124 BRANDS ARE PRODUCING SAME 70CC DECADES OLD MODEL IN PAKISTAN

Pakistan’s Motorcycle assemblers have a total installed capacity of 4 million motorcycles per annum but the production for the last two fiscal years has remained low at 1.7 million bikes per year.

Relatively a small country with population of 200 million, the country has 124 bike assemblers including three Japanese giants. In Pakistan Two Japanese assemblers Yamaha and Suzuki are not producing 70CC Bikes, but all other approx 122 assemblers are producing same CD-70 cc bike with only brand name change, these 122 brands are Bionic, Racer, Laser, Safari, Aan, Royal Star, Mehran, Honda, BML, Blue Star, Grace, Crown, Star, Eagle, Hero, Ravi, Habib, Raftar, King Hero, Leader, Super Star, Metro, Hunza, Moon Star, Super Powr, New Asia, Osaka, Pak Star, Sohrab, Hi Speed, Royal, Rohi, Diamond, Union Star, Jinan, Guangta, Star Asia, Geo, Supreme, Toyo, United, Zxmco, Guru, Tez Raftar, Saszgar, Super Asia, Unique, SKM, Ghani, Qingqui, Aiwa, Sakai, Shaheen, City Super, Unipak, Asia Hero, Super Speed, Treet, Buraq, Pal Style, Sonica, Master, Road Prince, Excel, Hawk, Aerolite, Sky Wing, Captain, Rockey, Super Shahbaz, Champion, Stahlco, ST-70, Jan Power, Challenger, Crown, King Rider, Josh, Laser, Long Life, Pak Hero, Super Hero, DHL, Hi-Deluxe, Shahcar, Rebon, Eagle Star, Sutlej, Lucky, Vicky, Shine Star, Gold Star, Hi-Metto, Fara, Imperial, Pak Speed, NXG, Stalion, Classic, Express, Jaguar, Metro, Elite, Akai, Royal Metro,  DYL Dhoom, My Hondo and Power.

The government is reported to have given go ahead signal to around 20 assemblers in the last two years without realizing that existing assemblers have failed in rolling out bikes as per their plant capacity.

Surprisingly, the previous governments gave permission to many assemblers whose annual installed capacity was ranging between 1,200-8,000 units.  It means that parties associated with other kind of business had invested in bike assembling business without having any technical expertise. As a result most of them had either closed down or slowed down their production due to intense competition, lowering profit margins and heavy production losses, but experts of motorcycle industry and marketing are also fail in bike assembling due to corrupt system of taxation and TBS by the government of Pakistan.

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.

Sources said the ministry of industries has compiled a data of number of bike assemblers in the country coupled with their products, installed capacity and their production during 2013-2014 and 2014-2015 to ascertain the actual situation. The Ministry is also searching as to how many units are now struggling for their survival.

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.

He said closure of units or slow down in production have already led to massive unemployment in the sector. Many of the units are on the verge of collapse while others are heading towards the dead end.

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.

Anticipating a big bike market in coming years, AHL has decided to invest $100 million.

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.

Memon Motors of Super Star bikes have the capacity to produce 126,500 units per annum but it assembled 75,181 units in 2013-2014 and 35,836 units in 2014-2015.

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.

Plum Qingqi Motors has a installed capacity of 100,000 units but it only produced 26,141 bikes in 2013-2014 and 30,155 units in 2014-2015.

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.

The difference in valuation of the import of motorcycle parts between commercial importers and assemblers – valuation for assemblers is mostly higher – is leading to an increase in the  smuggling of motorcycle parts from China, industry officials said.

Customs department increased valuation on motorcycle items or parts for local assemblers, which commercial importers import from China on lower valuations. Thus, smuggling increased manifold with 124 assemblers out of which 80 assemblers are active  in the country now using smuggled parts in the motorcycle assembling industry.

Commercial importers are those who import motorcycle parts for approximately 20 million motorcycles that are plying on the country’s roads. On the other hand, motorcycle assemblers import parts from China and then use them in the assembling industry.

Industry officials say the increase in smuggling is denting the national exchequer, and can possibly reach up to Rs5 billion on an annual basis. With the rise in valuation for assemblers, industry officials estimate that the cost of a Chinese assembled motorcycled has risen by Rs3,000 to Rs6,000. This is why motorcycle assemblers are now shielding themselves by using smuggled parts in assembling.

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. Branded Japanese motorcycle makers fill the remaining market share.

This exclusive article published in Monthly AutoMark Magazine’s December-2015 printed edition. Written by AM team