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Table of Contents Acknowledgement.2 Introduction of Report..3 Introduction of industry....3 Overall Brief...3 Major Players.

3 Production process and technology used...4 Raw material used..5 Industry Performance...5 Production Capacity and utilization...5 Import and export performance.7 Industry Current problems.11 Future prospects...12

ACKNOWLEDGEMENT Thanks to everyone who helped and gave access to us to gather knowledge of industry of motor cycle. Special thanks to our Sir Mankosh-ur-Rahman who provide a great opportunity for us to get some practical experience to perform research and great thanks to the companies of motor cycles who cooperated really well and let us enter in to their premises to perform research which made our research easy.

1. Introduction of report: As this is exploratory research design so it is to explore things and understand the concept going on in industries. The industry on which we have prepared report is Motorbike industry. This is the one of the famous industries among Pakistan. This whole report is about the motorbike industry performance, its imports and exports, problems facing industry and Future prospects of industry in Pakistan.

2. Introduction of industry: 2.1 Overall Brief: Pakistan motorbike industry started in 1964. The first company started in Pakistan was Atlas Group which started assembling Honda motorcycles in Karachi. After this other Japanese brands came in Pakistan including Yamaha and Suzuki. The most successful motorbike design among the Japanese brands has been the Honda 70CC which gained high success and popularity because of its economic fuel consumption, resale and low maintenance cost. Government is supporting motorbike industry much by giving them incentives and lowering tariff for raw materials, subcomponents and sub assemblies at zero percent, 5 percent and 20 percent respectively. This support by government has made motorbike industry capable of competing in global market and made them more competitive. Government has also taken non tariff initiatives like technology acquisition fund, establishment of R&D and Human resource development which will improve to meet local demand and export of vehicles and components. (As cited in IAR and www.competitiveness.org.pk/.../MotorcycleIndustryReport.pdf) 2.2 Major Players: There are total 43 motorcycle assemblers in Pakistan. Some Major players among them are: Atlas Honda Yamaha Suzuki Eagle Ravi Metro Pak Hero Unique Super Star United Hero Sohrab Zxmco

Among the above players Honda, Yamaha and Suzuki has largely dominated the local market which assemble and manufacture Japanese bikes while others assemble Chinese bikes. 2.3 Production Process and Technology used: Flow method is the main production process. Ready made motorcycle parts are joined together, one by one in assembly line. Although all of these parts, except some of the parts of engine, which are mostly imported, are of in-house production. This process is mostly used in almost all the companies of this industry. Following are the four main production processes: Engine assembly: In engine assembly various parts of engine which are made or mainly imported like engine piston, crank shafts, crank case, oil pump, combustion chamber, cylinder head, clutch assy etc are assembled together to make an engine. Body part manufacturing: In body part area the body parts of the bike are produced like the petrol tank, main frame, fenders, handle bars, mirrors etc are made and put forward to the paint shop The parts which are imported are water base stickers, lock sets, driving chain, front brake assy, rear brake assy etc Paint shop: In the paint shop all the workers paint the body parts of the motorcycle and put them on the side of the assembly line Final assembly: In the final assembly line the frame of the motorcycle is placed on the assembly belt and it is started and one by one all the parts are being fitted in the frame including engine, tyres, transmission and suspension after the completion of it this bike is moved for the final testing. Final testing In this final testing they use a computerized process for testing the performance of the bike this test checks the performance of engine, suspension and grip of the bike. Some of the technologies, commonly used in Pakistan industry are: Die casters Ltd generates aluminium die-casting and steel forging for most of the motorbikes in Pakistan. Forging It is a process or technology used to shape the metal through heating and by plastic deformation with compressive force which is a press or a hammer blow Deep drawing This process is one of the most challenging process in manufacturing. The size, shapes, thickness and materials used to produce sheet metal deep drawn parts covers a wide variety of variables. Galvanizing

This is the most widely used process in which metallic zinc coatings are applied to prepare steel surfaces by galvanizing, electroplating, mechanical plating, painting with zinc rich coating and zinc spraying. but galvanizing is mainly used Brazing Brazing is a process in which joining is done in which a filler metal or alloy is heated to melting temperature above 450 C (840 F) and distributed between two or more close fitting parts by capillary action. Wire cut In wire cut EDM, a thin single strand metal wire, usually brass, is fed through the workpiece, typically occurring submerged in a tank of dielectric fluid. This process is used to cut plates as thick as 300mm and used to make punches, tools and dies. EDM Edm is a machining method primarily used for hard metals or those that would be very difficult to machine with traditional techniques. Electro plating: The anode and cathode in the electroplating cell are both connected to an external supply of current the anode os connected to positive terminal and cathode to the nagitive terminal. Generally, the motorbike industry in Pakistan analyzes the technology used in thee modern Countries and tries to make a cost effective substitute of it. Mr. Fazal-ul-Rehman ( Manager, ZXMCO). The developed countries depend more on modern technology that is high in automation and low in labour; which generally means, more electricity usage. Electricity is the least concern of such countries. On the other hand, in Pakistan, electricity is of huge concern and hence, more and more labour work is of more interest. 2.4 Raw Materials being used: Plastic Rubber Polyurethane Aluminium alloy Steel Cast iron Leather Copper

