Pakistan starts assembling Chinese passenger car

KARACHI: The first Chinese passenger car is now being produced in Pakistan, a market that is currently dominated by three Japanese carmakers.

The company has recently invested Rs1.3 billion to improve its assembly plant, which is other than its initial investment of Rs2.5 billion.

 Al-Haj Faw Motors (Private) Limited, a collaboration between Faw China and a commercial importer of heavy vehicles Al-Haj Motors, has started assembling Faw V2, a 1,300cc hatchback, at its assembly plant in Karachi.

The company was importing Completely Built Units (CBU) of V2 for the last two years to see market response. Now that it is satisfied with the response, it has decided to produce the car locally to compete with well-established Japanese brands.

“We want to become the export base of Faw for export of cars to Southeast Asia and African markets,” Al-Haj Faw Motors Managing Director Bilal Afridi said on Saturday at a ceremony organised at the company plant.

The company initially targets to produce 300 units of V2 per month and then increase the production level to 500 units by the end of 2017. Currently, the company has over 600 workers and its annual capacity is 10,000 units (single shift) that will be increased to 15,000 units by 2020.

The company has recently invested Rs1.3 billion to improve the assembly plant, apart from its initial investment of Rs2.5 billion in the company.

The current price of Faw V2 is Rs1.069 million Company officials say they have only increased the price by Rs20,000 in over two years to make it an attractive product and compete well with the Japanese competitors.

Its Japanese competitor Pak Suzuki’s Swift, another hatchback with a 1,300cc engine, is available for Rs1.327 million (prices of its automatic variants go up to Rs1.511 million).

“I think they (Al-Haj Faw Motors) are maintaining a very good quality, something they should do because they have to compete with Japanese brands,” Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Mashood Ali Khan told The Express Tribune while inspecting a Faw V2 on the assembly line.

Company officials say they wanted to produce Chinese passenger cars and light commercial vehicles (LCVs) locally for a long time, but delay on the part of the government (from 2013 to 2016) in announcing a new auto policy interrupted the planned investments.

Al-Haj Faw Motors has been assembling trucks since October 2011 while its plant is also capable of producing LCVs and passenger cars.

The Al-Haj Group has been present in Pakistan since 1960 when it started trading in different products like tyres, textiles and electronic goods.

The group, in May 2017, launched a separate company, Al-Haj Hyundai (Pvt) Limited, which will invest about Rs4 billion in producing Hyundai trucks and buses in Pakistan.

Chinese vehicles, led by Faw, are gradually getting a good response from the market, which has historically been dominated by Japanese companies.

Chinese brands have faced difficulty in the presence of Japanese and Korean companies that have enjoyed production facilities in Pakistan. However, the situation is going to change with the first locally produced Chinese car in the market.

Although Faw V2 has a distinct customer base, some analysts say it could take the market share of used cars that have caught the attention of Pakistanis for over a decade and a half. Pakistan currently imports over 45,000 used cars annually.

Analysts say growing middle class, better macroeconomic indicators and easily available car financing are some of the top reasons why car sales are continuously growing in Pakistan.

After over seven years of slowdown in the automobile industry, the country is once again producing over 250,000 units of LCVs, jeeps and cars annually.

Published in The Express Tribune, August 13th, 2017.


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