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Transcript of Motocycles
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FINAL PROJECT
A STUDY ON THE FACTORS LEADING TO THE
PURCHASE OF MOTORBIKES
Preston University,North Nazimabad Compus, Karachi.
Research and Compiled By:
Rizwan Aziz
2411106014
Submitted To:
Mr. Khalid Pahore
Date: 30th June 2009
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DECLARATION
I hereby declare that this project titled A study on the factors leading to the purchase of
motorbikes submitted by me to Preston University, in partial fulfillment of requirements of
BBA program is a bonafide work carried by me under the guidance of Mr. Khalid Pahore.
This has not been submitted earlier to any other University or Institution for the award of any
degree diploma/ certificate or published any time before.
Place: Karachi, Pakistan Mr. Khalid
Pahore
Date:
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CERTIFICATE FROM GUIDE & HEAD OF THE
INSTITUTION
Certified that this project entitled A study on the factors leading to the purchase of
motorbikes submitted in partial fulfillment for BBA Degree of Preston University was
carried out by Mr. Zubair Naikzad under the guidance of Mr. Khalid Pahore. This has
not been submitted to any other university or institution for the award of any degree/
diploma/ certificate.
GUIDE SENIOR
PROGRAMME DIRECTOR
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DEDICATION
I dedicate my project to my beloved mother and father who both supports and
encourages me at every stage of my life and especially in this project and also my
teachers and my friend Zubair Naikzad for their guidance and moral support in
completion of this project.
God Bless All of Them
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ACKNOWLEDGEMENT
By grace of AL-Mighty Allah, I have completed my Final Project of BBA. I
would like to thank my teachers in Preston University who gave us lots of help
and suggestions. Special thanks to Sir Khalid Pahore for helping us a lot and
providing valuable suggestions, guidelines and moral support.
I would also like to thanks Professor Mr. Sibaty Amir, who guide me too much in
my project.
I also like to thank my friend Zubair Naikzad who helps me a lot whenever I
needed especially in gathering the information.
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Table of ContentsPreface........................................................................................................................................ 8CHAPTER 1 INTRODUCTION ............................................................................................... 9
1.1 GENERAL INTRODUCTION TO THE STUDY ........................................................ 101.2 THEORETICAL BACKGROUND OF STUDY .......................................................... 101.2.1. Market .................................................................................................................... 101.2.2. Marketing ............................................................................................................... 111.2.3. Marketing Management ......................................................................................... 111.2.4. Marketing Mix ....................................................................................................... 121.2.5. Marketing Planning ................................................................................................ 121.2.6. Marketing Research ............................................................................................... 131.2.7 Need of marketing research .................................................................................... 131.2.8 Consumer ................................................................................................................ 131.2.9 Perception ............................................................................................................... 131.2.10 Attitude ................................................................................................................. 131.2.11 Brand ..................................................................................................................... 141.2.12. Consumer Behavior ............................................................................................. 141.2.13 Model of consumer behavior ................................................................................ 141.2.14. Major Factors Influencing Consumer Behavior .................................................. 14
CHAPTER 2 RESEARCH DESIGN ....................................................................................... 172.1 Introduction .................................................................................................................... 182.2 Review of Literature ...................................................................................................... 182.3 Purpose of Literature Review ........................................................................................ 182.4 Statement of the Problem ............................................................................................... 192.5 Need of the study ........................................................................................................... 192.6 Objectives of the Study .................................................................................................. 192.6 Methodology .................................................................................................................. 192.7 Sources of Data .............................................................................................................. 202.8 Scope of the study:- ....................................................................................................... 212.9 Limitations of the study:- ............................................................................................... 212.10 CHAPTERIZATION ................................................................................................... 21
CHAPTER 3 PROFILE OF THE INDUSTRY ....................................................................... 223.1 ANALYSIS OF PAKISTANI INDUSTRY .................................................................. 233.2 Major Policies after year 2005 ....................................................................................... 243.3 Problems Faced By the Automobile Industry ................................................................ 273.4 Current Investment, Contribution to GDP and Revenue to GOP: Error! Bookmark not
defined.3.5 Present situation of motorbike industry: ........................ Error! Bookmark not defined.
