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Old December 31st, 2011, 03:27 PM   #1761
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Auto sector: Manufacturers race ahead amid bumps

Sales stand strong despite relaxation in car import policy.

Auto manufacturers faced a setback early in the year as the government increased the age limit for imported second-hand cars to five years from three years apparently to punish the industry, for failing to reduce prices.

The year 2011 has been a sweet and sour period for the country’s automobile industry, which was full of challenges and exciting developments. Though car prices rose sharply amid a dispute with the government over relaxation in used car import policy, the industry recorded strong sales compared to the previous year.

Auto manufacturers faced a setback early in the year as the government increased the age limit for imported second-hand cars to five years from three years apparently to punish the industry, for failing to reduce prices.

However, the age relaxation brought cheers from car importers. All Pakistan Motor Dealers Association Chairman HM Shehzad says over 25,000 cars were expected to be imported by the end of December 2011, up from 15,000 the previous year. Now car manufacturers are worried about another blow at the hands of importers, who are lobbying for permission for import of 10-year-old cars.

JS Global Capital analyst Atif Zafar said after the disturbing start in January, the auto industry got good news in the budget for 2011-12 which abolished 2.5 per cent special excise duty and cut general sales tax by 1%.

“But during the year, the government also introduced a policy for new entrants into the automobile industry, triggering fears among existing players that the policy will encourage South Korean and Chinese carmakers, which can hurt their interests,” he added. Zafar was of the view that the new entrant policy was aimed at pressing carmakers to reduce prices, but they argued that rupee’s depreciation and the rising cost of production precipitated the increase in prices.

Besides the sharp depreciation of the rupee against Japanese yen and US dollar, the floods in Thailand in the second half of the year disrupted supply of spare parts for local companies. Industry officials expect annual car sales to rise above 170,000 units by the end of December, but will not hit 180,000, the historic high struck in fiscal year 2006-07. Some point out that the growth is more crucial this time unlike 2006-07, when major support came from banks’ car financing. Sales of Pak Suzuki Motor Company in the first nine months of calendar year 2011 grew 17% compared to the previous year despite an average increase of 7.5% in prices. The high sales and prices substantially supported the company’s bottom-line, which grew 73% year-on-year to Rs672 million from January to September 2011.

Analysts believe that 2012 will not give an easy ride to the carmakers following the government’s ban on import of CNG kits, which will hurt sales. In addition to this, the rupee is continuously depreciating, which will increase production cost and add to the woes of carmakers.
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Old January 5th, 2012, 11:31 AM   #1762
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Old January 5th, 2012, 10:12 PM   #1763
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Old January 6th, 2012, 04:53 PM   #1764
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Suzuki mulls over Alto discontinuation

Following the earlier announcement by Indus Motor Company Limited of the discontinuation of Daihatsu Coure, Pak Suzuki Motor Company (PSMC) recently announced similar plans with respect to its 1000cc Alto model. Implementation of Euro-II compliant emission standards from July 2012 is to blame for this.

Although applicable on all vehicles assembled locally, PSMC has announced that it only plans to cease production of Alto while its other non-Euro-II compliant models (Mehran, Bolan and Ravi) will be upgraded to meet the new regulatory specifications. We believe the reason behind Alto being singled out is the fact that at least three of PSMC’s models (Mehran, Bolan and Ravi), together comprising more than 60 per cent of total units sold in CY10, use variants of the same engine thus making it economically feasible to import an upgraded version of the engine used in these models as compared to investing in one which makes up 15 per cent of total sales volume, said Umar Hafiz at AHL.

Disaster for PSMC?
Not necessarily! Even though this would impact EPS negatively by approximately PKR 1.05 when viewed in isolation, we believe that PSMC’s Mehran model would witness an increased demand owing to this cessation, he added. ‘Our argument is based on the relative pricing of different passenger cars in the 800-1000cc segment. With Coure no longer being an option for customers, Cultus, priced at Rs957,500 (average) as of January 2012, is the next best alternative,’ he added. However, with this price being almost 25 per cent higher than Alto’s January 2012 average price, coupled with the effect of higher fuel costs owing to CNG curtailment and halt of production of CNG variant models, we believe that Mehran sales would also be augmented

