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Automobile projects.

Lately several developments were made in automobile industry. Famous car makers of the world showed keen interest in setting up plants in Pakistan. For instance Germany's automobile giant the Volkswagon Group, has made a decision to come to Pakistan. Similarly Daimlar Benz Stuttgart showed interest in building spare parts manufacturing plant for its Mercedez Benz.

Honda: Honda is also considering to instal a plant in Pakistan in a joint venture between Honda Motor Company of Japan and Atlas Group of Pakistan. The plant is expected to start manufacturing cars by the spring of 1994.

The Honda car plant which is being set up with share holder's initial capital of Rs. 700 million will have an installed capacity of progressive manufacturing of 10,000 cars annually. The plant would create job opportunities for at least 1000 skilled workers. Honda Plant is being installed, 43 kilometers away from Lahore near Manga Mandi and cars produced will be marketed in Pakistan, and its parts would be exported.

Toyota Car Plant: Pakistan will also be having another car assembly plant, the Indus-Toyota plant which was inaugurated on April 22, 1993 by T. Toyoda President of the Toyota Motor Corporation of Japan. Initially, the plant would be turning, out 20,000 vehicles annually but will later touch the 40,000 a year mark. In due course, it is envisaged, the plant would also be exporting vehicles, especially to the Gulf and the Middle East, and other Third World countries. The Rs. 2 billion project, situated near Port Qasim, sprawling over 105 acres, embodies the latest in technology and state-of-the art techniques in automobile production. Set up by the Toyota of Japan in collaboration with the Habib Group, the venture is envisaged to induce a substantial transfer of technology as its technological and management experts are to receive training overseas, mostly at the Toyota plant in Japan. The plant is said to be incorporating the latest technology in the fields of welding and painting.

Apart from putting Pakistan on the automobile map of the world, the project, it is envisaged, would also provide substantial employment to various categories of personnel and induce the sprouting of many downstream industries which again would generate employment and self-sufficiency.

Cummins Engine: Pakistan Automobile Corporation and Cummins Engine Company have finalised a joint venture agreement to manufacture the full range of Cummins Engines for automotive and industrial applications. According to the details of the agreement released the new plant would be established in the downstream industrial area Pakistan Steel is expected to start commercial operations in the first quarter of 1994. The first phase of the project will cost Rs. 42 million.

A joint venture agreement was finalised for setting up a company to manufacture the full range of Cummins engines for automotive and industrial applications. Cummins Engines Company is the leading worldwide designer and manufacturer of fuel efficient diesel engines ranging from 76 to 2000 horsepower. These engines power a wide variety of equipment is key markets including medium and heavy duty trucks, bus and light commercial vehicles, power generation sets and industrial and marine products.

Cummins other products include generator sets and alternators, electronic control systems, remanufactured engines and military trucks, filters, turbochargers and heat transfer systems. Earlier, a technology transfer agreement had been signed between Cummins Engine Company and Pakistan Motorcar Company, in which Cummins granted PMC a licence to manufacture their engines in Pakistan. Cummins have also granted a licence to use, distribute, sell and service their products in Pakistan through a distribution company which has already been incorporated for this purpose.

With the joint venture and transfer of technology agreements the latest technology for engine manufacture would be transferred to Pakistan. Local engineers and technicians would be trained in current production and quality assurance methods at Cummins overseas facilities. The project would generate direct and indirect employment and would utilize the local industry for component manufacturing. On completion of the project, the country would have the capability to produce a range of engines to international quality standards for automotive, industrial and marine applications in Pakistan.

Transmobile Limited: This company is busy in manufacturing military trucks in joint venture with Pakistan Automobile Corporation (PACO). The first lot of fully assembled military truck locally designed by Transmobile Limited has already been delivered to Pakistan Army on April 10, 1993. TML will start production of Yasoob trucks in June, 1993. The factory has been located on 20 acre site at Bin Qasim. The total cost of a truck manufactured here at the TML will be around 50,000 to 60,000 dollars almost half of the price of the imported truck.

The company has decided to set up five separate plants for the manufacture of engines, axles, transmission propeller shaft and clutches, in this context agreements have been signed with the manufacturers of engines, transmission axles, clutches etc. for the transfer of technology for buybacks and investment in Pakistan. While the truck assembly plant is under construction, work is underway on business plans for the other five to six joint venture companies which are to be set up for progressive manufacture of major components for local consumption and for exports. The aim is to achieve a level of export of components within five years.

PACO enjoys 40 per cent shares in TML while Pak-Kuwait, 15 per cent NDFC, nine per cent, Management Pakistan Limited 16 per cent while negotiations are underway to have shares from International Finance Corporation (IFC), and Central Development Corporation (CDC) of UK.

Pak Suzuki Project: Sales during the year ending June 30, 1992 stood at Rs. 5247.90 million as compared to Rs. 4880.68 million in the preceding year indicating a rise of 7.73%. Pretax Profit during the same period showed an adverse balance of Rs. 507.10 million as compared to a profit of Rs. 167.88 million in 1991. The main reason of this loss was that the company was not allowed increase in prices.

The company has most actively participated in the Taxi Scheme (Yellow Cabs) for revamping public transport. It booked a record number of 862 Khyber and 2,651 Mehran Taxis, total 3,513 against which 499 Khyber and 1,909 Mehran Taxis were supplied during the year under review.

The company is adhering strictly to the deletion programme approved by the Ministry of Industries and would continue to play a vital role in the development of the vendor industry for automobile products in the country. The new project begun in 1987-88 to produce 30,000 to 50,000 cars at Bin Qasim has been most successfully completed at a total cost of Rs. 1,575 million. Trial production of sheet metal component for SB 308 (Mehran) and assembly of SF 410 was started in March 1992 and May 1992 respectively and 115 units were produced.

The assembly of the 1300cc SF 413 car was started in July '92 at the new Bin Qasim Plant in accordance with approved deletion programme. It is expected that in the next phase of expansion programme the production capacity at Bin Qasim Plant would be increased to 100,000 units per annum. The deregulation policy of the government will improve profitability of the company.
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Title Annotation:Pakistan
Publication:Economic Review
Date:Apr 1, 1993
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