree with DW44 that local manufacturing should be protected but at the same time no government minister or diplomat should be allowed to import or use foreign cars. India ministers for years used to ride in Maruti's but our ministers have always travelled in bmw and mercs.

One rule for the corrupt elites another rule for the poor masses who have no choice but to travel in death traps like the Suzuki mehran and Suzuki carry box

 

[DW44]

Can someone please tell me of why the likes of Toyota, Suzuki and Honda have such a high market share in the Pakistani market? Is it due to deals with the government?

First mover advantage. They were the first to setup assembly lines here. Pakistan's auto market is minuscule so three brands were enough to saturate it and later entrants were quickly driven out of business due to too much competition in an extremely small market.

 

[Noman]

First mover advantage. They were the first to setup assembly lines here. Pakistan's auto market is minuscule so three brands were enough to saturate it and later entrants were quickly driven out of business due to too much competition in an extremely small market.

How is Pakistan a small market? We are 200 million people and in 2050 we Will be 300 millions people. There are getting so many cars in the City? I refuse to believe We are a small market.

 

[DW44]

How is Pakistan a small market? We are 200 million people and in 2050 we Will be 300 millions people. There are getting so many cars in the City? I refuse to believe We are a small market.

Population is meaningless if they don't have the minimum required purchasing power. Pakistan is big but it's also dirt poor. Our auto market tops out at less than 300'000 units moved per year which is a joke for major automakers. Pakistan has a big population but a small economy and, therefore, a small market. For comparison, Spain and Slovakia (populations 40 mil and 5 mil) produce 5 to 10 times as many vehicles as Pakistan.

 

[saeedhk]

Pakistan's auto market is an absolutely pathetic. I am appalled to see paying 10 lacs for a two-bit Toyota 2D manufactured in 2010. In Hong Kong. you can buy the same car for USD$2000-2500.

There is a serious lack of competition and it is alleged the three big manufacturers,Toyota, Honda and Suzuki, have a deal with the government under which no other auto maker is given a free hand to enter Pakistan's market.The big three automakers provide sub-standard vehicles at exorbitant prices. Pathetic!

 

[Syed1]

Pakistan's auto market is an absolutely pathetic. I am appalled to see paying 10 lacs for a two-bit Toyota 2D manufactured in 2010. In Hong Kong. you can buy the same car for USD$2000-2500.

There is a serious lack of competition and it is alleged the three big manufacturers,Toyota, Honda and Suzuki, have a deal with the government under which no other auto maker is given a free hand to enter Pakistan's market.The big three automakers provide sub-standard vehicles at exorbitant prices. Pathetic!

I had a thread on it once where I compared the same Honda Civic price in Canada and Pakistan, with the same model number and features and the price difference was massive. Even though the build quality of the car is inferior in Pakistan.

These Japanese are conducting daylight robbery and nobody in our government seems to car about it.

 

[Reddy]

This needs to end immediately. Of all things, we absolutely can not be importing cars right now.

Ask Audi, BMW, VW etc to assemble in Pakistan then you won't have car imports. People are sick of buying Mehran, City, Civic or Corolla.

Protectionism has generally been an admission of failure

Im for free market

Protectionism in Pakistan means protecting industrities and rackets / mafia that are run by elite families who suck the country dry .

I may be wrong but the atlas group is owned by shirazi family whose members were involved in the pedo racket in kasur

What do you suggest? A complete ban or further increase in taxes?

BMW, Audi, Mercedes started Indian factories only after India made it very very expensive to import these cars, after import duty and other cess,taxes it is nearly car price + 150% tax for imports. And i am talking about new cars here, it is nearly impossible to import used cars, the rules and permissions make it so.

So, Pakistan can also follow India's footsteps, first the Government need to make imports not worthwhile then you will get many factories, Every major car brand has factories in India now and all the companies right from a low end Suzuki to Mercedes Maybach have early launch in India, earlier we used to get these cars late like in Pakistan.

These Ferraris, Lamborghini, Maseratis, Porsches, Rolls Royce etc are too niche and they have only dealerships, No Indian factory, but it's ok, people with 500 crores or more net worth can easily pay 150%-200% taxed showroom price.

 

[waqar goraya]

BMW, Audi, Mercedes started Indian factories only after India made it very very expensive to import these cars, after import duty and other cess,taxes it is nearly car price + 150% tax for imports. And i am talking about new cars here, it is nearly impossible to import used cars, the rules and permissions make it so.

So, Pakistan can also follow India's footsteps, first the Government need to make imports not worthwhile then you will get many factories, Every major car brand has factories in India now and all the companies right from a low end Suzuki to Mercedes Maybach have early launch in India, earlier we used to get these cars late like in Pakistan.

These Ferraris, Lamborghini, Maseratis, Porsches, Rolls Royce etc are too niche and they have only dealerships, No Indian factory, but it's ok, people with 500 crores or more net worth can easily pay 150%-200% taxed showroom price.

We do have taxes which are more than the actual price, it is the over priced yet poorly assembled local vehicles which make the imported cars attractive. Despite so many taxes people import used cars which are often 2-4 years old because locally manufactured ones are way too expensive with inferior quality.

 

[Syed1]

We do have taxes which are more than the actual price, it is the over priced yet poorly assembled local vehicles which make the imported cars attractive. Despite so many taxes people import used cars which are often 2-4 years old because locally manufactured ones are way too expensive with inferior quality.

This time I went to Karachi... and Audis were so common I thought Audi had set up a manufacturing plant or something.

People are buying 4-5 year old German cars from places like Dubai because they are still better than made in Pakistan Japanese cars.

 

[R3verse Swing]

There is nothing wrong in importing goods; it builds up trade and the economy.

 

[Reddy]

We do have taxes which are more than the actual price, it is the over priced yet poorly assembled local vehicles which make the imported cars attractive. Despite so many taxes people import used cars which are often 2-4 years old because locally manufactured ones are way too expensive with inferior quality.

This time I went to Karachi... and Audis were so common I thought Audi had set up a manufacturing plant or something.

People are buying 4-5 year old German cars from places like Dubai because they are still better than made in Pakistan Japanese cars.

If that is the case then allow import of cars from India, people can pick up cars and bikes from showrooms in Indian Punjab

The Pakistani car market at least has some decent options but two wheeler market can really benefit a lot from Indian imports.