• car sector was investigated by the Competition Commission of Pakistan in 2010. However, no conclusive evidence for collusion amongst car makers was presented, and findings were heavily criticized by the industry.
32 Sales Volume • One of the most important features of the passenger car segment is the low volumes, which prevent the manufacturers from reaching economies of scale. • Domestic sales volumes are currently approximately 216,786 per annum, with total sales. • The motorization index in 2011 for Pakistan was 12 cars per 1000 people, compared to the global average of 165.97. • Industry stakeholders that we interviewed suggest that they would achieve economies of scale at 500,000 car/annum.
33 Sales Volume of Giants 2011-12 2012-13 2013-14 2014-15 90000 62000 61000 79000 13000 20000 22000 23000 50000 35000 32000 55000 Sales Volume Suzuki Toyota Honda
34 Regional Price Comparison Pakistan Thailand China India 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 Honda Civic Final Price Column1
35 Cont. Pakistan Thailand China India 0 5000 10000 15000 20000 25000 30000 Toyota Corolla Grande Final Price Column1
36 Cont. Pakistan Thailand China India 0 2000 4000 6000 8000 10000 12000 Suzuki Wagon R Final Price Column1
38 Market Structure • The motorcycle segment in Pakistan has seen rapid change in recent years, the most important of which has been the increase in volume. • From a volume of merely 63,000 in 1999-2000, production has grown to around 1.9 million units in 2017-18. • The impact of this increase in volume has been to potentially allow the assemblers and suppliers in their vending chain to achieve economies of scale, and consequently high levels of localization and low price. • These lower prices have in turn fueled demand further. • Currently the market is characterized by a large number of assemblers competing on price, with low barriers to entry.
39 Cont. • The motorcycle industry began with Honda’s assembly of motorcycles under the Atlas group in 1964. • The industry was initially dominated with just three Japanese brands: Suzuki, Yamaha and Honda. • Of these, Honda was the dominant player with approximately 70 per cent market share. • In the late 1990s non-Japanese OEMs began to make forays into the market and by the early 2000s, several local companies had started local assembly.
40 Cont. • The first sharp growth period started in 2002, driven by this increase in the number of players, a low exchange rate, and low duties and taxes. • A defining feature of this growth was the introduction of the “Chinese bike” or “Honda clone”. • The clone motorcycle, is a replica of the classic Honda CD-70, assembled out of local and Chinese parts, and available at about two-thirds of the price of the Honda original. • Despite the financial crisis, which registers as a dip in the period 2007-09, the industry quickly picked up volumes as it entered the sharpest incline since its inception.
41 Number of Manufacturers Year Number of Manufacturers 2009-10 83 2010-11 95 2011-12 100 2012-13 103 2013-14 111 2014-15 112
42 Large Number of Competitors • The rapid increase testifies not just to the demand factors discussed earlier but also to low barriers to entry on the supply side.
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