French carmaker Renault is the new entrant in Pakistan’s growing auto market that was long dominated by Japanese manufactures for decades. The French company recently signed an agreement with a local partner to assemble Renault cars in Pakistan.
The new state of the art car plant will be built in Karachi, the country’s economic hub, in a sign that government incentives in the auto industry are attracting new investment. A growing middle class in the country of nearly 200 million people offers a great opportunity for investors in the auto industry.
The government last year announced new incentives to attract investment in the auto sector, including one-off duty-free import of plant and machinery for setting up an assembly and manufacturing facility.
Under the new incentives, a new company is also permitted import of 100 vehicles of the same variant in the form of completely built units (CBUs) at 50% of the prevailing duty for test marketing after ground-breaking of the project.
The Renault car plant is expected to complete in the first quarter of 2018 and car sales are likely to begin in 2019, according to a statement issued after the agreement signed between Renault and its local partner Al-Futtaim Automatic Pakistan (Pvt), Limited, a subsidiary of Al-Futtaim.
Fabrice Cambolive, Senior Vice President of Renault said that Renault Group was delighted to extend its international footprints by entering Pakistan’. Mr. Len Hunt, President of Al-Futtaim Group said that Pakistan offers one of the most dynamics opportunities in the region.
The Pakistan’s government this year granted three new companies to set up car assembly plants in Pakistan that analysts say could bring upvto $2 billion investment into the auto sector.
The new companies will challenge the long-held monopoly by the Japanese carmakers including Toyota, Honda and Suzuki, which have dominated the auto industry for several decades.