By: Ali Raza Behrani

Before purchasing a car what a customer need from a car?Drive quality Fuel efficiencyComfortValue for money and safety. More DurableLower on the list of considerations Features and Accessories Car designResale valueCost of ownershipAfter sales servicebetter interior components and electrical parts

Problems in Pakistan regarding Automobile Industry?1. Locally assembled carsi. quality of local carsii. Overpricediii. Low fuel economyiv. Occasionallyv. Substandard parts.

Japanese International Cooperation Agency (JICA) for the Engineering Development Board (EDB): Survey report in 2011

• General perception among consumers in Pakistan was that• “used cars imported from Japan [are of a] better quality than new

[locally assembled] cars, together with [a] price advantage.”

Psychology used in the new cars• More style• Less substance:• Variations in the modelsWhy?In order to attract the customers

 Khalid Rashid: A Auto dealer

• “Used cars are not a threat; the problem is that manufacturers do not listen to customers, they are not willing to face reality.”

• If that happens continuously than

• many people prefer to buy a Japanese assembled used car

Government role

• lowered the age limit of used cars that can be imported into Pakistan.• from five to three-year-old cars.• In result Automobile car’s became more expensive.• local auto industry is unwilling or unable to produce cars that are in

keeping with customer needs and demands• The result is that the consumer is the ultimate loser.

Video• https://www.youtube.com/watch?v=k4-XsZiSSAI

•The local industry produced just over 116,000 passenger cars (800cc to 3000cc) in FY 2013-14 and sold just over 118,000 cars in the same period (a mere 0.6% increase over last year).

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

Pak Suzuki

What about Price?• http://www.paksuzuki.com.pk/automobile/pages/allpricesautomobile

.aspx• Can middle class Pakistanis afford a vehicle ?

What are the Economic factors?• Macro-Economics factors• low GDP growth• higher car prices due to the depreciation of the rupee• wealth disparities (reflected in the fact that 49% cars sold in 2013-14

were priced from Rs 1.2 million upward)• lack of affordable car financing schemes as a result of high interest

rates.

What are the some other factors ? Local Cars

• New ones• lack of choices in every engine size• customer perception about locally

assembled cars is not good regarding Smaller engines• not good value for money after sale• Less affordable• 1000cc and below category are the

Mehran, the Cultus and more recently the Wagon R.

Japnese cars

• Used ones• More available choices in every

engine size• Perception about Japnese used cars

is satisfactory regarding Smaller engines• Good value for money after sale• More affordable• Mostly from 660cc to 1000cc Cars

are imported

VERSUS

What are the main reasons for the sales dip?1. Variations in Small Engines2. Prices of the Cars3. Used car imports: Mostly from Japan4. Government policy’s regarding Import of the carsi. Three year old car’s age limit ii. Five year old car’s age limit

Prices in the Other Countries?• Similar vehicles are 30 to 50% cheaper in • India, Thailand and Vietna• Why?• Because Local industry is unable to produce any electrical or

mechanical components locally• Because the manufacturing process and in the fact that the local auto

industry functions like a cartel(1An association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition).

Automobile Industry