CHAPTER 4 ANALYSIS OF DATA COLLECTED .............Error! Bookmark not defined.4.1 Age of the Respondents ................................................. Error! Bookmark not defined.4.2 Occupation of the Respondents (Testing Hypothesis 4) Error! Bookmark not defined.4.3 What is your monthly Income? (Testing Hypothesis 4) Error! Bookmark not defined.4.4 Which Bike do you have? ..............................................Error! Bookmark not defined.4.5 How did you come to know about this motorbike? (Testing Hypothesis 3) ..........Error!Bookmark not defined.
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4.6 Does Advertisement Influence your decision in choosing a motorbike? (Testing
Hypothesis 3) .................................................................. Error! Bookmark not defined.4.7 Do you have full knowledge about motorbike before buying? (Testing Hypothesis 3)
..............................................................................................Error! Bookmark not defined.4.8 If new motorbike with good features comes in, then would you like to change your
..motorbike? (Testing Hypothesis 3) ................................ Error! Bookmark not defined.4.9 For how long do you own a motorbike? (Testing Hypothesis 2) .Error! Bookmark not
defined.4.10 For what purpose do you use your Motor Bike? (Testing Hypothesis 4) .............Error!
Bookmark not defined.4.11 What is your opinion on the performance of your own motorbike? (Testing.///Hypothesis 2) ............................................................... Error! Bookmark not defined.4.12 Rank the factors which have influenced you purchase of motorbike? (5- Most
influenced, Rank 1- Least influenced) (Testing Hypothesis 2) ..Error! Bookmark not
defined.4.13 How is the availability of spare parts of your motorbike? (Testing Hypothesis 4)
..............................................................................................Error! Bookmark not defined.4.14 Which factor below influenced your decision? (Testing Hypothesis 1) ...............Error!
Bookmark not defined.4.15 How would you rate the following factors of bikes when you purchased the
motorbike? (5 for Highest, 1 for lowest). (Testing Hypothesis 1) .... Error! Bookmark
not defined.4.16 Are you required to have description from sale representative about features of
different models when you purchase a motorbike? (Testing Hypothesis 3) .........Error!
Bookmark not defined.4.17 Did you go for the test drive? (Testing Hypothesis 1) . Error! Bookmark not defined.4.18 Are you satisfied with the post sales services provided by your motorbike company?
(Testing Hypothesis 1) .................................................Error! Bookmark not defined.4.19 Are the expert mechanics available to repair motorbike? (Testing Hypothesis 4)
..............................................................................................Error! Bookmark not defined.4.20 When it comes to service the motorbike, where would you prefer? (Testing
Hypothesis 4) ...............................................................Error! Bookmark not defined.4.21 Select one from given motorcycle brands which you would like to recommend to
...others? (Testing Hypothesis 1) ..................................... Error! Bookmark not defined.CHAPTER 5 FINDINGS AND CONCLUSION ....................Error! Bookmark not defined.
5.1 FINDINGS .....................................................................Error! Bookmark not defined.5.2 CONCLUSION .............................................................. Error! Bookmark not defined.
BIBLIOGRAPHY .................................................................... Error! Bookmark not defined.APPENDICES .........................................................................Error! Bookmark not defined.
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Preface
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CHAPTER 1
INTRODUCTION
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1. INTRODUCTION
1.1 GENERAL INTRODUCTION TO THE STUDY
Two-Wheeler industry is one of the largest industries in the automobile sector of global
market. Being the leader in product and process technologies in the manufacturing sector, it
has been recognized as one of the drivers of economic growth. During the last decade, well-
directed efforts have been made to provide a new look to the automobile policy for realizing
the sector's full potential for the economy. The liberalization policies have led to continuous
increase in competition which has ultimately resulted in modernization in line with the global
standards as well as in substantial cut in prices. Aggressive marketing by the auto finance
companies have also played a significant role in boosting automobile demand, especially
from the population in the middle income group.
