Reasons For Slow Growth of Automobile Industry in Pakistan
The automobile industry is amongst the most powerful industries in the entire world, not only affecting not just the economies of individual countries but the societies as a whole. It produces billions of dollars each year in world-wide revenue, provides countless jobs for countless individuals, and gives the foundation for a myriad of other related service and support industries. Given these fundamentals, it is no wonder that Pakistan is interested in establishing such an automobile industry of its own. Let’s take a look at the emerging automobile industry of Pakistan.
The automobile industry of Pakistan is the product of numerous synergistic developments. The advent of the automobile industry of Pakistan has triggered off a chain reaction of developments in other sectors, including the construction industry, services, infrastructure, and the overall social and economic structure of Pakistan. All these developments are taking place against a backdrop of continuing instability in the Middle East. In fact, there have been instances of middle-eastern countries like Iraq, Saudi Arabia, and the UAE receiving advanced auto manufacturing equipment from Pakistan in order to develop their own automobile industries. Needless to say, this has created a situation where the once “out of reach” eastern Asian countries have become serious contenders for automotive production, in a process that could ultimately culminate in greater global acceptance of automobile technology.
The automobile industry in Pakistan has seen numerous advancements over the years. However, what has actually mattered most is that over the last decade or so, the pace of change has accelerated dramatically. What was just a trickle of change a decade ago has now become a hurricane of change. In fact, it has accelerated so much that Pakistan is fast approaching the developed world in terms of new model and production of cars. There is no question that the advent of Pakistani car manufacturers has turned the auto industry of Pakistan around.
Now, let us take a look at the development story of the automobile industry in Pakistan. First and foremost, the major driving force behind the emergence of Pakistan car manufacturers has been the need for affordable automobiles. There has been an increasing move away from the American made automobiles that Pakistani car makers have been enjoying for the past few decades. The main reason for this is that the cost of producing cars in America has risen dramatically. It is this increasing cost that has led many automobile manufacturers in India and Malaysia to invest in making cars that are more affordable.
Secondly, the rise of soft market competition has meant that there has been a parallel move away from imported vehicles to cheaper domestic ones. In fact, there have been accusations that the recent introduction of fuel economy standards has encouraged U.S. carmakers to bring back their foreign-based vehicles. However, the biggest contributing factor has been the rise of the U.S. automotive industry. While the U.S. car industry was hit by the fuel economy standards recently, they have still managed to emerge stronger.
Thirdly, the introduction of Japanese automobile manufacturing companies in Pakistan has seen the introduction of several new auto brands. This has been possible because the Japanese automotive companies have been able to tap into the domestic market as well as the Indian market. The success of Japanese companies in India and Malaysia has also encouraged their counterparts in the U.S. to come forward and offer cars at lower costs. In fact, the current situation currently stands where there are more Japanese cars on the roads in Pakistan than in India and Malaysia.
Finally, the rise of Pakistan automobile manufacturers has also facilitated the entry of new entrants. These include Chinese automobile manufacturers that have been coming up with new cars and trucks every year. At the end of the day, the market is flooded with cars and trucks from various different manufacturers. That is why, it is not surprising to see Chinese automobile manufacturers emerge as the top automobile brands.
All in all, the automotive sector in Pakistan is far from stagnant. It has just gained ground against the backdrop of a faltered economy and increasing competition. The key however, is how the industry will manage to sustain its growth and how the government can support the market. If the government truly believes in the importance of the automobile industry, it should immediately focus on making the auto sector as an investment.