3. Industry Performance

3.1 Production Capacity and utilization Assemblers and vendors have enhanced their capacity and upgraded manufacturing facilities by hiring large number of skilled labour force to fulfil the requirements of auto industry. There are 43 motorbike assemblers in Pakistan and have total capacity to produce 1.6 million motorbikes annually. These units have been licensed by Engineering Development Board (EDB). Due to the energy crisis and load shedding their utilization is getting down because most of the companies are using gas generators in their production process so gas is available only three days a week so they only can produce three days a week. They have much capacity to produce but due to crisis utilization is getting down. (As cited in IAR 2011 Report No 155) 3.1.1 Introduction to APMA Association of Pakistan Motorcycle Assemblers (APMA) is a body of motorcycle Manufacturers and Exporters in Pakistan, founded in the year 2006 by the sixty main Pakistani companies in the field. APMA is still in her early age of life but with tremendous support of their members it has successfully achieved some of their present goals. The product range goes from small 70cc Motorcycles up to motorcycles of 125cc and over. (http://www.motorcycleexport.com/aboutus.html) 3.1.2 Production performance of Motorcycle The production is increased in 2010- 2011 as compared to the previous year that means the performance of production is increased in 2010- 2011 S. No. 1 2 3 Category of Manufacturer / Assembler's Pakistani Assemblers total production Non-APMA Members (3 Japanese) total production Imported CBU Motorcycles from China Total Local Production 2006-07 4,24,629 4,15,221 156 8,39,850 2007- 08 5,03,278 5,50,824 0 10,54,102 2008-09 4,87,321 430,307 0 9,17,628 2009- 10 7,58,038 622,366 0 13,80,404 2010- 11 9,04,797 7,05,884 0 16,10,681

Source: http://www.motorcycleexport.com/tenyearsmotorcycleproduction.html 3.1.3 Pakistani Assemblers performance by Sale from 2000-01 to 2010-2011

Year Sale 2000-01 10,319 2001-02 36,923 2002-03 48,208 2003-04 102,059 2004-05 185,527 2005-06 299,430 2006-07 424,629 2007-08 503,278 2008-09 487,321 2009-10 758,038 2010-11 904,797 http://www.motorcycleexport.com/tenyearsmotorcycleproduction.html 3.1.4 Non-APMA Members performance by Sale from 2000-01 to 2010-2011(NonAPMA Members 3-Japanese Including Sales of LocalDhoom 70cc) Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Sale 108,850 120,627 156,961 268,948 385,179 451,949 415,221 550,824 430,307 622,366 705,884

http://www.motorcycleexport.com/tenyearsmotorcycleproduction.html 3.2 Import and Export Performance: Due to the good performance by motorbike industry in past couple of years Pakistan has entered in to some regional markets. Atlas Honda one of the leading manufacturers had exported around 22,000 bikes to Bangladesh, Afghanistan and Sri Lanka during 20022005(As cited in IAR 2011 Report No 155).

3.2.1 Exports As the Pakistan motorcycle industries have achieved nearly 80% localization so they are in a condition to export and compete with china and India. With the export of the last couple

of years Pakistan is also able to enter in some regional markets. The atlas Honda is the leading manufacturer who had exported 22000 motorbikes to Afghanistan, Bangladesh and srilanka during 2002-2005. During the last year Pakistan was able to export 4000 motorbike per month to Afghanistan, Bangladesh and Sri Lanka (all above information is cited in IAR 2011 Report No 155). As with the following table it is projected that within the 2006-2010, Pakistan had a largest exports in 2009 and Pakistan is mainly exporting to Bangladesh and Afghanistan. Unit: US Dollar thousand Importers Exported value in 2006 World 4480 Bangladesh 3973 Afghanistan 334 Italy 2 Liberia 0 Mozambique 0 Belgium 0 Kenya 24 United 0 Kingdom France 0 United 0 Republic of Tanzania Djibouti 0 Japan 15 United Arab 2 Emirates Angola 0 Congo 0 Sierra Leone 0 Australia 1 Canada 0 Cape Verde 0 Sri Lanka 26 China 38 Croatia 0 Greece 0 Kuwait 0 Mauritius 2 Oman 0 Namibia 0

Exported value in 2007 1768 1349 313 0 0 0 0 36 12 0 0 0 32 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0

Exported value in 2008 4348 3648 619 0 0 0 0 23 8 0 0 0 8 0 0 0 0 0 2 0 4 0 13 0 0 0 0 0

Exported value in 2009 6131 3446 2574 3 0 6 38 2 1 1 9 0 1 7 1 1 4 0 0 1 4 0 0 0 1 0 12 6

Exported value in 2010 5587 2916 2565 23 19 19 18 9 8 3 2 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Nigeria Saudi Arabia India South Africa Thailand Egypt United States of America Yemen