Presently many international brands like Honda, Suzuki, etc. are competing with Pakistani
brands such as Hero, Star etc. to capture Pakistani markets.
These aggressive marketing strategies have resulted in making the consumer the major key
for success in the industry. Each product offering is now designed to meet and exceed the
expectations of the consumer. But understanding consumer behaviour and knowing
consumers is never simple. And it is more difficult that to understand what a consumer
perceives about the product. Customers may say one thing but do another. They may not be
in touch with their deeper motivations. They may respond to influences that change their
minds at the last moment.
1.2 THEORETICAL BACKGROUND OF STUDY
1.2.1. Market
The term marketmay be considered as a convenient meeting place where buyers and sellers
gather together for the exchange of goods and services. Market means a group of people
having unmet wants, purchasing power to make their demand effective and the will to spend
their income to fulfill those wants. Today a market is equated with the total demand.
The American marketing association defines a market, as the aggregate demand of potential
buyers for a product or service.
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Under keen competition, a marketer wants to create or capture and retain the market i.e.
customer demand through an appropriate marketing mix offered to a target market. The
market offering i.e. supply must meet customer demand, which are unmet needs and desires.
1.2.2. Marketing
Marketing is a comprehensive term and it includes all resources and set of activities
necessary to direct and facilitate the flow of goods and services form the producer to the
consumer through the process of distribution. Businessmen regards marketing as a
management function to plan promote and deliver products to the clients or customers.
Human efforts, finance and management constitute the primary resources in marketing.
We have twin activities, which are most significant in marketing:
1. Matching the product with demand i.e. customer needs and desires or the target market.
2. The transfer of ownership and possession at every stage in the flow of goods from the
primary producer to the ultimate consumer.
The American marketing association defines marketing as the process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational objectives.
1.2.3. Marketing Management
Marketing management represents an important functional area of business management
efforts for the flow of goods and services from the producer to the consumers. It looks after
the marketing system of the enterprise. It has to plan and develop the product on the basis of
known customer demand.
Marketing management may be defined as, a process of management of marketing programs
for accomplishing organizational goals and objectives.
Marketing management has to build up appropriate marketing plan or marketing mix to fulfill
the set goals of the business. It has to formulate sound marketing policies and programs. It
looks after their implementation and control. It has to implement marketing strategies,
programs and campaigns. It must evaluate the effectiveness of each part of marketing mix
and introduce necessary modifications to remove discrepancies in the actual execution of
plans, policies, strategies, procedures and programs.
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1.2.4. Marketing Mix
Marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in
the target market.
There are four elements or variables that make a marketing mix, they are:
1. Decisions on product or service.
2. Decisions on promotion
3. Decisions on price
4. Decisions on distribution.
The four ingredients are closely interrelated. Under the systems approach the decision in one
area affects action in the other. Marketing mix decisions constitute a large part of marketing
management.
According to Philip Kotler the term marketing mix is, the set of controllable variables that
the firm can use to influence the buyers response. In the simplest manner, the basic
marketing mix is the blending of four inputs or sub mixes, which form the core of the
marketing system.
Product mix decision refers to decisions on product variety, quality, design, features, brand
image, packaging, sizes, services, warranties and returns.
Price mix decision refers to decisions on the product list price, discounts, allowances, andpayment period and credit terms available.
Place mix decision refers to decisions on the channels, coverage, assortments, locations,
inventory and transport of the market offering.
Promotion mix decisions refer to decisions on the products advertising, sales promotion, sales
force, public relations and direct marketing. Together they form the four Ps of marketing.
1.2.5. Marketing Planning
A marketing plan lies down in writing the marketing objectives, programs and policies to be
adopted to achieve the set marketing objectives. Even before an integrated marketing plan is
prepared the company shall prepare functional plan for each component of marketing mix. To
have a sound marketing plan, every operation is to be examined and the problems are to be
identified. The overall marketing plan should be linked to the distribution channel of the
company to have effective marketing operations.
