Reasons of price fluctuations and its impact on the sales of automobiles in Pakistan

Abstract

Automobile manufacturing in Pakistan started in 1953 with the production of General Motors vehicles in partnership with the National Motors. In the same year, American automobile giant Ford Motors entered in the market of Pakistan with Ali Automobiles to manufacture Ford vehicles and light trucks. In 1960s Pakistan saw a huge boom in automobile industry, Several European automobile manufactures started production e.g., Massey Ferguson and Vauxhall. Later scooter manufacturer Vespa also started manufacturing in Pakistan. This was the time when automobile parts as well manufacturing of car batteries and other parts of automobiles started in Pakistan. Decline of automobile industry started in the 1970s when many companies were nationalized and, in return foreign investment in automobile and automobile related industry declined (Hafeez, 2007). New era of automobile industry started in 1983 with the entrance of Suzuki motors in partnership with the government of Pakistan. During the same time period Mazda also started their production of small trucks. In 1993 Toyota formed Indus Motor company in partnership with Arif Habib group and started manufacturing vehicles. In 1994 Pakistan saw their biggest foreign investment in automobile sector when Honda joined hands with Atlas group and started manufacturing motorcycles and vehicles in two state of the art plants in Shiekhupura.Some Korean automobile manufacturers e.g., Daewoo, Hyundai and Kia tried their luck in automobile industry but failed to retain their market in long term and both manufacturers decided to exist from market in 2008 due to financial crises of their local partner Dewan motors. From 2008 to 2016 only three Japanese manufactures dominated the automobile industry in Pakistan and annual sales in these years almost double from 100,000 to 200,000 vehicles which resulted in making Pakistan automobile sector attractive for foreign manufacturing companies (Irfan Anjum, 2019).