Automark

A visit to Guangzhou Haojin Motorcycle Co. Ltd.

An exclusive interview with Thomas Peng, Vice G.M. of Haojin Motorcycle Co.

During my recent visit to China to attend the 120^th Canton Fair, I had the opportunity to meet a lot of different representatives from various Chinese Manufacturing and Service Industry, specifically related to Two Wheelers. Amongst many, I had the honour of meeting Mr. Thomas Peng, Vice General Manager International Marketing of Guangzhou Haojin Motorcycle Co. Ltd. In the Canton exhibition, HaoJin motorcycle had launched the new model  “TAURUS”to global market; and at the same moment Haojin won the “Recommended export brand of year 2016@

Guangzhou Haojin Motorcycle Co. Ltd. Is one of the biggest domestic producers of 2W products which range from dynamic and stylish Motorbikes (Sports, Cruisers & Offroad), Scooters &Trikes which features engine displacement capacities in between 100-250cc. The production customers of Haojin are not only domestic but the company is also one of the biggest exporters of the products to international market.

During our meeting, Mr. Thomas honoured me by inviting me to visit the manufacturing facility which I humbly accepted. As planned I visited the manufacturing facility on 19^th October 2016. Mr. Thomas organized a guided tour of the facility in which I saw the production operation in conformance to ISO9001:2000 QMS standards. The state of the art facility is capable of producing hundreds of thousands of unit yet conforming the quality standards. I was taken through the motorcycle assembling facility and the engine manufacturing facility separately and was allowed to photograph the whole facility.

Mr. Thomas then expressed his interest in Pakistani market. He has intention to introduce their product range in Pakistan and to fulfil his intentions he had visited Pakistan earlier and had meetings with few trading organizations in Pakistan but so far he has not received any positive response from any local importer. He believed that the lack of interest is perhaps due to very high concentration of obsolete 70cc motorcycle designs currently being sold to Pakistani consumer market, however he remains positive that due to competitive pricing the products from Haojin can compete in Pakistani market. He specifically mentioned that the competitive pricing did not mean in any case a compromise in quality, as the products can compete on the same quality levels as observed by many other branded bikes in local market.

Concluding this meeting I had sincere hope for Haojin’s introduction to Pakistani market for our consumer market needs good quality modern products which Haojin can offer at a very competitive price.

This exclusive interview published in Monthly AutoMark Magazine’s November-2016 printed edition

by M. Hanif Memon

Dewan Motors inaugurated Pakistan’s first public charging station for electric vehicles and plug-in hybrid electric vehicles at Emporium Mall in Lahore.

“Today is an important milestone for the BMW Group: not only does it mark the inauguration of the first public BMW charging station in Pakistan but also the first in the entire region. We call this service BMW ChargeNow,” said Mr. Johannes Seibert, Managing Director of BMW Group Middle East.

“Dewan Motors’ investment in this technology is a significant step in supporting the BMW Group’s vision to offer Electromobility internationally, and in providing easy access to charging stations for customers of our plug-in hybrid and electric vehicles,” he added.

By 2030, 60 % of the world’s population is expected to live in cities. When it comes to shaping future mobility, the BMW Group considers the entire value chain, offering innovative services and solutions to improve urban mobility.

Foreseeing the growth potential of plug-in hybrid and electric vehicles in the country, Dewan Motors took the first step towards electric mobility in Pakistan by installing a BMW ChargeNow station. This is the first of the three stations to be installed by the end of this year.

BMW ChargeNow is a network of charging stations that provides BMW plug-in hybrid and electric vehicle owners with easy, quick and secure charging services.

“The latest BMW plug-in hybrid and electric vehicles offer even greater mobility than conventional Hybrid vehicles making it possible to have everyday motoring purely on electric mode with practically little to no requirement for fossil fuels”, said Mr. Dewan Mohammad Yousuf Farooqui, Chairman, Dewan Motors.

“Not only does this result in minimum to zero emissions; but also tremendous fuel savings. This as you know sir, has a direct and very positive impact on foreign exchange reserves of the country”, added Mr. Farooqui.

