Pak's Japanese-dominated car market poised for new entrants

Pakistan's car market has been dominated by Japanese automakers for decades, but a mini-economic revival looks set to attract new players from Europe and Korea into the mix.
Despite heavy taxation on imported vehicles, enthusiasm for owning a car in Pakistan has remained undented -- thanks in part to underdeveloped public transport in the country's sprawling cities, but also the social status it brings.
Toyota, Suzuki and Honda car assembly plants already work around the clock in the southern port city of Karachi and eastern Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered.

Now demand for cars in the South Asian giant of 200 million people is accelerating even more quickly, as economic growth has reached its fastest pace since 2008 while renewed investor confidence and easing inflation have spurred consumer spending.
Keen to cash in, a delegation from German auto giant Volkswagen visited the country in recent weeks, according to Pakistani officials and German diplomats.
Company spokesman Christoph Adomat told AFP that while "Volkswagen is constantly evaluating market opportunities on a worldwide basis... There are no decisions for an investment from Volkswagen side in Pakistan".

Miftah Ismail, the chairman of Pakistan Board of Investment who took part in the talks, said Volkswagen was not the only company expressing an interest.

"There are a number of other companies from (South) Korea and Europe that we are talking to who are thinking of setting up assembly plants in Pakistan," he said, without naming the firms.
US and European cars dominated Pakistan's roads in the early years after it gained independence from Britain in 1947.
But fuel prices made their compact, efficient Japanese rivals more popular and from the 1960s onwards manufacturers like Toyota, Suzuki and Honda gained a stranglehold on the market.
Italy's Fiat made a brief foray in the 1990s, while South Korea's Hyundai as well as Daewoo-owned Chevrolet tried -- and failed -- to gain a foothold in the 2000s before the financial crisis forced them to exit.

Because Pakistan charges heavy duties on imported cars less than three years old, Japanese companies with in-country assembly operations can set prices significantly above the regional average.
The bottom-of-the-range Suzuki Mehran costs the equivalent of USD 6,300 in Pakistan but sells for around USD 3,900 in neighbouring India. The most popular Corolla 1.3 sedan starts at 1.6 million rupees (USD 16,000), but buyers have to wait months or pay USD 1,500 for prompt delivery.