The marketing planning covers the preparation of functional plans, integration of this plan
and the preparation of master marketing plan to serve the objective of the organization.Marketing planning is bound to get a better hold of environmental factor.
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1.2.6. Marketing Research
Marketing research is the systematic gathering, recording and analyzing of the data about
problems connected to the marketing of goods and services i.e. problems relating to product,
price, promotion and distribution of the 4ps of the marketing mix.
Marketing research is concerned with all those factors, which have a direct impact upon the
marketing of products and services. Marketing research has grown along with the expanded
role of marketing as the focus for the business decision-making.
1.2.7 Need of marketing research
Marketing research is conducted for different purposes. They are:
1. To estimate the potential market for a new product.
2. To know the reactions of consumers to a product already existing in the market.
3. To find out the general marketing condition and tendencies.
4. To know the types of consumer buying and their buying motives.
5. To know the reactions of failure of a product already in the market.
6. To assess the strength and weakness of competitors.
1.2.8 Consumer
A person who purchase or has the capacity to purchase the goods of service often for sale by
the marketing firm in order to satisfy personal need and desires.
1.2.9 Perception
Perception is the sensing of stimuli external to the individual organism the act or process of
comprehending the world in which the individual exists.
Perception has been defined by social psychologists as the Complex process by which
people select organize and interpret sensory stimulation in to a meaningful and coherent
picture of the work.
1.2.10 Attitude
Social psychologist defined attitude as an emotionalized predisposition to respond positively
or negatively to an object. Predisposition can be thought of as categories of meaning stored in
the memory of a person and are based on previous experience. Predisposing the person to
have in specific manner towards a certain objects in the environment.
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1.2.11 Brand
A brand is a name, term, symbol, design or a combination of them which is intended to
identify the goods or services of one seller or group of sellers and to differentiate them from
those of competitors.
1.2.12. Consumer Behavior
The term consumer behaviorcan be defined, as, the behavior that the consumer display in
searching for, purchasing, using and evaluating products, services and ideas, which they
expect, will satisfy their needs. The study of consumer behavior enables marketers to
understand and predict consumer behavior in the market place; it also promotes
understanding of the role that consumption plays in the lives of individuals.
Consumer behavior refers to all psychological social and physical behavior of potential
consumers as they become aware of, evaluate, purchase and consume and tell others about
products and services. It is the pattern of response of buyers to marketing offer of a firm. It
refers to the process as how consumers make their purchase decisions. It is concerned with
what, why, how much, when and from whom buyers make their purchases of goods and
services.
1.2.13 Model of consumer behavior
The starting point of understanding consumer behavior is the stimulus-response model.
Marketing and environmental stimuli enter the buyers consciousness. The buyers
characteristics and decision process lead to certain purchase decisions. The marketers task is
to understand what happens in the buyers consciousness between the arrival of outside
stimuli and the buyers purchase decisions.
1.2.14. Major Factors Influencing Consumer Behavior
Consumers buying behavior is influenced by cultural, social, personal and psychological
factors.
Cultural Factors
Cultural factors exert the broadest and deepest influence on consumer behavior. The roles
played by the buyers culture, subculture and social class are particularly important.
o Culture
Culture refers to that complex whole which includes in it knowledge, beliefs, art or
anything man acquires as a member of society.
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o Subculture
Each culture consists of smaller subcultures that provide more specific identification and
socialization for their members. Sub cultures include nationalities, religions, racial groups
and geographic regions.
o Social Class
Virtually all-human societies exhibit social stratification. Stratification sometimes takes
the form of a caste system where the members of different castes are reared for certain
roles and cannot change their caste membership more frequently; stratification takes the
form of social class.
Social Factorso Reference Groups
A persons reference groups consists of all the groups that have a direct or indirect
influence on the persons attitudes or behavior.
o Family
The family is the most important consumer buying organization in the society and it
constitutes the most influential primary reference group.
o Roles and statuses
A person participates in many groups, family, clubs, organizations etc. The persons
position in each group can be defined in terms of role and status. A role consists of the
activities that a person is expected to perform. Each role carries a status.