Curtsey: Propakistani

Motorbikes, A word humans usually associate with individuality, passion, enthusiasm, adrenaline, customization, fineness and above all liberation. Motorcyclists around the globe usually are people who may start up riding motorbikes as a part of mere necessity but the love of riding and joy of unstable stability is what appeals many to become motorcyclists for their entire lives.

In Pakistan, most of our population rides affordable small engine globally obsolete variants of motorbikes for catering their needs. These motorbikes serve as family saloons for the lower middle class and we often see a family of 4 riding along. As the inflation rose a decade ago raising the value of the 4 wheeler, so came the influx of Chinese motorbikes thus enabling the affordability of two wheelers for the masses.

As the world recovered from global financial crisis and Pakistan emerges from the stranglehold of terrorism, the prosperity in the past 5 years have risen altogether. With the prosperity flourishing the middleclass motorcyclist searches for a motorbike which not only serves the need but also fulfills the thrills of brisk acceleration and a comfortable ride, both of the aspects which couldn’t be associated with an affordable Chinese motorbike of obsolete design.

For this purpose enthusiasts turned to Suzuki Motorbikes and particularly towards Suzuki GS 150. A bike that is known to be the most comfortable & powerful, carbureted locally produced motorbike of recent times with a retro design.As the interest of the motorcyclists rose, the sale figures of GS 150 climbed as well.

GS 150 is particularly known for its higher sprung weight which gives the rider comfort and high speed stability. The powerful engine displacing 150cc of Air/Fuel mix is also a masterpiece which propels the bike smoothly yet the acceleration doesn’t seem to stop even beyond 100kph thanks to the 5 speed sliding mesh gearbox. These are the reasons which have made the GS 150 a bike famous for long distance touring purpose.

Humans are perfectionists.This means of having the very special ability of finding areas of improvement even with the perfect product. As more and more users acquainted with GS 150, areas of improvement were highlighted. Due to its heavier weight the need for a front disc brake was realized. Most of the users who bought GS 150 replaced its rear tire with a wider tire for better traction as well as in general opinion the standard factory tire was suited for obtaining better fuel economy but yielded lesser grip.

Considering the user opinions, PSMCL has recently launched Suzuki GS 150 SE.Unlike most of the competing manufacturers in which a model change only means change of graphic stickers,this version now comes not only with stylish graphics but with front Disc Brake and wider rear tire as a standard. Alongside these updates we also get casted wheels, which add style while requirement of regular maintenance and alignment from spoke wheels is also eliminated. The motorbike features new front fenders and new shock absorbers as well. The shock absorbers have been upgraded to cope with the additional loading on the front fork due to addition of Disc Brakes.

By Shahzad Tabish

Published in Monthly AutoMark Magazine’s November-2016 printed edition.

Pakistani auto market is monopolized by the Toyota, Honda and Suzuki. According to reliable sources the official of Nissan and Renault met with officials form Board of investment and Engineering Development Board in a meeting to discuss the plan of introducing new cars by Nissan and Renault in Pakistan.

Group Renault is a French multinational automobile manufacturer. Nissan is a Japanese multinational automobile manufacturer.
Last month, Ishaq Dar met the representatives of Renault to resolve their queries about the new import/export policy Pakistan has devised for car manufacturers looking to expand their businesses here in Pakistan.
New measures for expansion, investment and consumer protection in auto sector of Pakistan were proposed by Economic Coordination Committee after reviewing the Auto Policy, headed by the finance minister.
Miftah Ismail, chairman of Board of Investment Said, “We expect there will be one or two foreign investors coming into Pakistan…. hope some people will bite”. He further said that we would like to have as many manufacturers as possible in Pakistan by ensuring protection to our local manufacturers.
The major attraction for companies such as Renault is the new policy which allows these investors to import tax free manufacturing plant equipment and pay less taxes on import of parts when assembly starts plus various other incentives that can help new entrants in the automotive industry to set up their operations in Pakistan.

Nissan chief spokesperson Jonathan Adashek said: “Pakistan is certainly a market of interest for us at present”, but added no final decision had been made.

Police in southern China are punishing drivers who dazzle other road users with full-beam headlights by making them stare into the lights for a minute, it’s reported.