Will Mehran save the day?
Although it is impossible to calculate with a high degree of certainty at this stage, but even if CY12 Alto sales (by volume) are reduced by 60 per cent, and half of these lost sales are captured by Mehran, this would entail a top-line net impact of Rs2.6 billion. Our base case hinges upon Rs1.8 billion revenue increase brought about by an additional 3000 Mehran units being sold at a CY12 estimated price of Rs597,000. However, being a high margin product with higher degree of localisation, Mehran sales would entail lower costs, especially when viewed in light of rupee depreciation against Japanese yen and US dollar.
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Old January 6th, 2012, 08:05 PM   #1765
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What's Pakistan got to do with Euro-II? And Alto has a very defined market for itself. It's the poor man's car that doesn't look like a poor man's car (Mehran). It's also not a pile of shit like Mehran. If Suzuki discontinues it, I think it'll increase the market for imports.
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Old January 6th, 2012, 11:11 PM   #1766
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PAKISTAN people should rise up against suzuki and protest the garbage death traps that pass as cars

enough of the lobbyists of these japanese motors in pakistan and open the markets to european economy makers
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Old January 7th, 2012, 01:22 AM   #1767
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Quote:
Originally Posted by siamu maharaj View Post
What's Pakistan got to do with Euro-II?
The article says that Pakistan will require new cars to comply with Euro 2 requirements from July 2012. European Union countries introduced Euro 2 in 1996 and replaced it wth Euro 3 in 2000. We're now on Euro 5.
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Old January 7th, 2012, 06:35 PM   #1768
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Yeah, and why the hell is Pakistan doing it that was my question
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Old January 8th, 2012, 05:09 PM   #1769
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PAKISTAN people should rise up against suzuki and protest the garbage death traps that pass as cars

enough of the lobbyists of these japanese motors in pakistan and open the markets to european economy makers
You are sounding as if someone's holding EU makers from Pakistan. NO, they just arent interested in coming.

Fiat came with that hideous UNO, that should qualify as the worst flop ever. So nobody, except themselves and our poor economy, is a hurdle.
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Old January 21st, 2012, 10:55 PM   #1770
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Auto Industry Development Programme: Auto industry seeks government assurance on consistent policies

* AIDP to expire in June 2012 industry believes a new policy is critical for its growth

Auto Industry of the country has demanded from the government that similar to Auto Industry Development Programme (AIDP), which is to expire in June 2012, a new long term consistent policy is critical for the industry’s growth to restore investors’ confidence and save the foreign exchange and earn substantial revenues.

In a presentation, the auto industry has stated that the industry is generating substantial government revenues contributing significantly to the country’s gross domestic product (GDP) and saving a huge foreign exchange by import substitution through localisation of the parts through transfer of technology to vendors. A consistent long term policy for the auto industry will create more investment and job opportunities in the industry which already has an investment of over Rs 92 billion and giving employment to 0.4 million people directly.

More importantly, a better policy is meant for addressing the issues like most liberalised used cars imports policy in the region, proposal on tariff rationalisation, under invoicing, mis-declaration in auto parts imports and limited consultation with Original Equipment Manufacturers (OEMs) on free trade agreements, etc, which are badly hurting the industry.

Localisation is the key factor meant for progress and growth of the national economy, however, tariff reduction and used car imports are two major issues of the local manufacturers that must be considered prior to formulation of any policy.

Any reduction in duty structure will make local nascent industry uncompetitive, which will lead to complete collapse of the industry, therefore, causing more unemployment.

Similarly, the government should monitor the misuse of used car policy. Some changes in the policy is required like registration should remain in importers’ name for at least 2 years, while the policy should be reverted back to 3 years and 1 percent depreciation with maximum depreciation cap of 36 percent to discourage abuse of the policy. According to some facts in this regard, the used cars importer enjoy 60 percent depreciation allowance while in India the basic duty on used cars is 100 percent with some additional duties and taxes of 32 percent.

“Although there is a very short term benefit in the imports of used cars in the country but on the long term basis this policy is against the national interest and we should understand what national interest in the import of used cars is,” said Munir K Bana, Vice Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM).

It is pertinent to mention that the used cars imports are expected to exceed 40,000 in 2011-12 that is 25 percent of the total industry volume for 2010-11.

“The policy of used cars offers very little employment opportunities and there is no possibility of technology transfer. On the other hand, the local auto industry had employed over 400,000 and technology transfer to OEMs, vendors and dealers,” said a vendor, Muhammad Ashraf Shaikh, adding that flight of capital from the country is a serious issue in the import of used cars policy mainly at the time when the local currency is already under pressure and government earns very little revenue.

Shaikh M Aslam, Secretary PAAPAM, while pointing out one very important factor said that frequent shift in policies on the part of the government along with security risks and high input costs have been conducive for incessant decline in the Foreign Direct Investment (FDI) in the country.

“There is only a short term benefit in car imports and trading with very little employment generation, in fact the government will lose millions of rupees of its revenue and foreign exchange in the long term in spare parts also as there are no arrangements for technology transfer to the local industry,” he added.