Personal Factors
o Age and stage in the life cycle
People buy different goods and services over their lifetime. Taste in clothes, furniture and
recreation is all age related.
Consumption is shaped by the family life cycle. Marketers often choose life-cycle groups
as their target market.
o Occupation and economic circumstances
Occupation also influences a persons consumption pattern.
Product choice is greatly affected by economic circumstances; spendable income, savings
and assets, debts, borrowing power and attitude toward spending versus saving.
o Lifestyle
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People from the same subculture, social class, and occupation may lead quite different
lifestyles. A lifestyle is the persons pattern of living in the world expressed in activities,
interests and opinions. Lifestyle portrays the world person interacting with his or her
environment.
o Personality and self concept
Each person has a distinct personality that influences buying behavior. It is that
distinguishing psychological characteristics that lead to relatively consistent and enduring
responses to environment. Related to personality is self-concept or self image. Marketers
try to develop brand images that match target markets self image.
Psychological Factors
o Motivation
A person has many needs at a given time. A need becomes a motive when it is aroused to
a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the
person to act.
o Perception
Perception is the process by which an individual selects, organizes and interprets
information inputs to create a meaningful picture of the world. How a, motivated person
actually acts is influenced by his or her perceptions of the situation.
o Learning
When people act they learn. Learning involves changes in an individuals behavior
arising from experience. Learning theory teaches marketers that they can build up
demand for a product by associating it with strong drives, using motivating cues and
positive reinforcement.
o Beliefs and attitudes
Through doing and learning, people acquire beliefs and attitudes. These in turn influence
buying behavior. A belief is a descriptive thought that a person holds about something.
The beliefs make up product and brand images and people act on these images.
An attitude is a person enduring favorable or unfavorable evaluations, emotion feelings
and action tendencies toward some object or idea. Thus a company would be well advised
to fit product into existing attitudes rather than try and change peoples attitudes.
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CHAPTER 2
RESEARCH DESIGN
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2. RESEARCH DESIGN
2.1 Introduction
The two wheeler industry in Pakistan collectively produces 5 Lakh vehicles a year. Some
players have managed to cut through consumer resistance with innovation, pricing and
aggressive marketing. The competition level in the two wheeler industry is very high now.
Many brands are fighting in the market for maximum share. They have to bring out a lot of
differentiation among them. The major duty of the marketer is to know the reasons for
preferring particular motor bike by the consumers.
2.2 Review of Literature
The Customer Perception Report includes questions in four key areas, Expectations, Purchase
Decisions, Customer Service, and Future Purchases. So the customer should be invited to
participate in the survey. Setting realistic expectations during the sales process is a vital
component of making happy customers. How a company sets and meets product and service
expectations plays a pivotal role in fashioning customer opinions. How a company meets or
exceeds expectations is measured in three important areas: product/service, support, and
price. These three areas will be used to factor a score for the Expectations category. The
results of the three questions will be used to factor an overall expectations perception score.
The Purchase Decision category gives us a better understanding of how the customer
perceives the purchase process. Two key areas for questions include an open ended question
on why they purchased and a ratings question on their experience. The rating
Question data will be used for the analysis of Purchase Decision category. The open ended
responses from the Why questions will be used for product strengths analysis. The results
of the purchase experience question will be used for the overall Purchase perception analysis.
Customer service is one of the most important differentiations a company can have. For this
report, customers will rate a company in three key areas: customer service, timeliness for
problem resolution, and expertise. These three areas will be used to factor a score for the
Customer Service category.
2.3 Purpose of Literature Review
Literature review is one of the prime parts of every project. The very basic purpose of the
literature review is to gain insight on the theoretical background of the research problem. Ithelps the researcher to gain strong theoretical basis of the problem under study and also help
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to explore whether any one has done research on the related issue. Thats why literature
review helps one to find out the path of problem solving. In this regards the very basic
purpose of the literature review in this dissertation is same as mentioned
2.4 Statement of the Problem
We want to find out the main buying factor which influence towards the buying decision of
motor cycle, choice of brand, budget limitation, mobility convince, parking problem, and
maintenance at low cost.