Shenzhen Traffic Police posted photos of the campaign in action on their official Weibo account. “Tonight we are carrying out punishments using a high beam,” the post reads. It’s racked up 87,000 likes and been shared 93,000 times. The photos show people sitting directly in front of a car with its headlights on.

Official media say drivers are fined 300 yuan ($44; £36) and made to spend 60 seconds in front of the beam. But some news websites have suggested that the headlight element is optional, although it’s unclear why people would choose it on top of paying a fine.

The force faced criticism for a similar initiative in 2014, but nonetheless decided to start it up again on Tuesday. This time around, the reaction has been largely positive. Several other local police forces gave it the thumbs-up on their social media accounts, and a poll on the mainstream Sina news portal found that 90% of people approved.

On the Weibo microblogging site, many people agree. “Am I the only one who thought a minute was too short?” reads one comment, which garnered 12,000 likes from other users. Another person feels the campaign is “long overdue”, while one berates “selfish, inconsiderate drivers”. A few people are concerned that the punishment could seriously damage eyesight, and one declares: “This is a human rights violation”.

Shenzhen’s traffic police have opted for unconventional penalties before. Last year, they made jaywalkers choose between paying a fine or wearing a green hat and vest while directing traffic.

source – BBC

The Director General Customs Valuation has issued new custom values on August 25, 2016 after three years for import of motorcycle helmets ranging between $2.60 to $9.60 per piece of Chinese and other countries origin based on the prevailing prices in world markets.

Customs values for bike helmets (half and full face and cross shaped) specified shall be assessed to duty/taxes of above customs values.

The Customs said valuation methods given in Section 25 of the Customs Act 1969 were followed. Transactions value method provided in Section 25 (I) was found inapplicable because the requisite information was not available. Identical/ similar goods value methods provided in Section 25 (5) and (6) were also not found helpful in determination of values due to wide variation in values. Consequently market enquiries as envisaged under Section 25(7) of the Customs Act 1969, were conducted and customs values of bike helmets were determined under Section (7) of the Customs Act 1969.

The values determined in the ruling shall be the applicable customs value for assessment of subject imported goods until and unless it is rescinded or revised by the competent authority.

Market sources said that previous ruling on full face helmet of China was $2.53 per piece while valuation of half face helmet was $2.23.

They said the import duty on helmet ranges between 16-20 per cent, additional customs duty of one per cent, 17 per cent sales tax, additional three per cent sales tax and six to nine per cent income tax. Considering the valuation ruling of $2.80 of a Chinese helmet at 16pc ST, one per cent additional customs duty, three per cent additional sales tax and six per cent income tax, the cost of import for a helmet comes to Rs 440. On the contrary, full face helmet of Chinese origin sells between Rs 800 to Rs 4,000 while half face helmet sells between Rs 750 to Rs 3,500. Some branded cross shape helmet is priced Rs 5,000, but after the sindh Govt’s announcement for bike rider wearing compulsory helmets, the prices of helmets increased.

Association of Pakistan Motorcycle Assemblers (APMA) Chairman Mohammad Sabir Shaikh said it is also unclear whether imports of helmets from China at same of European standards or average quality is arriving into Pakistan.

He said customs department does not have any study regarding category of helmets arriving from China as certified helmets are already very costly in China starting from minimum $10 to $35 per piece and sub standard helmets are priced between $4 to $13 per piece.

Thanks to the rising demand for two- and four-wheelers in Pakistan due to China-Pakistan Economic Corridor (CPEC), both car and bike segments of the Atlas Group have been recording high sales in recent months.

Bike-maker Atlas Honda sold 76,309 units in August alone while car-maker Honda Atlas has so far booked orders for over 18,000 new Civics since its launch in June 2016.

“After the pre-launch on June 6, there have been approximately 18,500 orders for the new Honda Civic,” Honda Drive-In and Honda Quaideen CEO Shabir Alibhai said.

Honda Atlas is delivering Civic I-VTEC within one month of the booking date followed by two to three months’ delivery time for Civic Turbo 1.5 and four months for Civic Oriel 1.8. Bookings are made at 50 per cent of the value of the car.

