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Automobile industry in Pakistan.

Automobile Industry in Pakistan

Automobile Industry in Pakistan presents a sorry state of affairs. It is a great pity that this industry, which is considered vital for economic development and for providing a sound engineering base in any country has suffered grave neglect in Pakistan. It was only for a brief period that importance of this industry was recognised in Pakistan. The result was that indigenisation of Bedford truck and bus chassis was stepped up and as much as 70 per cent deletion was achieved in Bedford truck chassis. Seventy percent deletion was no mean achievement. Apart from other gains to the economy of the country, it reduced the bill for imports of components and parts considerably. However, Pakistanis have not become accustomed, as yet, to taking pride in local skills and local products and what should have been the strong points of Bedford model became its weakness. Priorities started changing. Hostile propaganda was unleashed against the locally produced components and parts. It was forgotten that Pakistan had fought two wars with the help of Bedford truck. It was also forgotten that expertise for this truck (as well as for bus) was available all over the country presenting no difficulty in carrying out repairs and that most of the parts and components of the truck had also been developed locally presenting no difficulty in their availability.

New models such as Mercedez, Nissan and Hino were introduced. No help; not even lip sympathy was forthcoming for Bedford model. The obvious followed. Proposals were prepared and submitted to the Government for progressive manufacture of Nissan and Hino trucks with tall claims for speedy deletions.

Volume Production

It was pointed out at that time that large volumes of production are necessary for development of components and parts locally and that multiplicity of models will give a setback rather than provide help in the process of local development. It was also urged that progressive manufacture of Bedford model should be speeded up further rather than discouraged and that if progressive manufacture of another truck is also considered necessary, this responsibility should also be entrusted to the manufacturing unit, which has already acquired experience and expertise in this field.

It appears that these arguments did not find much favour and projects for the progressive manufacture of Hino and Nissan trucks were sanctioned in favour of other parties. Although these projects were sanctioned some years ago, it is understood that claims made in the proposals for these projects for deletions are far from having been realised; although in one case, assembly and manufacturing facilities of a state enterprise have been placed at the disposal of the joint venture set-up for the project. It is believed that some exercises were carried out some time ago for drawing up new deletion programmes for Hino and Nissan trucks, but it appears that these exercises did not yield much result. The question arises as to who has gained and who has lost in the process. It is obvious that foreign manufacturers, whose projects for new models were sanctioned, have been the main gainers as they have been supplying almost all the components and parts from abroad. On the other hand, production of Bedford model in the country has dwindled, if it has not come to complete standstill.

Expertise Lost

The experience and expertise acquired by a local concern, namely National Motor Limited (NML), for progressive manufacture of Bedford model has been lost as it is understood that sponsors of projects for new models are not utilising these facilities. NML is also understood to be trying its hand on another modelviz., Isuzu. It is only hoped that a proper and detailed agreement has been executed for this model with the foreign manufacturers. Incidentally this raises the number of models to be produced in Pakistan to three. Actually the number of trucks/buses to be produced locally will be more as more than one version in each model will be marketed in Pakistan.

This increase in number will impose a severe restriction or production volumes, which will act as a disincentive for local development. Apart from this important factor, it is consider doubtful if we will be prepared to stick to the models, which have been selected, when we have not been able to stick to the Bedford model. All this does not leave good taste in one's mouth and one gets the impression that local sponsors have their sights fixed elsewhere and that local development does not have any priority in their plans. In the circumstances, it is not understood as to why ambitious targets for deletions were indicated to the Government in their schemes and as to why the Government has not reviewed periodically progress of implementation of schemes, which they have been pleased to sanction. It appears that schemes are forgotten after these are sanctioned and no one is penalised if the schemes are not implemented as per sanction.

Not content with the supply of maximum components and parts from their factories abroad, foreign manufacturers are keen to supply machinery and equipment from abroad for manufacture of these components and parts; although they are aware that local manufacture will proceed, but at snails pace. In this context it is recalled that General Motors/Vauxhall Motors once deputed their teams of experts to draw up proposals for increasing production of Bedford trucks and buses at NML to the level of 10,000 per annum from the level of 4,000 to 5,000. Their final proposals included addition of machinery.

Workers of NML, however, took up this challenge and utilising existing facilities, production was increased to 1000 trucks and buses and even more per month. This surprised Vauxhall Motors. It is not infrequent that potential of workforce in the country is lost sight of and blame for low production is placed on machinery and equipment rather than one lack of interest on the part of management in increasing production. This reminds one of the old proverb that a bad workman always finds faults with his tools. Encouraged by increases in production and sales efforts, Vauxhall Motors showed inclination to transfer franchise to NML for other countries. They also showed inclination to provide tools and dies to NML for components and parts not yet developed locally. Bedford model, however, stood condemned and all attention was being paid to other models on the plea of their being based on advance technology.