“This shift in policies related to auto sector is evident from the decisions of ECC that has allowed the import of five-year old used cars, allowed depreciation allowance raise from 50 to 60 percent, and considers allowing new entrants on much relaxed policy,” said Shaikh.

This was also admitted by the Board of Investment (BoI), while giving a briefing to the Economic Co-ordination Committee (ECC) of the cabinet recently that frequent changes in policy are scaring the investors away from Pakistan.
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Old January 29th, 2012, 04:45 PM   #1771
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Auto industry urges changes in liberal used cars policy

* Revised policy would bring more tax on sale of new cars and more job opportunities in auto assembly and allied industries

Pakistan’s auto industry believes that government should discourage import of used cars and other used vehicles by amending the existing liberal used cars policy to safeguard the interest of the local auto industry and vendor industry employing over 400,000 people directly and two million indirectly.

The auto sector estimates that Pakistan’s local auto industry is likely to see increase demand of locally produced cars from 184000 units in 2011-12 to 222000 units in 2013, 259000 units in 2014, 293000 units in 2015, 323000 units in 2016 and 349000 units in 2017. In case the government revises its used cars policy, than there would be more tax collection on sale of increased new cars, there would be more job opportunities in auto assembly as well as vender industry, improved policy would help attract more investors in sector and all this would help reduce the dependence on import by spending precious foreign exchange.

The industry wants reversal of the used cars policy and allowing only 3 years old and used cars instead of existing 5 years old and bringing depreciation to 1 percent per annum from existing 2 percent.

The industry also demands that registration of used car should remain in the name of overseas Pakistanis on whose name used car have been imported. Otherwise, government should collect tax on registration of such car on any other name instead of overseas Pakistani on whose papers such car was imported.

According to industry data, some 13,000 used cars and other vehicles were imported during 2007-08 and when policy was tightened during fiscal year 2008-09 this import dropped to 7,000 and 4000 in 2009-10 and just 7000 units in 2010-11. When the policy was relaxed by the present government by allowing 5 years old used cars and other vehicles from 3 years old and used with increase in depreciation rate from 1 to 2 percent, a sudden jump in imports have been witnessed during ongoing fiscal year 2011-12.

Pakistan’s auto industry has estimated that due to the incentives given by the government on import of used cars and other vehicles some 40,000 vehicles are likely to be imported in to the country during 2011-12. Some 21, 000 used cars and other used vehicles have already imported in to the country during first half July-January period of the ongoing fiscal year 2011-12.

Despite having excess assembly capacity in the country, import of used cars and other vehicles in such a large number would impact the production of the local industry, but would also result in lowering job opportunities in the entire chain of the local industry especially the vender industry.

According to industry, liberal policy of used cars and used vehicles is only benefiting the traders who are importing such vehicles on the name of overseas Pakistanis. Traders who are not actually entitle to import such cars and vehicles simply buy the document and import the used cars and other vehicles for making money for themselves.

The auto industry believes that because of depreciation of Pakistan Rupee against United States Dollar, Japanese Yen and Thai Bath, prices of used cars have increased many folds and import of used cars have not been so profitable. However, traders who are actually making money from this business in the name of overseas Pakistanis is continuously importing used cars for their own benefit.

The auto industry was of the opinion that 5 year old and used cars were allowed for import to benefit the overseas Pakistanis through age limit and reduced duty rate on the basis of depreciation. This was done to over come the issue of own charged by the dealers and delay in delivery of cars for months. The auto sector is of the opinion that delay in delivery of cars was mainly due to the bulk purchases by the investors, who make money on immediate sale of new car to intending buyers, who need delivery of cars without any delay. To eliminate the role of investors who book more than five to ten cars at a time, auto sector has time and again asked the federal government to impose tax on such investors who get delivery of cars on bulk and sell such cars to buyers with own.

To press their demand further, auto sector is planning to approach all four provincial governments to levy equal amount of tax on the basis of own charged by the investors and make it mandatory for the buyers to keep the registration of new car on the name of first purchaser for at least two years.
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Old February 7th, 2012, 06:23 PM   #1772
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Car rates likely to go up as input cost surges by 4.7pc

The unabated surge in input costs of different commodities is mounting pressure on manufacturing sector to push up the prices of their products, auto manufacturers stated.

The automobile makers are going to increase the rates of cars and light commercial vehicles due to rising prices of locally manufactured spare parts, inflated petroleum prices, hike in electricity tariff and soaring expense on imported CKD kits.

