Hyundai Shakes Hands with a Pakistani Company to Set-up an Assembly Plant

Al-Haj Group has recently shook hands with Hyundai Motor Company (HMC) and make a decision to assemble various truck models and luxury buses in Pakistan with a projected investment plan of Rs4 billion.

For the joint venture, 30 acres of land outside Karachi have already been purchased as it is aimed to commence production in the next 12 months.

Phase 1 of the venture will see Al-Haj Hyundai (Pvt) Limited, a separate company, initially investing Rs1.5 billion through its own sources.

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Nevertheless, if both the partners share the same opinion about moving forward, then Hyundai might provide an investment of its own in Phase 2 which is expected to commence by the start of 2019. Al-Haj Group has been in the market since 1960 and is presently assembling Chinese trucks and passenger cars. While talking to news agencies this Thursday, Al-Haj Hyundai CEO Bilal Khan Afridi said “Hyundai had so many choices to cohort in Pakistan, but we believe they chose us because of our familiarity in the heavy vehicles’ industry,”

According to Afridi, his company is willing to tap the development in heavy vehicle industry in the coming years, as the China-Pakistan Economic Corridor (CPEC) initiative gains momentum.

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The company will organize a Green-field initiative– entirely new infrastructure – with an aspiration to take the advantage of tax advantages the government granted in the new Automotive Development Policy (ADP) 2016-2021.

After a period of over seven years, sales of buses and trucks have recovered strongly because of relative developments in security and macroeconomic solidity in the nation state. Pakistan manufactured a record 6,736 units of buses and trucks in financial year 2015-16.

Al-Haj Hyundai will originally initiate a heavy duty truck named Hyundai XCIENT with diverse models and Hyundai UNIVERSE luxury buses for inter-city journey. The company also intends to launch Hyundai MIGHTY medium and light duty trucks. Afterwards, the company also prepares to pioneer a range of many other products of Hyundai in Cargo and passenger handling sections.

The Chairman of Hyundai Global Motors Co Ltd, Kyung Sik stated that his company is positive about its partnership with Al-Haj Group and with confidence that this venture will help both players as Pakistan is a big market with a rapidly growing population.

Current market

Currently, there are four Chinese truck assemblers functioning in Pakistan. Chinese truck assemblers have declared that they are already in possession of up to 40% market share in a small interlude of 10 years while the rest of the shares are in the hands of the deeply ingrained Japanese competitors who have dominated the market historically.

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The costs of Chinese trucks seem to be in the lowest band right now. For example, if a Chinese truck is accessible in Rs7.8 million its price can go up to Rs12.6 million in the Japanese variety. Worth of a high tech European trademark like Volvo goes up to Rs16.5 million, partially for the reason that they are not assembled in Pakistan.

Officials from Al-Haj Hyundai state that they are positive that they would be able to grasp the market share of both the Chinese and Japanese companies. The costs of Hyundai trucks are projected to be higher than the Chinese brands yet they would at least be 10% to 15% cheaper than their Japanese counterparts.

According to Industry officials, German truck manufacturer MAN SE is also rearing up to set up an assembly plant in Pakistan.

Pakistani Truck assemblers have stated that CPEC is projected to engender gigantic demand for buses and trucks in Pakistan. Nevertheless, much to the satisfaction of local competitors the demand is intensifying even previous to the launch of the CPEC ventures thus, generating opportunities for all corporations from mid-tier to high-end groups.

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