A Paradox

Paradoxically, while on the one hand, Bedford model was being driven out of the market, on the other hand, schemes involving large purchases of machinery and equipment for manufacture of wheels, tools, dies and castings were being sponsored primarily to cater to large volumes of production of Bedford model. It is not surprising, therefore, that, as a result, some of thee projects are still going abegging orders. To cap it all, large sums of money were mopped up from NML as "Bedford development surcharge". It is doubtful if any amount from this collection was spent on development work initiated by or in NML.

The story of manufacture of cars in Pakistan makes no better reading. First of all, liberal imports of cars were allowed from USA and the West. Feeble attempts were then made to assemble same of these cars locally. Japan saw the potential for their cars in Pakistan. There was flood of imports from Japan, which swept away all other makes, leaving a few Mercedez, here and there. Models of cars from USA and the West just could not stand competition from Japan in prices.

Suzuki of Japan entered Pakistan with their small car and pick-ups. This caught fancy of some people in Pakistan and a proposal was floated for their progressive manufacture locally. It was pointed out at that time that Suzuki car did not appear to be suitable for Pakistan in view of size of an average Pakistani family and in view of long distances involved in travelling. It was also pointed out that major research work was going on in Japan and rest of the world for cutting costs on production of cars of 1000 and 1300 cc rating.

Cars of Higher Rating

Accordingly it was suggested that some attention should be given to producing these cars in Pakistan. Toyotas had shown willingness to collaborate in this project. Interest in this project was also evinced by Vauxhall Motors and some other manufacturers in Europe, but the dice had become heavily loaded in favour of Suzuki car and if the stories published in newspapers are to be believed, the then President of Pakistan is reported to have told a gathering on the eve of inauguration ceremony of Suzuki car that he sanctioned this project as otherwise, the then Minister of Production would not leave his room. Are major projects sanctioned in Pakistan on some such basis and are exercises of preparation of detailed schemes and their examination at the level of CDWP, ECNEC etc., just a white wash? Let us hope that this is not so and even if the remarks attributed to the then President of Pakistan as published in the newspapers have not been understood incorrectly by the writer, these remarks were made in lighter vein. In any case, targets given in the scheme for Suzuki car and Suzuki pickups do not appear to have been met; although the Government, as a special gesture of goodwill for the project, reduced the import duty by 5% more. It is understood that deletions have received a setback in the car project because of change of model. Quite recently, manufacturers of Suzuki car in Japan have introduced car of 1000 c.c. rating in the market.

This model has been offered to Pakistan also, which appears to have been accepted. A lot of machinery and equipment is proposed to be purchased and installed for the progressive manufacture of both small and larger model of cars. It remains to be seen if this machinery and equipment will be put to effective use. It is suggested that before importing new machinery and equipment for trucks as well as for cars and pickups, availability of machinery and equipment already installed in the country is reviewed and efforts are made to utilize this machinery and equipment also. The same should also apply to the project of Toyota car sanctioned in the private sector.


Progressive manufacture of tractors, now appears to be the exclusive responsibility of public sector. Millat Tractors, in the public sector, appear to have made headway in the progressive manufacture of one model of Massey Ferguson tractor, but probably discouraged by the slow progress in deletion in Flat tractor, they do not appear to be making much headway in the local manufacture of the other model which they are also marketing. No worthwhile attempt appears to have been made for progressive manufacture of jeep. It is understood that the scheme for the manufacture of Suzuki vehicles includes Suzuki jeep and as can be expected, deletions in this vehicle also do not appear to have made much headway. Particularly unfortunate is the fact that heavier models of jeep not included in Suzuki scheme, do not appear to have received much attention; although these models are needed for the Defence.

Our concentration has been on imports and if stories published in newspapers are to be believed. Pajero Jeep is now catching fancy of our people. It is not considered advisable that we should continue to depend upon foreign suppliers for all times to come for our requirement of jeeps. A start was made some time ago in the progressive manufacture of Willy's Jeep. It is understood that changes in models have prevented further development. Start was also made in assembly operations of Toyota Land Cruiser, but these also do not appear to have advanced further due to changes in Franchise holders. The present "free for all" situation needs to be controlled.


One or two models of jeeps should be selected in consultation with the Defence Authorities and progressive manufacture of the selected models should be initiated in right earnest. Importance of undertaking progressive manufacture of heavier models of jeep can not be emphasised, too strongly. Progressive manufacturer of motor cycles, scooters, etc. leaves a lot to be desired. We are lost in the maze of number of models of various makes of motor cycles being imported in the country. This makes it difficult to keep track of progress of manufacture of each model. This branch of automobile industry is now exclusive responsibility of the private sector.