As per the figures provided by the manufacturers, a steep hike witnessed in vendors’ cost on producing spare parts by 4.7 percent and more hikes is expected in the cost after fresh increase in petroleum products prices by Rs5-6 per liter on diesel and petrol.

The auto manufacturing sector is worst hit by the inflation as it is under pressure from foreign currency appreciation, utility prices as well as from the vendors’ side who are feeling similar heat.

Experts said that the local automobile makers are likely to pass on the impact of rising cost of production to customers with surge in the prices of cars and light commercial vehicles.

The petrol and diesel prices were recently increased by 15.8 percent and 8.9 percent per liter in the period Jul-Dec 2011.

Similarly, the prices saw increase on various raw materials including plastic, paints and light engineering products. In addition, the transportation costs were inevitable to go up for the supplies of these raw materials to automobile makers.

The imported CKD parts are up by 3 percent in past three month on the disparity of rupee against US Dollar by 2.5 percent and 5 percent on Japanese Yen.

Moreover, industry is forced to use expensive diesel for power generation in the absence of KESC & gas load shedding. Government has already announced a 3 percent increase in electricity tariff in the past couple of months which is adding up to the woes of industry.

Automobile makers claimed that they have already absorbed the increase in aggregated production cost, thanks to localization of automobile sector; otherwise, the cost would have increased more on different brands of cars.

http://www.nation.com.pk/pakistan-ne...urges-by-4-7pc
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Old February 11th, 2012, 10:45 PM   #1773
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Automobile industry: Sales grow 17% with Suzuki in the front seat

Sales stood at 85,011 units in the first seven months of fiscal 2012 against 72,580 units sold in the same period of the preceding year, according to data released by Pakistan Automotive Manufacturers Association.

Car sales rose 17% in the first seven months of fiscal 2012 on the back of higher demand and Punjab’s yellow cab scheme.

Sales stood at 85,011 units in the first seven months of fiscal 2012 against 72,580 units sold in the same period of the preceding year, according to data released by Pakistan Automotive Manufacturers Association.

Honda’s production stood at a standstill for the second straight month in January, however, production is expected to be back on track at the end of February as its Lahore plant will restart operations. Honda Atlas Cars has been facing shortage of parts since October because of floods in Thailand from where the company imports part and then assembles them.

Market leader Pak Suzuki Motor Company witnessed 39% growth in sales during July 2011 to January 2012 with Mehran leading the way with 40% growth to 19,375 units.

Suzuki’s Mehran and Bolan witnessed healthy growth during the period under review due to Punjab’s yellow cab scheme. The provincial government aimed to deliver 7,500 cabs to successful applicants in 2011.

Suzuki Swift sales almost doubled to 3,847 units during against 1,972 units in the same period last year.

Indus Motor Company witnessed 4% growth in sales to 29,462 units during the period under review against 28,293 units in the same period last year.

Toyota’s Hilux, under the pick-up segment, grew a gigantic 195% to 2,162 units against 732 units in the same period last year.

The country’s highest selling car Toyota Corolla grew 5% to 24,885 units against 23,740 units in the same period last year. Cuore was the only segment of the company whose sales experienced a substantial decline of 36% to 2,245 units.

The company announced earlier that manufacturing of Coure would stop before June 30, 2012 on account of its high cost of production.

Overall, Honda Atlas Cars Pakistan Limited posted a decline of 20% to 6,991 during the period under review with both brands Civic and City witnessing a downward trend in sales.

Tractor industry continued to suffer from lower production in January, however, major crop season resulted in a slight improvement in sales as assemblers restricted their production during the period. Similarly, sales have been hit by 74% for Agritech Limited and 61% for Millat Tractors during the period under review.

However, the industry will see better days ahead as general sales tax has been reduced to 5% from 16% in 2012.
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Old March 2nd, 2012, 01:17 PM   #1774
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Ban on CNG kits reduces car sales

Sale of vehicles is dropped to considerable level after imposition of ban on import and installation of CNG kits.

Representatives of Pak Suzuki, Indus Motor Company (IMC), Landi Renzo (LR), Tesla and BRC said OEMs and the CNG kit manufacturers were confronting numerous problems after imposition of ban on Dec 15, 2011 by the government.

During a meeting with Aziz Ahmad Bilour, Federal Secretary Ministry of Industries, Pak Suzuki member informed their company was badly affected by the decision and sales have plummeted.

Similar, sentiments were expressed by IMC regarding substantial drop in sales of Toyota and Daihatsu brands.

It was informed the saving of natural gas due to the imposition of ban was very insignificant, as this would only save 0.26 percent of total gas production annually.