2.5 Need of the study
We observed that in a last two decades, peoples are mostly liken to acquire the motorbikesfor daily usage, and we also observed due to this buying trend so many new companies arrive
in Pakistan to introduce new brands in Pakistani Market. There is no doubt that the old
companies market share is falling down. So this study will help to understand and identify
what the consumer feels or perceives about motor bikes. This will help the marketer to
identify which all are the factors that a consumer looks in to when he selects a particular bike.
And also explains how a consumer selects and interprets the qualities of bike.
2.6 Objectives of the Study
The research has been undertaken with following hypothesis:
1. To analysis people perception towards the motor cycle brands.
2. To get feedback what people expect from motor cycle.
3. To analyze people perception towards services offered by different makes
performance of the motor cycle.
4. Analysis financial factor influence buy process of motor cycle
2.6 Methodology
The research will be done through survey method. The collection of data will be done
through questionnaire, interview and related websites
The sample size taken for this research is 200 customers those who are having motor bikes.
The area of this survey consists of Karachi city.
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The collection of data will be done with the help of a structured questionnaire. The designing
of questionnaire needs precision and classification of the subject, so that the respondents can
easily understand the question and can answer it sincerely and correctly.
2.7 Sources of Data
Primary data:-
Primary data consists of original information for the specific purpose at hand. It is first hand
information for the direct users of respondents. The tools used to collect the data may vary
and can be collected through various methods like questionnaire, personal interview
Secondary data:-
Secondary data is the data which is already been collected and assembled. This data is
available with the companies or firms and it can be collected from newspapers, periodicals,
magazines, websites etc.
Sample Design
Sample
The sample size taken for this research is 200 customers having motorbikes.
Sampling Technique
Convenient Sampling technique is used for this project.
Data Collection Tool
Questionnaires will be used as the primary form of collecting data.
Statistical techniques
1. Bar Diagrams
2. Pie-Chart
Statistical tools
1. Statistical software like SPSS 17.0
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2.8 Scope of the study:-
The study helps in having an awareness of customer satisfaction towards motorbike
usage. As the vehicle had a good convenient transportation in town of Karachi, this study will
help to know that how motorcycle increase their grip in vehicle industry. It also helps us to
increase our practical knowledge towards marketing of a motorbike.
2.9 Limitations of the study:-
a) In this study it is not possible to collect the opinion of all the customers owing to
personal constraints. So the assumptions are drawn on the basis of the information
given by the respondents.
b) The study needs to be completed within a specified time of one month and in
certain restricted areas. So the findings cannot be generalized as a whole.
2.10 CHAPTERIZATION
1. Introduction
2. Research Methodology
3. Profile of the Industry
4. Analysis of the Data Collected
5. Finding and Conclusion
Bibliography
Appendix
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CHAPTER 3 PROFILE
OF THE INDUSTRY
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3. PROFILE OF INDUSTRY
3.1 ANALYSIS OF PAKISTANI INDUSTRY
Auto market is one of the largest segments in world trade. Changing models, improving fuel
efficiency, cutting costs and enhancing user comfort without compromising quality are the most
important challenges of the auto industry in a fast globalizing world.
The first phase of automotive assembling in Pakistan started in 1950 with Bed Ford truck
followed by Ford Prefect, Ford Cortina and Dodge Dart. The indigenized parts in these vehicles
did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%. By the
end of 70s practically all automobile assembling in Pakistan ceased.
The 2nd phase of Automobile assembly started in 1983 with the introduction of FX 800 CCSuzuki Car. In 1989 Pak. Suzuki changed the Model of FX 800 CC with Mehran 800CC. Pak
Suzuki thereafter in 1992 introduced Khyber 1000 CC and 1300 CC Margalla but the
indigenization levels from 1983 to 1995 were not significant (i.e. Mehran 30%, Khyber 20%, and
Margalla, 15%).