0 6 0 0 2 47 10 0

0 0 1 4 0 0 17 1

0 17 0 0 5 0 0 0

13 0 0 0 2 0 0 0

0 0 0 0 0 0 0 0

Source: www.Intracen.org Graph

7000 6000 5000 4000 3000 2000 1000 0 Exported Exported Exported Exported Exported value in value in value in value in value in 2006 2007 2008 2009 2010 World Bangladesh Afghanistan Italy Liberia Mozambique Belgium Kenya United Kingdom France United Republic of Tanzania Djibouti

3.2.2 Imports: In 2006 to 2009 imports in this industry was less as compared to 2010 because of 80 % of localization but due to the increase in cost of production because of the power, shortage of gas and other issues imports has been increased in 2010 which is 57% increase with respect to the overall world imports. The main countries from which Pakistan is importing are Japan, china and Thailand Unit: US Dollar thousand Exporters Imported value in 2006 World 38674 Japan 24055 China 12274 Thailand 1815 Imported value in 2007 65144 42302 15066 7236 Imported value in 2008 42546 21313 15341 5014 Imported value in 2009 46720 24501 17728 3949 Imported value in 2010 73804 34757 30928 7153

United Arab Emirates Indonesia Chinese Taipei United States of America United Kingdom Italy Oman Sweden Germany Canada Malaysia Belgium Republic of Korea New Zealand British Virgin Islands Australia Brazil Denmark France Hong Kong, China Iran (Islamic Republic of) Kuwait Netherlands Qatar Saudi Arabia India Singapore Slovenia

30 143 70 47 13 52 10 0 9 2 0 0 78 0 0 0 0 0 0 33 0 0 1 1 0 0 40 3

13 264 34 33 19 53 0 0 70 0 8 0 0 15 0 0 2 19 0 0 0 0 0 0 4 6 0 0

27 504 116 110 5 37 0 0 0 3 0 0 0 0 0 0 0 0 0 4 1 8 0 0 0 0 63 0

126 270 39 4 44 5 0 0 0 37 0 0 0 0 5 3 0 0 3 1 0 0 0 0 0 0 4 0

306 268 255 39 21 20 15 13 11 8 3 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Source: www.Intracen.org

World Japan China Thailand United Arab Emirates Indonesia Chinese Taipei United States of America United Kingdom Italy Oman Sweden Germany Imported Imported Imported Imported Imported Canada Malaysia value in value in value in value in value in Belgium 2006 2007 2008 2009 2010 Republic of Korea New Zealand British Virgin Islands Australia Brazil Denmark France Hong Kong, China 4. Current Problems of Industry Iran (Islamic Republic of) Kuwait Netherlands Qatar Saudi Arabia The number of exports of motor bikes of Pakistan is decreased because of the high India cost of production and similar designs for 70cc, 100cc and 125cc engine as Singapore Slovenia compared to china and India. 80000 70000 60000 50000 40000 30000 20000 10000 0

Due to the power crisis and the shortage of gas, industry is facing real issues, the manufacturers or producers are forced to buy a diesel or petrol generators which is creating a huge cost for them and due to shortage of gas their paint shop in the factories are taking more time in painting and they are paying extra money to their labour. These factors are ultimately increasing their cost of production. Increase in raw material costs like steel, tires and increase in transportation cost has also negative impact on industry performance. (All above points cited in IAR 2011 report No 155) According to PAAPAM (PAKISTAN ASSOSIATION OF AUTOMOTIVE PARTS AND ACCESSORIES MANUFACTURERS) government always focuses on textile industry which have only 6 percent share in international export market while engineering manufactured goods have 65 percent share. Non-registered PAMA (Pakistan Automotive Manufacturers Association) companies are avoiding sales tax by not showing actual production figures and also not paying custom duties for imported parts which is giving PAMA registered companies disadvantage. Trained Labour force is rare

Most of the supply chains are not formal members which dont add value to company and increases transaction costs for formal sector. Technology from foreign countries is not easily available and is very expensive Financing facility is not available from commercial banks for the purchase of new motorbikes and motorbikes are also not the part of rozgar scheme launched by National Bank of Pakistan. Components which are imported from china are charged much high prices than its actual price in china by customs to non PAMA companies.

Common die, tooling and designing facilities are not provided to non PAMA companies which makes huge imbalance between PAMA and non PAMA companies. (All above points except first three cited in www.competitiveness.org.pk/.../MotorcycleIndustryReport.pdf)

5. Future prospects Pakistan motorbikes industry has achieved nearly 80 percent localization so they are now enough capable of competing India and china. If government provides some rebates on exports of these then this industry might increase its exports in future. Training institutes must be setup for labour to train and enhance their skills. FBR should ensure that importers must be made part of supply chain so that they can add value to industry. If this happens, then local motorbike industry of Pakistan can go globally. Technology Assistance funds should be set up to assist manufacturers to acquire technology from foreign suppliers so that they can make high quality parts in house With technology which will reduce their imports and rise exports.

(All above points cited in IAR 2011 Report No 155 www.competitiveness.org.pk/.../MotorcycleIndustryReport.pdf) References: www.competitiveness.org.pk/.../MotorcycleIndustryReport.pdf http://www.motorcycleexport.com/aboutus.html IAR 2011 Report No 155 http://www.motorcycleexport.com/tenyearsmotorcycleproduction.html