CORPORATE WINDOW: Driving auto antiques

While electric vehicles (EVs) have already made deeper inroads in various countries, consumers in Pakistan are still using around four decades old two-wheeler models and four-wheelers over 30 years old.
In the digital age, buyers usually use the internet to verify automobile prices, especially cars and SUVs available in Pakistan, compared to rates in the world market. However, in the case of motorcycles, consumers appear helpless when it comes to counter-checking the price and models of two-wheelers like the Honda CDI 70cc and Honda CG125.
It is hard to find over 30-year-old global prices of Suzuki Ravi — which is still being rolled out without a model change in Pakistan — since it does not exist in any other country.
Recently, Pak Suzuki Motor Company Limited (PSMCL) closed down the production of the Suzuki Bolan after over 30 years, which was also inaccessible on the internet for price and model verification due to its exit from other countries decades back.
The Honda CD 70 bike was transformed into CDI in 1993, and since then, its shape and design have been unchanged. Another flagship model, the Honda CG125, has been in the assembly line of Atlas Honda Limited (AHL) for around 40 years.
As both Honda CDI 70cc and CG125 have enjoyed robust sales, AHL did not bother to roll out the all-new models, knowing that consumers had limited choices and blind trust in Japanese bikes. In 1996-1997, the combined production of Honda bikes was just 68,637 units, which later achieved a milestone of rolling out 1.36 million units in FY22.
When the Musharraf government opened a floodgate for fresh investment, new investors from different trades plunged into the two-wheeler business by signing agreements with Chinese companies. As a result, these new investors brought replica models of Honda 70cc and 125cc at cheaper rates, thus changing market dynamics in the favor of consumers.
However, many Chinese bike assemblers have not been maintaining quality and durability and have packed up their business. As a result, demand for Honda bikes became stronger, thus strengthening Atlas Honda’s ability to remain as market leader amid dozens of Chinese bike assemblers.
With time, the quality of parts of Honda 70cc and 125cc bikes has deteriorated, but they are still the market leaders due to consumers losing trust in Chinese bikes.
As far as prices are concerned, consumers braved multiple price shocks in Honda bikes every year due to exchange rate parity and the high cost of doing business amid a claim of 95 per cent localisation. Chinese bike assemblers also followed suit.
Honda CDI 70cc and Honda CG125 carry price tags of Rs0.16m and Rs0.23m. In the demand and supply crisis, people pay “on money” to the dealers for instant delivery.
A senior bike dealer at Akbar Road, Mohammad Sabir Sheikh, said Atlas Honda is not ready to take risks when their old models sell like hotcakes amid no competition with Chinese bike assemblers.
He said no country produces 70cc to 125cc obsolete models, but these models are exported to Afghanistan and other less developed countries. Chinese bikes lack quality and durability, but people compromise owing to their lower prices.
Mr Sheikh further said that people are slowly turning towards electric bikes to save petrol, but it will take a few more years to grab a sizable market share.
In four-wheelers, PSMCL has kept the legacy of maintaining old models from 12 years to over 30 years without making significant changes. At best, a new model is unveiled with a few cosmetic changes.
With a price tag of Rs1.94m, Suzuki Bolan production was discontinued recently after achieving 72pc localisation in its 30-year journey, which should have been around 95pc. Bolan witnessed peak production of over 30,000 units in 2015-2016.
Suzuki Mehran VX model production was discontinued in July 2018, followed by the production closure of the Mehran SB-308 VXR model in March 2019 after staying in the assembly line for 30 years. As per vendors, Suzuki Ravi’s pick-up will be discontinued next year.
Suzuki Cultus, which came in place of Suzuki Khyber, took over 16 years to end its assembly on Feb 1, 2017. Still, the assembler decided to continue its trending name, Cultus, though the vehicle was known as Suzuki Celerio in other countries. Suzuki Alto’s 1,000cc production ended after 12 years, but the company replaced the 1000cc with the 660cc Alto. The availability of various new Suzuki models globally suggests that consumers here have been deprived of the latest ones.
Suzuki vendors continued making parts and accessories on old plants and machinery for decades without making any fresh investments. With no stiff competition from Chinese, Japanese, and Korean competitors, Bolan remained the first choice for transport owners of school vans, offices, and ambulance services.
A rising competition is on the card as many assemblers are gearing up for local assembly of new energy vehicles (NEVs). Sazgar Engineering Works Limited (SEWL) has planned to roll out a completely knocked-down model of NEV before the end of Dec 31, 2025. Dewan Farooque Motors Limited had started production of EVs, followed by plans by China’s electric vehicle giant, BYD, to test EV potential in Pakistan. Master Changan Motors Limited has also launched its EV vehicles, such as the Deepal L07 sedan and Deepal S07 SUV.
Published in Dawn, The Business and Finance Weekly, September 30th, 2024