MG Motors: maximise localisation in Pakistan
Since announcing last month that it would launch three Completely Knocked Down (CKD) models in Pakistan in the coming 5 years, MG Motors General Manager Syed Asif Ahmed has revealed in his recent interview with Gwadar Pro that it is investing in the second phase of the plant with a focus on localisation and export based automotive industry.
“The plant will be operational in the last quarter of this year” Syed Asif Ahmed said, “the expansion of Pakistan’s car market is being driven by Pakistani consumers starving for more options.”
When MG entered Pakistan for the first time in 2020 in the form of Complete Built Unit (CBU), its trendy technology brought a shocking experience for Pakistani auto companies and consumers. “However, due to various factors such as international transportation and tariffs, we had to pay more money to buy similar foreign products.” admits one of MG’s first batch of owners.
Due to the automobile policy launched by the Pakistani government to support the new auto companies entering Pakistan, more than ten foreign auto companies have poured into the Pakistani market and set up local factories for CKD. To this end, MG has also adopted CKD as its business plan to enter the Pakistani market. The established auto companies that have been in the market for many years felt the pressure of competition and also launched new models and other positive response measures.
According to statistics of PAMA, Pakistan produced 226,433 passenger cars in FY2021-22 with a sales volume of 234,180 units, up about 49%, 55% from 151,794 and 151,182 units in FY2020-21, respectively.
In the changing market environment, auto companies have realised that CKD is the best choice compared to CBU. “The degree of localisation varies from model to model, and unfortunately this localization is not in terms of value, but volume. MG is committed to developing localisation capabilities for high-value components.” Syed Asif Ahmed explained.
Pakistan’s auto industry can only develop until its component manufacturing companies are in the global supply chain. MG will bring technology to Pakistan under transfer of technology policy. The automobile industry development policy targets every industry to export 5% – 15% from Pakistan, which can be possible only when high technological parts are manufactured in Pakistan.
Compared with the West and Japan and South Korea, China’s auto industry is a late starter. Syed Asif Ahmed stated that the experience of China’s rise in such a short time in the automobile industry is worth learning from.
In recent years, Chinese auto manufacturing has grown strongly, and the performances of many brands, including MG, have been impressive. From January to April 2022, SAIC Motor Group (SAIC) was the largest exporter of Chinese auto brands, among which SAIC MG ranked first. The cumulative export volume of MG ZS reached 24,799 units in the first four months of this year, including the EV model.
“We are planning that those technology transfer steps which have been taken by the Chinese automotive industry to be taken in MG Pakistan through SAIC. Through joint ventures and localisation, more parts partners will come to Pakistan to manufacture, develop and improve these parts to meet international export standards and eventually export to neighbouring countries.” he concluded.
