Muhammad Luqman

With the establishment of state-of-the-art assembly plants by two Chinese automobile companies, Lahore has emerged as a major cluster of the automobile industry in Pakistan, only second to the port city of Karachi.

The latest entrants in this cluster are the Chinese companies – Beijing Automobiles Industries Company (BAIC) and SUV manufacturers, Great Wall Motors. Honda, a Japanese car manufacturing company, has been operating in Lahore for decades. In addition, the city is home to over a dozen rickshaw manufacturing plants and several motorcycle assembly units including that of Honda.

Besides, the country’s largest farm automobile company, Millat Tractors Limited, has its plant on the outskirts of Lahore with an annual production capacity of 40,000 units. The fast-growing automobile industry accounts for 7% of Pakistan's GDP and employs a workforce of over 6.8 million people. Pakistan is the 15th largest producer of automobiles.

Its contribution to the national exchequer is nearly US$5.4 billion “The new Chinese companies have entered the Pakistani market just to benefit from the increasing demand for four wheelers,” Mian Muhammad Ali Hameed, Executive Director of Great Wall Motors, said in an interview with WealthPK. He said Great Wall Company has launched sport utility vehicle (SUV) Haval while BAIC has also introduced three models in Pakistan.

“Both the companies are targeting high-end clientele in Pakistan,” Mian Muhammad Ali Hameed said. The rickshaw assembly plants in Lahore and the adjoining districts, mostly with Chinese technology, are producing both ordinary three wheelers and loaders. The establishment of automobile plants has resulted in the mushroom growth of manufacturers fabricating components of two-wheelers, three-wheelers and four-wheelers, in addition to the ever-expanding tractor industry.

Major clusters of auto parts units are in Sundar Industrial Estate, Quaid-e- Azam Industrial Estate, Daroghawala Industrial Estate and Ferozepur Road Industrial Area. Besides, dozens of units dot Bund Road and Shahdara area. The units in nearby districts of Sialkot, Gujrat and Gujranwala, collectively known as industrial triangle, have also become the lifeline of Lahore’s automobile cluster by continuously supplying parts and other accessories.

In addition, a number of entrepreneurs have entered the business of manufacturing accessories related to the automobile sector. “More than 200 major auto parts manufacturing plants are working in Lahore and its vicinity,” Almas Hyder, former chairman of the Engineering Development Board (EDB), told WealthPK. He said a rationalized taxation regime could boost the automobile sector’s growth.

He said Karachi is still ahead of Lahore in car manufacturing, as automobile plants in the port city annually produce more than 100,000 four wheelers whereas the car production in Lahore and the adjoining districts is around 40,000. Almas Hyder said Lahore's growing reputation as a hub for the automobile sector has been driven by a combination of government support, international investment, and strategic location.

He said there is a need to design a policy that could encourage the export of automobiles while also meeting domestic requirements. “We have to follow the suit of Turkey and Malaysia in introducing Pakistani automobile brands in the regional market,” he said. He said the development of reliable local four wheelers could help reduce the country’s dependence on imported used and reconditioned cars.

Credit: INP-WealthPk