In 1993, Indus Motors Company Ltd., Karachi introduced Toyota Corolla. Honda Atlas cars
(Pak) Ltd Lahore in 1994 introduced Honda Civic having 1300CC engine capacity. Indus
Motors, Dewan Farooq Motors and Pak Suzuki introduced smaller Cars i.e. Cuore, Cultus and
Santro of engine capacities 850 cc, 1000 cc respectively in 2000.
This was known as era of competitiveness. Up to 1995, the deletion cell of MOI&P was
formulating and monitoring the deletion programs. The industry specific deletion programs were
formulated to specify local content requirements for cars, motorcycles, Buses and Trucks
Tractors etc.
The deletion policy finalized in 1996 has the following features:
Industry Specific Deletion program.
No roll back from achieved Deletion Levels.
Even handled Tariff Protection at all levels of processing. The deletion levels were finalized by
the sub-committees for cars, LCVs, Motorcycles and tractors etc., constituted by indigenization
committee of EDB on the basis of technology levels prevalent in the engineering industry of
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Pakistan. The Industry specific deletion program (ISDP) books were published and distributed
amongst the stakeholders, which resulted in a significant improvement in indigenization.
3.2 Major Policies after year 2005
1. Tariff Based Systems (TBS)
2. Auto Industry Development Program (AIDP).
FINAL REPORT
July 1st 2006, the deletion programs for the Automotive Sector have been replaced by the Tariff
Based System (TBS). The deletion programs have gradually been phased out under the WTO
regime to become TRIMs compliant. The TBS is the outcome of a long drawn consultativedialogue between all stakeholders including OEMs and Vendors, belonging to different sub-
sectors of the Automobile Industry. The TBS has been developed with the following overriding
objectives:
Preservation & promotion of technologies that have been developed in the country
Protection to the present job structure in the auto sector.
Promote job creation
Protect the existing & planned investment by the OEMs & Vendors Promote new investment
Expand the consumer base to create economies of scale
The basic framework of Tariff Based System is as under:
1. Imports in CKD condition would be allowed only to assemblers having adequate
assembly facilities and registered as such by the concerned Federal Government Agency.
2. Parts/ components indigenized by June 2004 have been placed at higher rate of Customs
Duty.
3. Parts not indigenized would be allowed at CKD rate of Custom Duty.
Introduction of Statutory Regulatory Order (SRO):
1. SRO 656 (I) / 2006 dated June 22, 2006 (For OEMs)
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2. SRO 693 (I) / 2006 dated July 1, 2006 (For OEMs)
3. SRO 655(I) / 2006 dated June 22, 2006 (For Vendors)
For the purpose to handle the switching from ISDP to TBS and to ensure stable policies the
consultations on the development of AIDP kicked off from the 8 March, 2006 Workshop atIslamabad by clearly defining the objectives at a time when the industry was switching over from
the deletion programs to a competitive tariff based system. There was realization that the
transition phase may affect the rapid growth and sustainable development of auto industry. A
comprehensive development program with pre-announced tariffs to provide predictable and
stable environment was therefore much needed and the finalization and approval of AIDP by the
government was held on 13th November, 2007.
Policy Wise Growth of Auto Sector (PC + LCV):
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The automobile industry in Pakistan can be broadly categorized into following segments:
Cars and Light Commercial Vehicles (LCVs)
Two and Three Wheelers
Tractors
Trucks and Buses
Vendor Industry.
The industry operates under franchise and technical cooperation agreements with Japanese,
European and Korean manufacturers.
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3.3 Problems Faced By the Automobile Industry
The automobile industry of Pakistan is an oligopoly with 22 automobile OEMs producing
passenger cars, commercial vehicles, tractors and motor cycles in collaboration with Japanese
and Korean manufacturers. The major assemblers/manufacturers are Pak Suzuki Motor Co. Ltd.,Honda Atlas Cars (Pakistan) Ltd., Hinopak Motor Ltd., Indus Motor Co. Ltd., Ghandhara Nissan
Ltd., Ghandhara Industries Ltd., Atlas Honda, Suzu