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WORLDWIDE AUTOMOBILE INDUSTRY

HISTORY OF THE AUTOMOBILE:

Mobility has been an important objective for mankind since the beginning of time. The invention
of the wheel which was in about the year 3000 B.C. was the first great achievement of humanity.
Then in the 18th century the steam engine, one of the greatest gifts of the Industrial Revolution,
made a major impact on the life-style of the human race. From the 18th century till the 20th
century, the history of the automobile is a journey of human inventiveness and passion for
comfort, fastness, safety and a better quality of life. In Pakistan, we cannot boast of any
contribution in this vital field.

PRESENT SCENARIO:

In 2008, with rapidly rising oil prices, industries such as the automotive industry are
experiencing difficulties because of the combined impact of the high prices of raw materials and
the corresponding changes in the consumer behavior. The industry is also facing increasing
external competition from the public transport sector, as consumers reconsider their private
vehicle usage. As many factors are the determinants of automobile industry, it does not remain
stable especially at the present time.

CRISIS IN THE AUTOMOBILE INDUSTRY:

The automotive industry crisis in the early months of 2008 was mainly as a result of the global
financial crisis and the related credit crunch. In the United States, other contributing factors were
pricing pressures on raw materials and substantially more expensive automobile fuels which, in
particular, caused customers to turn away from large vehicles such as SUVs. In certain countries,
particularly the United States, the industry has also suffered from relatively cheap imports
available from countries such as Japan and South Korea and to some extent from Europe. As of
November 2008, the Big Three U.S. manufacturers, (General Motors, Ford and Chrysler),
indicated that unless additional funding could be obtained over the short to medium term, there
would be real dangers of bankruptcy.
AUTOMOBILE INDUSTRY IN PAKISTAN

ASSEMBLAGE OF VEHICLES:

Some of the cars in Pakistan are imported into the country. Some car factories in Pakistan serve
as the site for assemblage of unique vehicles which are the vehicles designed for sale on the
Pakistan automobile market. During the years of 2005 and 2006, important transactions were
made which promised to impact the sale within Pakistan of both imported and assembled cars.

In December of 2005, Korean makers of the Tata Daewoo Commercial Vehicle (TDCV) signed
a technical assistance agreement with Afzal Motors of Pakistan. The Koreans agreed to assemble
TDCVs inside of Pakistan. The first assembled TDCVs rolled out of a factory in Karachi during
the final quarter of 2006.

AUTO INDUSTRY DEVELOPMENT PLAN:

As residents of Karachi admired those large vehicles, a second significant transaction was about
to take place. On December 20, 2006, the Pakistan government announced creation of an Auto
Industry Development Plan. The government of Pakistan had agreed to that Plan in an effort to
encourages car production within the borders of Pakistan.

Creators of the Auto Industry Development Plan had two goals in mind. First, they wanted to
increase the level of competition among the small car makers in Pakistan. In order to raise the
level of that competition, the Development Plan called for limits on the number of used cars
imported into Pakistan.

Second, the creators of the Auto Industry Development Plan wanted to encourage progress in the
areas of design and innovation. The Plan creators hoped that increased competition among the
car assembly plants would motivate car assemblers to create marketable new car designs, and to
consider the well-accepted car innovations.

MAJOR FIRMS:

The Auto Industry Development Plan promised to help the various car assemblers operating in
Pakistan are as mentioned on the next page:
 Toyota

 Suzuki

 Honda

 Kawasaki

 Yamaha

 Hyundai

 Kia

The firms mentioned above have their assembly plants in Pakistan. The existence of these plants
now provides Pakistanis with a sure way to display their design skills and their innovative
thinking.

DEWAN FAROOQUE MOTORS:

Dewan Farooque Motors has a growing presence in Pakistan. Like Toyota, Honda and Suzuki, it
assembles vehicles inside of Pakistan. The people of Pakistan seem to favor the passenger cars.
There are at least 10 different models offered by Dewan Motors. The people of Pakistan have
shown less interest in Dewan's recreational and commercial vehicles. Dewaan Farooque Motors
started production of Korean Pickup named Shahzore in 1999.

While the government of Pakistan has reached out to the car assemblers in that country, the
government has not forsaken the companies that import new vehicles. Chevrolet is one such
company. A Pakistani looking for a new Chevrolet must visit a facility operated by Nexus
Motors.

At such a facility, a prospective car buyer can find cars with two original names and one rather
common name: Aved, Optra and Joy. Those vehicles, all of which have been imported from the
U.S., compete with the cars assembled in Pakistan's car factories.
PAKISTAN MOTORS:

Another important player in Pakistan's car market is Pakistan Motors. Pakistan Motors purchases
many used imports. It then uses its online presence to sell those used imports to Pakistan
residents, residents who have discovered just how to go about shopping for a car on the Internet.

PRODUCTION OF AUTOMOBILES:

Despite the traffic jamming in a few major cities, Pakistan is still a grossly under-motorised
country. Pakistan is the fourth least motorised country in the world with 156 persons per vehicle.
In Pakistan, less than 8 per cent of the people are self-mobile; less than 6 per cent own bicycles;
less than 2 percent have a motorcycle and less than 1 per cent are privileged owners of a car. In
contrast, USA leads in motorisation with 1.1 persons per vehicle followed by Canada (1.6). Even
after 61 years of independence, Pakistan's automobile industry is still in its infancy. Our local
automobile industry is producing a poor annual volume of 50,000 cars and commercial vehicles,
4,000 trucks, 450 buses, 15,000 tractors and 100,000 motor-cycles. The local content of vehicles
produced in Pakistan ranges from 25 percent to 45 percent in cars and commercial vehicles; 45
percent in trucks and buses, 80 percent in tractors and 50 percent in motorcycles. All vehicles are
produced in technical collaboration with foreign principals. To date, the local automobile
industry has not been able to successfully develop its own vehicle.

