New Entrants in the Automobile sector of Pakistan and contribution towards GDP

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Kiran Ejaz
The Automobile industry is one of the rapidly growing industries of Pakistan and is highly contributing to the overall GDP of Pakistan which is approximately 2.8%. This industry also pays around 30 billion rupees per year in the form of taxation and other duties to the national finances. Pakistan automobile industry, being the smallest and fastest growing industry at the same time in the entire Asia has provided jobs to 3.5 million peoples, playing an important role in eliminating unemployment from Pakistan. The industry of petroleum, gas and Steel is also heavily influenced by this Industry.The three automobile companies i.e. Honda, Toyota and Suzuki have dominated the market at present. However, companies such as Hyundai, Kia, MG (Morris Garages) have also been introduced to the market recently as new entrants and have been showing great interest. A joint cooperation between the Honda Japan and Atlas group of industries , produces Honda cars in Pakistan. It started in 1993 in Pakistan and it’s far car was sold in market in 1994. Since then, it’s the biggest manufacturer of cars in Pakistan and heavily contributing to the GDP of Pakistan. At present, these cars are known to be the most lucrative cars in Pakistan at economical rates. The growth of this company increased around 3.4% in fiscal year 2019 while growth decreased 2% in 2020 due to Covid-19 and new car entrants in market. Indus motors also known as Toyota is one of the most important car manufacturers of Pakistan and have highly influenced the market by continuous growth. However, it has heavily lost its market place in 2020 due to two reasons. As it is obvious, the first was Covid-19 but the factor that has lead to decrease in its market was the sudden increase in the prices of Toyota cars and at the same time entry of new lucrative cars. Suzuki is also the biggest car manufacturing company in Pakistan that produces small cars and these cars are only being produced in Pakistan . The company is increasing it’s prices at a very high rate which has also given place to new Entrants in automobile industries in Pakistan. The “Auto Policy 2016-21” which offered tax incentives to the car manufacturers passed in Pakistan in 2016. With that, different International car companies singed contracts with the local car manufacturing companies of Pakistan. New entrants such as Hyundai, Kia, Nissan entered in Pakistan and secured their place as the local companies were increasing their prices rapidly.. This rapid increase in prices lead to market decline of local companies while the growth of new entrants started to increase. Now the local companies are facing competition from the new car entrants mainly from China and Korea. The leading car entrants are Hyundai, Kia, ,Nissanand it’s expected that the growth of these new car entrants will increase at an exceptional rate in the year 2021.