In the motorcycle segment, Atlas Honda had achieved sales of 73,259 units in January followed by 73,078 units in April.

A spokesperson for the bike maker said the two-wheeler market is responding well to the company’s competitive pricing strategy and timely response to customer needs.

He said the company is nearing the completion of 1.3 million-unit capacity expansion form the previous capacity of 750,000 units per annum.

While the demand for CG125 and 100cc bikes is on the rise, CD70 is leading the company’s sales with the monthly demand clocking up at more than 50,000, he added.

Karachi is also experiencing a surge in demand. The city is a big credit sales market, but Honda is selling on cash “even in this tough market,” he claimed.

“Our target is to increase the capacity utilisation of the new factory as soon as possible,” he added.

The bike manufacturer sold 811,034 units in 2015-16 as opposed to 653,193 units in 2014-2015, reflecting a year-on-year rise of 24.1 pc.

Sabir Shaikh said Honda is going strong because of its high quality unlike Chinese bike assemblers. Most of the Chinese bike assemblers prefer selling cheap and affordable bikes to increase sales, he added.

Out of the total annual production of about 2m bikes, Honda manufactures around 800,000 units of original Honda CD 70 and CG 125, Chinese bike assemblers roll out up to 1.1m units of replica of CD 70 and CG 125 while all other models and brands including Suzuki & Yamaha assemble and  sales 100,000 units every year. The very notable and important point is that out of 02 million 1.9 million bikes are original and replica of CD 70 and CG125.

Suzuki bike sales plunged 9.5pc to 2,825 units in July-August from 3,121 units in the same two-month period of the preceding fiscal year.

In 2015-2016, Suzuki’s sales decreased to 17,456 units from 22,703 units recorded in 2014-2015, down 23.1pc year-on-year. Yamaha sold only 2,044 units in July-August as opposed to 3,450 units in the same period a year ago, showing an annual decline of 40.7pc.

FBR has its focus on revision and streamlining of customs values as well as data interchange with the exporting country to eliminate under-invoicing.

Sources said that the delegation of Pakistan Customs would also hold meetings with Customs of China to discuss issues pertaining to the trade related aspects under China-Pakistan Economic Corridor (CPEC).

The import bill of parts and accessories used in assembling vehicles locally rose 8.5 per cent year-on-year to $841 million in the last fiscal year, even higher than $537m spent on imports of completely built-up (CBU) units.

According to the Pakistan Bureau of Statistics (PBS), imports of completely knocked-down (CKD) and semi-knocked-down (SKD) kits was $775m in the fiscal year 2014-15 and that of CBU was $406m.

In the imports of auto parts including CKD’s and commercial imports of after market parts of cars, motorcycles, LCV’s, heavy commercial vehicles and tractors massive mis declaration and under invoicing by the importers and assemblers of different categories and in different dry ports is one of the famous story in Tax evasion history of FBR in Pakistan.

Sources said the industry is importing hi-tech parts not manufactured in Pakistan while auto-parts makers are also importing finished parts, castings, sub assemblies, sub components and raw material, mis using the SRO 655/I-2006.

Based on the import figures of $841m for CKD/SKDs and $537m for CBU units in FY16, a total of 216,000 units were assembled, including cars and LCVs, the former Paapam chairman said. In contrast, imports of used cars were more than 50,000 units in same fiscal year, he said.

The combined imports of SKD/CKD units and parts and accessories (after market) come to $1.17 billion in 2015-16 compared to $1.09 bn in 2014-15.

Sabir Shaikh said hi-tech parts were not produced in Pakistan despite rising sales, especially of motorcycles. Rising imports of parts suggested local vendors were unable to meet demand and the industry was buying it from the commercial importers, he said.

“There is a need to form an independent audit team which can check the actual localization levels achieved by the industry in various auto segments,” he said, adding that despite high sales of bikes, nobody from Pakistan had made serious effort to set up a carburetor plant. “We are still an assembly-based industry as major parts come from abroad.”

Federal Board of Revenue (FBR) has increased duty on auto parts by one percent over and above the duty structure approved in the Auto Development Policy (ADP) 2016-2021, the 1% increased in Custom Duty already implemented from July 2016 under SRO 693/2006.

