Nishat Group is one of the biggest business conglomerates in Pakistan. They recently made an announcement of entering the rapid growing automotive industry of Pakistan. The Nishat Group signed an agreement with South Korean car maker, Hyundai Nishat Motor Limited will produce hybrid cars.
The new Automotive Policy 2016-21 has unveiled many such developments in the country. Analyzing the situation and strong competition with new market players, existing auto assemblers have also stepped up and announced new models along with investment plans.
The Nishat Group wanted to enter the auto sector back in 2012. However, back then there were quite a few incentives for a fresh investment that concerned them and they didn’t initiate any venture.
Norez Abdullah, Chief Financial Officer of Hyundai Nishat Motor Limited said that back in 2012 the policy was highly unfavorable whereas now the auto policy has brought new incentives which are attractive and which made them decide to start a venture with Hyundai, when approached.
He told that both the companies were conducting a feasibility study to analyze the scope of hybrid electric cars in Pakistan. The group has intentions of introducing hybrid electric cars but infrastructure for this technology is costly.
He further informed about Hyundai’s hybrid electric car Ioniq’s launch in US markets, adding that they intend to launch the same variant in Pakistan since such cars are in demand and people are out of choices at the moment.
He explained that they are trying to convince Hyundai about the potential of Pakistan’s market. The major concern is the technical issue as the hybrid technology is exclusive. Concluding, he added that importing of such a variant could be an option to be considered.
An assembly plant will be set up near Faisalabad with an investment of around $120 million. Both the partners of the Hyundai Nishat Motor Limited have to decide from which model would they begin.
Abdullah revealed that their plan is to produce fuel-efficient engines with price competitiveness to sustain in the market. They are conducting a survey to decide whether to start with 800 Cc or 1000 Cc engine category.
He said that the 800 Cc category is popular among consumers however, the profit margins are low. The company still has to decide about its low-end model.
The Hyundai Nishat Motor Limited is keen to come up with a sports utility vehicle (SUV) as a high-end model. The price range would be similar to the prices of such variants made by the existing Japanese car manufacturers.
Apart from this, the company will try to take advantage of the group’s diversified background in banking and insurance.
Nishat Group will also benefit from its diversified background in banking and insurance, since these two have strong connection with auto industry and this would give them an edge over other market players.
Millat Tractors are 18% stake partner in the new company. Millat has a good track record of developing local vendors and has achieved over 90% localization (local auto parts usage).
Abdullah also said that to achieve maximum localization within five years they will have to strategically take advantage of their partnership with Millat Tractors.
He concluded saying that as soon as the feasibility studies and market surveys were completed, they would start the construction of assembly line and would roll out their first variant in the market within two years.