Often derided as the sick man of Pakistan’s industrial base, the automobile sector seems to be experiencing a renaissance period. This is attributable to the crossover SUV (CUV) bonanza that’s currently in full swing. The sector is so dynamic that within three years of its inception it is now the stage for the automotive industry’s grand chess game. In this game, you have the progenitor still consolidating its gains, the Sino-Franco-Malay-Korean up starts, and a resurgent Big 3.Â
The CUV segment is the poster child for the success of the Automotive Development Policy (ADP) 2016-21. It was a market that did not exist prior to the KIA Sportage and has now grown from 5% to 20% over the past three years. It was actually not a market that existed at all. It was carved out at the expense of the Big 3 of Toyota Indus Motor Company (IMC), Honda Atlas Cars Pakistan and Pak-Suzuki Motor Company (PSMC).Â
Writer’s note: SUV is used interchangeably with CUVs in Pakistan and in many other countries where CUVs are described as small to medium size SUVs. We will use a liberal interpretation of the term for the sake of math, and club all of them together. At least, until we get completely-knocked-down (CKD) Prados for proper market differentiation.Â
Not only has the CUV/SUV segment achieved significant success, but it is also poised for further growth. Its market share is expected to increase from 20% to 37% by 2030 according to Shabbir Uddin, Director Sales and Marketing at Master Changan Motors. This will come at the expense of the sedan and hatchbacks segments.Â
Disregarding the industry’s protectionism, capital allocation of this sort would probably make Adam Smith proud.Â
All of this, at some level if not all, is attributable to the KIA Sportage. However, before the Sportage could consolidate its gains, it had competitors, and it’s half-sibling (we’ll get to this) at the gates armed with its blueprints for CUV success.Â
The Sportage may have found itself to become the first incumbent in the segment. However, all the entrants born from the ADP that sought to challenge the Sportage have now become incumbents as the Big 3 are now mounting their own entry to the CUV market with their CKD lineups. Â
To explain how everything got to this point. Let’s first begin with where it started and that is the KIA Sportage. The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account. Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.To read the full article, subscribe and support independent business journalism in Pakistan
Good Job
Could have used pictures of SUV’s coming to or present in Pakistan.
Nice. I like that red.
We are waiting for new change but prices should be less
Nice. Waiting Anxiously
Good article!
By the way, it is a shame that IC engines is about 140 years old technology and hitherto we don’t have a single plant for engine manufacturing. 100 % import and so is transmission (gear box) and almost everything in the car, except low level items like battery, tires, floor mats etc. Even Honda air filter is an imported product from Thailand. In Pakistan, the automobile companies call themselves “manufacturers”, but in reality they are mere assemblers!
This is largely due to the bad quality education where we are not producing competent engineers who can design and run the plants for hi tech products.
good
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