Sabir Shaikh argue that if the government starts intervening in the auto policy from day one, the fate of new auto policy will not be different from the previous policy and new investors will stay away from Pakistan. “I feel imposition of one per cent additional duty on auto sector components is an attempt to discourage new investment in this sector,” said Muhammad Sabir Shaikh.

Pakistan’s Motorcycle assemblers have a total installed capacity of 4 million motorcycles per annum but the production for the last fiscal year was record two million units, out of total 02 Million sales 1.9 million bikes are original and replica of CD 70 and CG 125.

Due to tough competition between bike assemblers 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 replica of CD-70, 70cc models mainly and due to competition they are decreasing the quality of products.

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 some of them are 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.

One more important point for fixing valuation for import of motorcycle parts that Honda is producing original CD 70 and CG 125 motorcycles, all other Chinese based assemblers are producing replica of CD 70 and CG 125 motorcycles which are 40% lower priced than original Honda.

This exclusive article on Pakistan Automotive Sector, published in AutoMark Magazine October-2016 printed edition

IT COULD STOPPED ALL NEW INVESTMENT

GOVERNMENT SHOULD REVIEW OTHERWISE ADP 2016-21 MAY BE A TOTAL FAILURE 

The Government of Prime Minister Muhammad Nawaz Sharif, decided in October 2013, to set up a Committee to formulate an Automotive Development Policy (ADP) that can provide a solid framework to strengthen the sector further, laying down a comprehensive, well-defined roadmap that aims essentially to lower the entry threshold for New Investment, create enabling tariff structure for development of the Automotive Sector, rationalize automobile import policy.

The Policy has been formulated after due consultation process with all import stakeholders including Pakistan Automobile Manufacturer Association, Pakistan Association of Automotive Parts and Accessories Manufacturers, Pakistan Association of Spare Parts Importers and dealers etc etc. Most importantly, the consumers’ interest was also the main consideration.

Government opinion is that the motor cycle industry has tapped market potential, while local car assemblers have failed despite enjoying several incentives like duty exemption. These assemblers have not even turned into manufacturers due to their failure in completing the localization programme. This is really the hard fact.

Engineering Development Board which is a part of federal ministry of industry and production and Board of Investment jointly announced the Auto Development Policy 2016-21, on 2nd June 2016. This policy is warmly welcomed by all relevant quarters. However old players of automobile industry who were enjoying monopolized situation in the market and pocketing huge some of money in shape of premium on every unit were not happy, rather annoyed. It may be noted that premium money is not taxable, it falls purely in the category of black money. Now this lobby is active and want that ADP 2016-21 could not become successful. They have their own traditional techniques to dilute the advantages and benefits of new policy.

The basic objective for announcement of five year policy is to ensure the new investors that this policy will consistent for 5 years and no change shall be made in the policy during this five years. So investor shall be satisfied that his investment is risk free. Unfortunately the Government has made a great change / amendment in this policy within the 25 days after the announcement, through SRO 483 dated 29th June, 2016. Now it is compulsory that every light commercial vehicle assembler has to establish ED Coat Painting system in his upcoming auto assembly plant. This is a new conditionality which was not mentioned at the time of announcement of the policy. This one word change, makes a very very negative impact upon the new investor / assembler. The cost / investment of existing conventional painting system is in between 2 and 3 crore rupees, where as the cost of ED coating painting system is around 30 to 40 crore rupees and every month running cost is around 1 crore to 2 crore rupees.

Light commercial vehicles plays a pivotal role in progress of economy. They are suitable for inter city transport of goods. They are the main tool to transport agriculture goods from farms to main roads. They also use for the transportation of passenger in country side and in small towns. These are utility vehicles, do not need extraordinary cosmetics. Their main function is loading of goods. So customer wants powerful engine and sturdy chassis. He is not more conscious about the looks and cosmetics of the vehicle. ED coating painting system mainly enhance the looks and cosmetic value of vehicle. It may necessary for the car but for light commercial vehicles it is not very much necessary.

Furthermore conventional primer painting system is largely acceptable by the Pakistani customers and even Heavy duty trucks are still allowed to do conventional primer painting system. This also creates an anomaly into the policy.

