Bike Assemblers Enjoying Famous Brands, Instead of Releasing Quality New Models
Tough competition starts in Auto Sector cars and motorcycles specially in Karachi city after the re-launch of Pakistan’s second biggest brand “UNITED” said Chairman Association of Pakistan Motorcycle Assemblers, Muhammad Sabir Shaikh, UNIQUE & SUPER POWER brands also working hard for the better position of sales in Karachi City. The more important point is that if we check the registration data of excise and taxation department Sindh, the registration of two wheelers in the month of Jan- 2016 is the highest figure in the history of Pakistan. In cars TOYOTA & HONDA’s sales are also highest in the country in the month of Jan.-2016. Delivery period of cars for booking is 04 to 05 months, for current delivery the dealers are charging highest own money in the history of Pakistan.
The second important issue in the Auto Sector is the policy matter, Sabir Shaikh also added that the alarming feature in the auto sector is the length of time that the problem has been pending, having been under discussion since 2006-07. This is similar to many other policy decisions that we have investigated in the auto sector: the AIDP, the valuation issue, smuggling, standards and export clearances have all been under discussion for years, with an inability of the government to take swift, decisive action. Some of this has to do with coordination between government departments, in this case the Ministry of Commerce and FBR. Other times it has to do with the limited capacity of the government, which comes under pressure from various interest groups who have an incentive to maintain the status quo. These include not just industry stakeholders but also customs and clearance officials. Developing a capacity to set and implement standards is crucial both for consumer protection and for industrial development.
Two Japanese bike assemblers have introduced special schemes to entice customers, while the third one, a market leader, has increased the price and its dealers are demanding premium for immediate delivery as demand outstrips supply by a big margin. Suzuki and Yamaha are offering free bike registration to buyers but those who aspire to own Honda CG-125cc had to pay over and above already higher price.
A random market survey at Akbar Road, the hub of new and used bikes, revealed that authorised dealers of Atlas Honda Limited (AHL) do not have CG-125 model even for display at their showrooms. However, some dealers while assuring buyers that the 125cc model will be available for spot delivery, were demanding an additional Rs 3,000-4,000 as ‘on money’. The dealers said CG-125 is in short supply while the demand is high.
These dealers are also readily booking for CG-125, assuring buyers of deliver after 15 days. The dealers claim the situation is same in interior Sindh and Punjab for the popular Honda model. However, the same dealers of Honda were seen offering discount of Rs500 on the retail price on other Honda models.
Chairman Association of Pakistan Motor Cycle Assemblers (APMA), Mohammad Sabir Shaikh said AHL had raised the price of CG-125 by Rs 1,000 from November 2015 to Rs 103,900 while the prices of other Honda bikes remained the same due to competition with Chinese assemblers.
Interestingly most bike assemblers have kept the prices unchanged despite one per cent increase in import duty on parts from December 1, 2015 under the Mini Budget.
Shaikh said due to depressed sales, Pak Suzuki Motor Company Limited and the maker of Yamaha bikes are selling the bikes without taking any registration fee which ranges between Rs.4,000-5,000 per bike. These assemblers have kept the retail prices unchanged so far.
The maker of Yamaha bikes has been offering free registration from December 25 and the scheme would in the end of January 2016.
“Chinese bike assemblers too have not passed on the impact of 1pc hike in import duty to buyers owing to tight market conditions,” said Shaikh. He added that only AHL sales were going strong while two other Japanese bike assemblers were facing problems.
AHL had been producing over 70,000 units per month since Oct 2015. During July-Nov, the company sold 328,763 units as compared to 247,149 units in the same period last year. AHL sales in 2014-15 rose to 653,193 units as compared to 639,499 units in 2013-14.
According to figures of Engineering Development Board – EDB, sales of Suzuki bikes had plunged to 7,080 units in July-November 2015 as compared to 9,265 units in the corresponding period 2014. Suzuki sales in 2014-15 dropped to 22,703 units from 24,356 units in 2013-14. Yamaha arrived in the Pakistani market in July 2015 and went on to sell 7,601 units in July-Nov 2015.
Pakistan’s Motorcycle assemblers have a total installed capacity of 4 million motorcycles per annum, the production for the last two fiscal years has reached to 1.7 million bikes per year, some assemblers are in a precarious position owing to which they are failing to pay the outstanding amount on received parts for production from their vendors.
Consumers have failed to get any benefit from the huge lot of assemblers as they have been producing more than three decades old 70cc models mainly and due to competition they are decreasing the quality of products.
Chairman Association of Pakistan Motorcycle Assemblers (APMA) Mohammad Sabir Shaikh said around 13 units in Karachi and Hyderabad have closed down or stopped production followed by same situation with around 26 units in Punjab, three in Khyber Pakhtunkhaw and two in Azad Jammu Kashmir. He said there was no need to allow more bike assemblers as most of the existing Chinese assemblers are already facing stiff competition and only 10 units are enjoying relatively good sales as compared to their competitors.
Atlas Honda Limited (AHL) has the installed capacity of 750,000 units per annum and despite its higher price than Chinese bike, the company produced 639,506 units in 2013-2014 and 653,193 units in 2014-2015.
Assemblers are producing lower number of bikes as per their installed capacity. The second highest bike producer is Lahore based United Auto Industries of United Bikes whose yearly installed capacity is 288,000 units while it assembled 215,897 in 2013-2014 and 230,837 in 2014-2015.
N .J. Auto Industries (maker of Super Power bikes) produced 114,158 units in 2013-2014 as compared to 124,250 units in 2014-2015 as against its annual installed capacity of 205,000 units.
The maker of Road Prince Bikes Omega Industries of Lahore made 134,612 units in 2014-2015 as compared to 117,108 units in 2013-2014 while its installed capacity is 150,000 units per annum.
D.S. Motors Hyderabad, maker of Unique bike, produced 115,731 units in 2014-2015 as compared to 107,619 units in 2013-2014 as against its installed capacity of 157,000 units per year.
In order to revive the production of closed units, Sabir said the current government has to fix sale and production quota of every assembler keeping in view last five years production and sales. Otherwise the government must close approval of new units for assembling 70cc bikes.
If the government did not experiment the above, the industry would fail to produce quality two wheelers. Atlas Honda despite being its high price and producing same 70cc as Chinese are producing is enjoying good sales due to high quality.
Pakistan produces around 1.6 to 1.7 million motorcycles every year (since last 5 years) out of which 1 million units are assembled with Chinese technology. Three Japanese motorcycle makers fill the remaining market share.
The imported used cars sales in the end of 2015 and in the month of January 2016 is also very notable. These 660 cc imported cars are famous in big cites of Pakistan due to good fuel consumption. The low prices of petroleum products are also the reason for good market of new, used cars and bikes.
This exclusive article published in Monthly AutoMark Magazine’s February-2016 printed edition
Muhammed Hanif Memon
Founder and Editor in Chief of Monthly Automark Magazine since 2006. Magazine published from Karachi Pakistan covers Automotive industry of Pakistan, car, motorcycle and tractor news. Magazine distributed in Karachi, Lahore, Hyderabad, Multan, Islamabad, Gujranwala, Faisalabad.