The delegation informed CNG kit manufacturers and OEMs have made a collective investment of Rs 14.5 billion, which was under threat after the imposition of the ban. It was informed another company Inflex entered into joint venture agreement with PoF Wah for manufacturing of CNG cylinders but due the ban it has become difficult for them to progress further with manufacturing in Pakistan.
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Old March 3rd, 2012, 07:56 AM   #1775
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When were CNG kits banned?
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Old March 3rd, 2012, 03:28 PM   #1776
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2-3 months ago when there were few incidents of CNG kits blast...
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Old March 3rd, 2012, 06:18 PM   #1777
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2-3 months ago when there were few incidents of CNG kits blast...
CNG cylinders last 5 years. We should be seeing more and more of these blasts. I don't think anyone gets the cylinders checked.
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Old March 3rd, 2012, 08:53 PM   #1778
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Couple of new car's cylinders (Applied for) also blasts...
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Old March 10th, 2012, 02:42 PM   #1779
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Clear road ahead: Car sales in cruise control mode


The growth primarily resides in the 1,000cc and below segment – which includes Suzuki Mehran and Diahatsu Coure – as its sales grew by at least 30%.

Car sales continued to cruise –rising 17% in the current financial year so far – despite industry players increasing prices on a regular basis.

The growth primarily resides in the 1,000cc and below segment – which includes Suzuki Mehran and Diahatsu Coure – as its sales grew by at least 30%, said Topline Securities analyst Nauman Khan. Sales in the 1,300cc and higher segment – which includes Honda Civic and Toyota Corolla – grew by a meagre 1% in the period under review, added Khan.

Sales stood at 98,252 units in the first eight months of fiscal 2012 against 84,225 units sold in the same period of the preceding year, according to data released by Pakistan Automotive Manufacturers Association on Friday.

The strong growth can be attributed to the rise in remittances and the yellow cab scheme offered by the Punjab government, said analysts.

Industry players have protected profit margins from rising costs or currency depreciation by increasing prices on more than one occasion in the current financial year.

Indus Motors raised its product prices thrice, while Suzuki jacked up prices twice since September 2011, according to a JS Global Capital research note.

Pak Suzuki Motor Company, the major player in the lower segment, posted a strong growth of 35% to 70,162 units during July 2011 to February 2012.

Mehran and Bolan, prime beneficiaries of the yellow cab scheme, grew by 37% and 47%, respectively. The Punjab government allocated Rs4.5 billion in fiscal 2012 budget to provide 20,000 yellow cabs to youth of the province.

Moreover, sales of latest arrival to the Suzuki family Swift reached 4,500 units, up a gigantic 86% compared with 2,420 units sold in the same period last year.

Overall, the company’s market share improved to 63% against 54% in the same period last year.

Indus Motors growth remained subdued with sales growing by a dismal 4% to 34,366 units compared with 32,991 units in same period last year. The company’s flagship product and the country’s highest selling car Corolla posted a growth of only 5% despite the company adding new variants of the car in the 1600cc segment and CNG vehicles.

Sales have been adversely affected by reduced farm income this year on account of higher input cost – fertiliser and other products – and reduced product prices particularly cotton, said Khan.

Cuore sales experienced a substantial decline of 34% to 2,765 units ahead of its complete shut down at the end of the financial year. The company announced earlier that it plans to pull the plug on Coure before June 30, 2012 on account of its high cost of production.

Honda’s production woes continued as it stood at a standstill for the third straight month in February due to unavailability of parts, PAMA data shows. Honda all around the world has been facing shortage of parts since October because of floods in Thailand.

Production is likely to be back on track in March as the company’s Lahore plant was expected to restart operations at the end of February, according to an announcement on its official website. Sales of Honda Civic declined by a massive 37% to 2,781 units and sales of Honda City slumped by 29% to 4,243 units during July 2011 to February 2012.
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Old March 10th, 2012, 03:44 PM   #1780
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Thumbs up Chinese Autos: Van, pickup truck introduced in Pakistani market

KARACHI: Al-Haj FAW Motors Private Limited held a launch ceremony for the introduction of two new automobiles in the Pakistani market at a local hotel.

The company aims to introduce a mini van (the FAW X-PV) and a mini pickup truck (the FAW Carrier) to Pakistani consumers. The FAW X-PV’s price has been kept at Rs699,000, while the FAW Carrier is priced at Rs609,000.

The cars will be assembled in Pakistan from June 2012 onwards. On the occasion, CEO of Al-Haj FAW Motors Hilal Khan Afridi said that the cars have been priced competitively, and profit margins kept low, in order to tap local markets.

“The future of automobiles in Pakistan belongs to Chinese technology; it is effective, and very economical as compared to its Japanese and
American competition,” he said.

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