LIMITED SUPPLY OF TECHNOLOGY:

Production of automobiles requires a fair quantum of technology. Pakistan's own technology in


the field of vehicles production is at a primary stage. This is due to the fact that in Pakistan,
technical knowledge is in extremely limited supply. This state of affairs is the result of lack of
interest and investment in this most important resource for development by all successive
governments. Countries are developed or under-developed not because of differences in the
quantum of physical resources they possess but on account of differences in the level of their
respective technologies.

ACQUISITION OF TECHNOLOGY:
Acquisition of technology for local production of automobiles is a laborious and difficult
process. This is due to the fact that in modern times the only real advantage one country,
company or individual has over others is that of superior technology. There is no easy or
inexpensive way to acquire technology. Nevertheless, it is essential if meaningful indigenous
automobile production is to be undertaken.

HONDA
Honda Motor Company Limited is a multinational corporation, engine manufacturer and
engineering corporation headquartered in Japan. The company manufactures automobiles,
motorcycles, trucks, scooters, robots, jets and jet engines, water craft, electrical generators,
marine engines, lawn and garden equipment, and aeronautical and other mobile technologies . It
has also created joint ventures around the world, such as Honda Siel Cars India Ltd, Hero Honda
Motorcycles India Ltd, Guangzhou Honda and Dongfeng Honda Automobile Company in China
and Honda Atlas Cars Pakistan.

HONDA ATLAS CARS PAKISTAN LIMITED (HACPL)

INAUGURATION OF HACPL:

Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited
Japan and the Atlas Group of Companies, Pakistan. The company was incorporated on
November --, 1992 and joint venture agreement was signed on August ---, 1993. The ground
breaking ceremony was held on April 17, 1993 and within a record time of 11 months,
construction and erection of machinery was completed. The first car rolled off the assembly line
on May 26, 1994. Official inauguration was done by President of Pakistan, Sardar Farooq
Ahmad Khan Leghari. Mr.Kawamoto, President of Honda Motor Company Limited Japan was
also present to grace the occasion. The company is listed on Karachi, Lahore and Islamabad
Stock Exchanges.

INNOVATIVE TECHNOLOGIES:

Honda Atlas has the distinction to introduce several technologies for the first time in Pakistan,
such as: PGMF-I (Programmed fuel injection); VTEC (Variable Valve Timing and Lift
Electronic Control); Automatic Transmission; Crystal Lights; Oriel (Sun Roof with both tilt and
slide functions); Four Wheel Disk Brakes, ABS Brakes (Anti-lock breaking system), G-Con (G-
Force Control Technology), PROSMATEC Transmission (Progressive Shift Management
Technology) and i-DSI engine Intelligence Dual Sequential Ignition) which has smooth
acceleration and world top level fuel efficiency to name a few.

Since the commencement of production in 1994 till March31, 2005, the company has produced
and sold over 77,500 cars.

All dealerships are constructed in accordance with the standards defined by Honda World over.

LOCAL PARTS:

Percentage of local parts conforms to the government's policy. Local vendors are continuously
patronized to develop parts locally. The quality of local parts is thoroughly checked to meet
stringent international standards.

HACPL always strive to give outstanding service to our valued customers. In addition to
providing regular service to customers, the company also regularly conducts Service Campaigns,
to facilitate customer's need for service. This has given their customers absolute confidence in
the cars, clearly evident from the ever increasing sale volumes.
It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1 Customer
satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet customer expectations,
and to provide good value for money. Currently they are offering 8 different models of Honda
CIVIC and CITY cars in wide range of colors with unique technological and other features.

SHOWROOM OF HACPL:

HACPL offer four products in their showroom, each of which holds its special significance and
all are very well known. These four are as follows:

 Honda Accord

 Honda Civic

 Honda City

 Honda CRV

After about every 4 to 5 years, a new model arrives in the market of each Honda product and
modifications are also made which arrives within a year, which are well appreciated by the
customers.

DEALERSHIPS NETWORK IN PAKISTAN:


3S Dealership (Sales, Service, Spare Parts), 2S Dealership (Service, Spare Parts)

On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and Islamabad.
Since then the Dealerships Network has expanded and now the company has sixteen 3S (Sales,
Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all major
cities of Pakistan. Now HACPL has Dealership Network covering all of Pakistan, and Dealership
are equipped with all the facilities a modern dealership should have. The facilities include Sale,
Service and Spare parts. The map showed above gives a clear picture that how this company has
very well expanded over the country except in the province of Balouchistan while it has
overgrown much in the province of Punjab.

FUTURE PLANNING OF HACPL:

To meet ever-increasing demand for automobiles in Pakistan, where economic growth continues,
HACPL will increase production capacity by expanding plant facilities and upgrading welding
and painting equipment. The annual production capacity will be doubled from the current 25,000
units to 50,000 units by the end of 2006. Total investment for this expansion is expected to be
approximately 1.67 billion rupee.
"Honda has been building a long-term partnership with Pakistan ever since we began motorcycle
business here in 1960s, and Honda would like to continue making a contribution to the economy
and society of Pakistan," said Mr. Satoshi Toshida, chief operating officer of Asia/Oceania
Regional Operations for Honda Motor Co., Ltd.

FUTURE OF AUTOMOBILE INDUSTRY IN PAKISTAN

According to one news agency, the auto industry of Pakistan has been facing a severe shortage of
skilled manpower. During a meeting of Auto Industry Development Committee on Human
Resources held in this month, the committee observed that the training institutes of the country
were producing only 0.2 to 0.3 million skilled manpower annually while the requirement of the
industry was more than one million. That is why the automobile industry in Pakistan is bearing
the consequences.