If we analyze the economic viability of the upcoming project in reference to sales / production volume and payback period of investment. One can easily understand the difference of 40 crore and 2 crore rupees. So if a new comer / investor install ED coating painting system the project will become totally unviable.

In the light of above mentioned facts, it is very much clear that new investment in automobile sector shall be totally stopped and government hopes and objectives shall not be materialized. As a result situation of unemployment will not improve. The old players of automobile industries shall maintained their monopolized stature. Customers will suffer immensely and forced to pay huge premium money as usual. Automobile sector experts has the opinion that Government policies should focus on technology transfer. It may be noted that still auto industry of Pakistan is restricted to the assembly work. Not a single company is producing the components of the following critical and functional parts.

a)    Engine

b)    Transmission

c)    Gear Box

d)    Axles

e)    Ignition System

f)     Clutch System

g)    Braking System

h)    Motors etc

i)     Wind Serene & Door Glasses

Japanese companies are working in Pakistan since 90’s but they are doing only welding, painting and assembly. Old players who have total grip on automobile industry and enjoying monopoly wish to continue this situation. They want to keep entangle new players in the same area i.e. welding, painting and assembly functions. Government authorities may review this unnecessary and damaging amendment in the policy and allowed the new players in this segment to establish a conventional primer painting system as per existing procedure.

Exclusive review by Anwar Iqbal, published in Monthly AutoMark Magazine’s October-2016 printed edition

Omega Industries established in 1995 in pursuit of empowering the Automotive Industry for Motorcycles and Rickshaws manufactures in Pakistan and have a professional team of sale, service and spare parts. The Industry is committed to providing necessary skills, knowledge, hands-on training and soft skills to the underserved youth which allows them to exploit employment

To appreciate dealers company have arranged a incentive tour to Singapore, Malaysia and Bangkok.

Meanwhile, Omega Industries held a convention 2015-16 in Bangkok hosted by Faisal Mufti Groups Senior Marketing Manger of Road Prince. The purpose of this convention was to meet their dealers under one roof and also want to appreciate their dealer’s employ in form of awards / Shield for their achievements.

There was a big ceremony at the occasion, This event was so special as another milestone achievement by this group were announced. Mr. Zhang of DFSK Group and Omega Industries Group Chairman Sohail Usman singed MOU for cooperation in 4 wheel business.

General Manager, Mr. Zhang, of DFSK group, China and Omega launches 3 models. Mr. Zhang addressed with the convention and announced that they will be happy to award the distribution ship of automobile to Regal Automobiles Industries Ltd. He also elaborates the features of the vehicle that these kinds of automobiles are very useful in Pak-Chine corridor due to its suspension and comfortable drive. These vehicles are designed as per quality and accordance with the market competition for customer’s satisfaction.

Mr.Tanveer Ahmed, CEO Omega Industries, also addressed with the convention. He was pleasure to see the progress of their dealers and their employers. He thanks to Mr. Zhang to trust on our group and ensure him for better services of their newly launched vehicles. He also appreciated the organizer of the convention.

Mr. Sohail Usman, Chairmanr Omega Industries, was also preset and he welcomes all the dealers at the occasion.

Dongfeng Motor Group, China

The story of DFSK can be traced back to DFM (Dongfeng Motor Group, China), originally founded in 1969.  Dongfeng is now China’s third largest vehicle manufacturer, selling almost 2 million vehicles representing a 10.8% share of the Chinese marketplace.

DFSK was formed as a joint venture between DFM and DFSK Group and today operate six manufacturing sites within China, producing mini vans, motorcycles, ATVs and shock absorbers. They have gained international quality certificates ISO9001, 3C and Environmental Certification ISO12000.

Such is DFSK engineering excellence that they are currently engaged in partnerships with several of the world’s leading motor manufacturers, making their vehicles for the Chinese domestic vehicle market. In 2014 DFSK commercial vehicles achieved sales of over 290,000 with a forecast of 360,000 sales for 2015.

This exclusive media coverage has been published in Monthly AutoMark Magazine’s October-2016 printed edition