The Automotive Parts Sector In Pakistan Export Performance - TRTA i

2.7 Exports/imports of autopartsThe trade deficit in the autoparts sector stands at just over US$400 million, with imports ofUS$432 million and exports of US$24 million in 2005.There is consensus in the industry that, in order to reduce the deficit, the Government must puta complete ban on the import of second-hand completely built-up unit (CBU) vehicles thathave flooded the local market. The import of second-hand CBU vehicles are not only hurtinglocal assemblers but also badly damaging the autoparts industry.2.8 Price structure of the industryThose suppliers who want to do business with the OEM industry must have an open bookstructure. A complete breakdown of all cost price elements has to be handed over. For this tooccur, one must consider that for a long-term agreement prices have to be reduced all the time.Where parts/components are labour-intensive, Pakistani automotive suppliers have acompetitive edge towards the high labour cost countries. The industry, as such, does not allowhigh profits in spite of the high risks involved in investment in R&D and tooling costs.For the AM, other price structures are applicable. Depending on the selection of thedistribution channel, separate price policies/strategies have to be developed.2.9 Annual turnover and some projectionsCar manufacturers have investment plans to enhance their production capacities to 516,000vehicles by 2011-12 and employment opportunities for 13,900 workers. Honda will increase itsinvestment to PKR 13.5 billion to achieve its projected production of 100,000 units. Suzuki isexpanding its production capacity to 250,000 units with an additional investment ofPKR 8 billion. The Dewan Mushtaq Group has earmarked an additional investment ofPKR 1.3 billion and has projected production of 48,000 vehicles, up from the existing level of25,000 units. The Indus Motor Company (Toyota) has projected to invest PKR 10 billion toincrease its production capacities to 100,000 vehicles from 50,000 units at present. Similarly,all other assemblers as well as autoparts manufacturers are aggressively investing in thecountry.The automobile sector of Pakistan comprises 93 assemblers/manufacturing units.Table 2.4 Number of assembler/manufacturing units in automobile sector of PakistanType of automobileNo. of assemblers/manufacturing unitsCars 7Tractors 6Trucks 13Light commercial vehicles 6Two wheelers 49Auto rickshaws 12Total 93Source: Engineering Development Board, Performance Review 2005-06, www.engineeringpakistan.comInternational Trade Centre Page 21