automotive industry pakistan

Written by PartEx Technologies 7:30 pm Articles, Pakistan, Published Content

Propelling Pakistan’s Automotive Industry to Embrace Technology

In the automotive industry of Pakistan, procuring spare parts and then providing the same have always been burdensome. There are several reasons for the sluggish growth of this industry, but the overriding factor that’s holding it back is the lack of an adequate technological infrastructure.
About the Author(s)
Website | + posts

PartEx Technologies is a B2B e-commerce marketplace for automobile spare parts. A marketplace that connects retailers and mechanics with spare parts manufacturers, and enhances working capital capability. PartEx's goal is to provide greater access to sellers to buyers by solving end-to-end supply chain inefficiencies while bringing ease in the life of consumers.

Introduction

Elon Musk’s personal sports car Tesla Roadster, nicknamed “Starman”, was left in space by his other company SpaceX in 2018 to symbolize his resolve to explore space and technology to make new ways of living possible for people. The sports car is still out there and is expected to orbit back to earth in the millionth year.

Such commitment to technology and entrepreneurship is also visible in the advancements Tesla has made in the electric vehicle (EV) segment of the automobile industry, showing the advanced level of technological growth and entrepreneurial achievements made by the automobile industry of the US. Similarly, European cars are famous for their agility, durability, and resilience.

Japanese and South Asian cars, embodying the principle of minimalism, are adding value through savings in fuel and money. Advanced economies of the world have refined a certain niche of automobile manufacturing capabilities and achieved fruitful results through specialization and economies of scale.

Limitations of Imports

Developing economies, such as Pakistan and Bangladesh, of the world import these luxury brands and advanced cars as Complete Build Units (CBU) and pay with their hard-earned foreign currencies remitted either through exporting raw materials or labor.

Although CBU cars have attractive features with value for money, their maintenance and after-sales issues force consumers to prefer locally manufactured cars. As hundreds of different cars are imported each year, it is next to impossible to import thousands of spare parts for each kind of imported car to make spare parts accessible to an average customer.

Also Read:  Saudi Arabia's Vision 2030: Expectations, Myths & Realities

Pakistan is no exception to this global trade order and mostly relies on the Japanese manufacturers having established assembling units and providing the cheapest possible minimum viable quality cars to fulfill the basic needs of Pakistan’s consumers. However, the same issue also persists in locally manufactured and assembled cars which makes one wonder, why?

Automotive Industry of Pakistan

The automotive industry is one of the biggest industries in Pakistan and is connected to more than 200 value chain providers for the provision of accessories, spare parts, and services. Since July 2022, the automobile industry is facing its worst crisis in history due to the State Bank’s ban on Letter of Credit’s approval for parts import, increasing interest rates, and dollar-rupee fluctuations resulting in declining sales and unstable supply chains—benefiting only hoarders and market speculators.

Pakistan’s economy is not yet at the advanced stage of technological and manufacturing capacities to provide value-chain goods through in-house production. Consequently, the automobile industry underwent a severe depression, and all downstream distributions and suppliers were affected. Car First and Vavacars, startups in the automobile industry, vanished and many vehicles went off-road due to the lack of provision of supplies and spare parts.

The cause-and-effect relations of this economic disparity are not just relevant to the big giants and wealthy distribution businesses; customers, small and medium enterprises and local investors are the ones suffering the most due to the lack of technological development in this industry. Besides the supply gap and speculative behavior of the market resulting in extraordinary prices of cars and spare parts, the lack of technology and its adoption in Pakistan’s automobile sector have made the exploitation of the end consumers easy and manageable.

Also Read:  America amid the Tumultuous 2020 Presidential Election

The FMCG and parallel industries in other segments of consumable goods have innovated and technologically grown which has maximized their efficiencies in the supply chain, production, and distribution, ultimately benefiting the end consumers and specifically the mom-and-pop stores.

The mechanics and the personnel of the automobile industry have never experienced an online platform or a marketplace for the provision of easy supplies and quality assurance. This confirms that innovation and technological spirit have never been subsidized by the government or any non-governmental organization. They are still working in archaic and traditional distribution methods resulting in economic loss and exploitation of mechanics and end consumers.

When supplies are short in the market, the wholesalers increase the rate of spare parts and charge hefty margins. The end consumers, due to a lack of technical know-how, are never assured of the quality being provided by the local auto stores and wholesalers. Customers ultimately pay higher prices to get the desired quality and timely supply.

As technology has not yet been adopted in this industry, specifically in the downstream value chain, the end consumers and mechanics will continue to suffer from the clutches of middlemen and big investors. Tax evasion is also very common in this industry, specifically due to the lack of trusted platforms that can verify the point of sales transactions.

There is no comprehensive platform that can provide information symmetry and data on product comparisons, price gaps, and effective utilities to Original Equipment Manufacturers (OEMs) and upstream players, who can further utilize it to streamline supply chains of value chain products. If the infrastructural issues are resolved for the betterment of this industry, it can have a net positive impact on the whole economy and a trickle-down effect till the end consumer. 

Also Read:  The Ill-Fated Relationship Between Pakistan and the International Monetary Fund (IMF)

Pakistan is embroiled in a lot of issues, but a lack of talent is not one of them. The young generation—being believers of technological determinism—is prudent and eager enough to disrupt the market through technology to bring social and economic change. However, one of the numerous issues the automotive industry is facing is the acceptance of such change in Pakistan.

Online shopping for lifestyle products and consumable goods is tempting and a pleasing activity. However, procurement of spare parts for car maintenance and safety is burdensome. Streamlining the industry through technology, trust, reliability, and convenience will change the impression of the parts procurement process. This is possible when young entrepreneurs of Pakistan, with the support of the government and key industry players, create an ecosystem for the further development of efficient platforms for automobile spare parts supply chains and distribution networks.

The hustle created with this technological intervention will provide the right milieu for a paradigm shift, through a behavioral and attitudinal adaptation of all the players in the industry. This disruption is imminent and possible if the focus remains on bringing ease to the life of consumers.


If you want to submit your articles and/or research papers, please check the Submissions page.

The views and opinions expressed in this article/paper are the author’s own and do not necessarily reflect the editorial position of Paradigm Shift.

(Visited 486 times, 3 visits today)
Close
Click to access the login or register cheese

Submit your work

No, thanks!