Inside Financial Markets

Hike in Japanese cars import an escalating threat to the domestic automobiles Industry

Report by Mujtaba Haider Qadri

Imports of Japanese cars soars up to 45%, reducing the market share of domestic automobiles manufacturer such as INDU & PSMC.
The impact of the entrance of new competitor is not being felt now since the lower discount rate has boosted the sales of the car but as the discount rate will start rallying then the domestic automobile industry would feel the lost market share.

Decrease in the discount rate has brought surge in the car financing leading to the high numbers of car purchasing.
People prefer Japanese cars because these cars are delivered immediately after receiving purchase order unlike domestic car industry. Similarly Japanese cars are more luxurious and have more feature as compare to the other cars.

The number of Imported cars increased from 7982 units to 14106 units from July to October 2015- 2016
Weaker Japanese currency in an international market makes their car cheaper. Currently 1 Japanese yen equals to 0.92 PKR. In Pakistan purchaser who have got 1 million could hardly afford a cultus on the other hand PASSO which is more luxurious and have more features as compares to the cultus can be bought.

Pakistan automobile industry comprises of assembling parts not manufacturing. Mostly automobiles parts are imported from Japan. Whenever the JPY weakens to PKR the cost of parts are reduced too but this benefits is not transformed to the consumer it only increases the profitability of the automobile assembler; however; on the contrary weakening JPY benefits are translated into the reduction of Japanese car prices. Consumers are benefitted for the reduction in the exchange rate if they purchase the imported cars.

Government intervention seems to be the only option left for the local industry to save their market share.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

The Canadian Securities Institute


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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)