In Islamabad I have spotted Tata Safari, Mahindra 800, Mahindra Esteem, Ford Ikon and Tata Sumo, but all of them belonged to the Indian High Commission, having the CD-27 number plate. Indian High Commission here has a large fleet of cars, I guess. But they haven't given me the opportunity of having a look at Tata Indica and Indigo so far.
The car market in India is a buyer's market. Cars are highly competitively priced there. The reasons, as pointed out by my friends here, are their economies of scale and greater competition between manufacturers.
The problem with Pakistan is the inability of the car makers to meet the local demand. Currently, there's demand of approximately 230k cars annually, whereas the local production is only 160k per annum. Imports are about 25k per annum, which leaves a demand-supply gap of 40-50k units per year. Due to this demand-supply gap, the market is completely seller-oriented. Customers have to wait for months to get the delivery of their cars. Otherwise they have to pay premiums. The situation of Indian car consumer is the envy of we Pakistanis.
This demand-supply gap has been there in the Pakistani market for the last four years. There's an ideal opportunity for new carmakers to invest in manufacturing facilities here to plug this gap. However, because of the failure of the govt to come up with a long term policy for the auto sector, investors have been shying away. It is high time for the Pakistani govt to announce and implement incentives for prospective and existing investors in the auto sector.
On the other hand, we have seen various Indian carmakers express their interest in establishing manufacturing/assembling facilities here over the past one year, which include Tata, Mahindra, Bajaj, Kinetic. However, the Pakistani govt has not been giving them a green-signal due to our pending disputes with India. I think it would be very wise to allow these Indian carmakers to establish their facilities in Pakistan. As it will be a win-win situation for both the countries. While Indian companies will get market access, Pakistani economy would get foreign investment. Jobs will be generated, domestic auto production will rise and consumers will get more choice in models.
