Pakistan’s 1st KIA Sportage Car

KIA-Lucky Motor held a press briefing to launch its first car Sportage in Pakistan.

The CEO of the company explained that, concessions provided by the government in the Auto Policy 2016-21 were the basis for new entrants coming in Pakistan.

The company acknowledged that it is not the best time for the auto industry due to rupee devaluation and higher financing cost, but remained optimistic about the local automobile market.

With 60% of population in the active work age the company believes that this will drive the future growth in the automobile industry.

Sharing some statistics, the CEO informed that in 2018, 1.65 cars per 1000 people were sold in Pakistan, which was below the global average of 12.8 cars per 1000 people. India sells 2.4 cars per 1000 people while Indonesia sells 4.2 cars per 1000 people.

Applying these ratios adjusted for the differences in per capita income, the market size of Pakistan should be around 450-500k units.

Further, Pakistan’s automobile market could grow to 1mn units per year in the next 10 years. The management compares the current situation with Indonesia where 12 years ago the per capita income was same as of Pakistan’s in 2018 and after 12 years Indonesia is selling 1.2mn cars a year.

Based on the company’s assumption of a market size of 500k/1mn units by 2025/2030 the industry will have to go through an expansion after a few years.

The current installed capacity of the industry is 350k units while incorporating all the new entrants the capacity will be around 600k units.

Despite the optimistic targets the CEO was of the view that the Government should remove the recently imposed FED and Additional Customs Duty, whereas they should reduce duties on CKD’s while link deletions levels to volumes.

The CEO also informed that Tax/car is around 30-38% of the selling price whereas he believed that in order to increase revenue; Government should support increasing volumes by collecting smaller levies on large volumes than that of larger levies on smaller volumes.

Briefing about the plant, he told the audience that the plant has a capacity to produced 50k units, is located in Bin Qasim Industrial Park at an area of 100 acres with an investment of USD175mn.

The plant was completed in record time of 18 months with the support of KIA.

The plant is state of the art with machinery supplied by globally renowned OEMs. The plant has a CMM machine which cost around USD500mn and no players had this when they started operations.

The company has 12 dealerships around the country with the near term target of 20.

Briefing about Sportage, he informed that the car accounts for 20% of the total KIA sales of the region.

The car has won 6 design awards and in Pakistan the company is introducing 4th Gen Sportage.

The rational for introducing Sportage first was that there was no car in between 1800cc and 2700cc and in the price range of PKR4.4mn to PKR8mn. Sportage is a 2000cc vehicle starting from PKR4.9mn and is placed exactly where the company wanted.

Some of the safety features of the car are Dual airbags, stability control and management, downhill brake control, uphill assistance and advance traction control.

The car also has a panoramic sun roof, which is the first in Pakistan.

Sportage comes with 4 year 100,000km warranty, which should inspire confidence in customers.

Source: KIA-Lucky Motors, Next Research

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