Formerly, Suzuki motor cycles were being progressively manufactured in the public sector and again if the stories published in newspapers are to be believed it has been reported that manufacturing and assembly facilities for Mack Trucks, which were under the management of public sector have been passed on to management in the private sector together with the responsibility for the manufacture of Suzuki motor cycles. Reasons for making this change and benefits which have accrued from this change are not known.

Damage to Economy

A lot of damage to the national economy has already occurred on account of lack of sense of direction and low level of deletions all around in the automobile sector. Extremely low levels of production of Bedford model have also had serious adverse financial repercussions on the operations of manufacturing units like National Motors, BELA Engineers, Pakistan Machine Tool Factory and a host of vending units in the private sector. Steps need to be taken, therefore, for making amends. Given below are some suggestions in this regard.

Progress achieved so far in progressive manufacture of trucks, buses, pickups, cars, tractors, jeeps, motor cycles, scooters, etc., should be reviewed carefully in the light of sanctions accorded by the Government. Agreements signed by local manufacturers with foreign manufacturers should also be reviewed. Defaulters should be penalised and sanctions should be revoked, where considered necessary. The number of vehicles to be manufactured should be reduced. New deletion programmes should be prepared, which should be reviewed closely and action should be initiated promptly against those who fail to achieve results. One yardstick for deletion should be adopted for all vehicles.

Indigenous Trucks

Experience and expertise acquired by National Motors in the development of Bedford model should be utilised and, if possible, Bedford model should be revived. Recently National Motors claimed in a full page advertisement in some newspapers that they have developed a truck indigenously for the Army. This claim should be scrutinised, if it has not been done already. A local party in the private sector is claiming to have developed a pickup locally, which has been given the brand name of "Proficient". This claim also needs to be scruitinised. There are complaints that the manufacturers are not adhering to any delivery schedules.

Foreign manufacturers should be requested to furnish complete breakdown of components and parts of their vehicles together with prices. This will not only help in getting reasonable allowances for deletions, but will also help in determining rationale of future increases/decreases in prices of vehicles and their components and parts. Complete technical details, drawings etc., of all components and parts should be obtained from foreign manufacturers in the very beginning including components and parts being obtained by them from their vendors. It should also be left to the local manufacturers to decide as to how they view to proceed with the manufacture.

Change Deletion Procedure

The general practice in the industry appears to be that deletion can take place only with the prior approval of foreign manufacturers. This is not a sound practice. Once a part or a component has been developed locally to the satisfaction of local manufacturers it should be possible to effect deletion immediately. If foreign manufacturer considers it necessary, he may get it checked up subsequently in his own workshops. In case of dispute, relevant clause of the agreement should be invoked. Capacity and capability of machinery and equipment already installed in the country for assembly and progressive manufacture of vehicles should be reviewed and assessed. Rather, than scrap the existing facilities, effort should be made to utilise these effectively by balancing and modernisation, if considered necessary.

Existing machinery and equipment is spread all over the country. It is suggested that at least in the public sector, efforts should be made to group some of these facilities and to place each group under one head.

Due attention was not given in the past to the progressive manufacture of engine and this seems to be the case even at present. This should now be remedied. Sponsors of the small car scheme had argued in favour of their scheme that a common engine would be needed. They had said that it would be more convenient and economical to develop one engine for the car and pickups rather than one engine for the car and another engine for the pickups. This argument has now fallen by the wayside as Suzuki car of a higher rating is also being taken up for progressive manufacture. When drawing up new deletion programmes, their engines should be included.

Fiscal Policies

Government fiscal policies are of no help. It was noticed in the past that if components and parts are imported from abroad, no sales tax was levied, but even if one nut and bolt were added locally, sales tax was levied. This made the progressive manufacture of vehicles in Pakistan an unattractive proposition. All such anomalies, if still existing, in customs tariff should be reviewed and removed.

Under the existing Government policy, maximum rebate in import duty is allowed from the very beginning i.e. from the stage of assembly operations. This acts as a disincentive rather than as an incentive for local manufacture. It is suggested that start should be made with a lower rebate, which should be increased progressively depending upon progress achieved in deletion. Unless this is done, there is not much hope achieving substantial deletions.

Last but not the least, local workforce's immense potential for increasing production and deletions should not be lost sight of. Those, who have any experience of working in a factory, know the influence that the workforce exercises in all spheres of factory operations. In order to tap this potential effectively it is necessary that suitable leadership with sound track record is provided at the top.

It is not, however, sufficient to place an individual at the top. It is necessary that reasonable support is also provided to him. When analysing performance of projects we generally tend to ignore this most important factor and get lost in arguments on machinery and equipment, technology, location, competition etc. For a proper assessment of any operations, the role that the local workforce and its leadership have played should figure prominently along with other factors.
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Title Annotation:Industry
Author:Khan, M. Anwar
Publication:Economic Review
Date:Jun 1, 1991
Previous Article:Biscuits and other bakery products.
Next Article:Planning to put up a sugar mill.

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