KARACHI: The simultaneous introduction of costly hybrid electric vehicles (HEVs) and electric vehicles (EVs) by established and emerging manufacturers suggests that the nation has overcome difficult economic times and that living standards have increased. The auto market, on the other hand, operates in entirely different ways.
The government also proclaims, without conducting any demand analysis, that the introduction of these new energy vehicles (NEVs) will reduce imports of gasoline and diesel.
Instead of being available to the majority of people with lower or middle-class incomes, these sleek and stylish HEVs and EVs with a variety of options are being imported or assembled locally only for a “limited elite class.”
The wealthy regularly upgrade their vehicles every one to two years. Many of them already own high-priced sedans and SUVs powered by gasoline or diesel, such as the Toyota Fortuner, Toyota Corolla, Honda Civic, Toyota Revo, Kia Sportage, Hyundai Tucson, MG and Changan Oshan, Honda HR-V, Hyundai Elantra, and Hyundai Sonata, among others.
Can expensive NEVs really aid in reducing fuel imports?
The wealthy class will be more excited to have expensive HEVs and EVs under such incentive-based policies.
“Money is not a significant concern for high-ranking members of the trade and industry, bureaucrats, landlords, growers, etc., and they do not seek to save any money by using gasoline- or diesel-powered vehicles. Mashood Ali Khan, an auto parts exporter and industry expert, stated, “They may also not hesitate to buy new HEVs and EVs.”
He asserted that most buyers of SUVs and expensive sedans like the Honda Civic will switch to electric vehicles.
EVs and HEVs, on the other hand, may be avoided by buyers of double-cabin vehicles (fueled by fossil fuels) because of their tradition of moving in style with two or three guards seated on the back.
Mashood stated, “They may purchase NEVs as a second option if there is no liquidity issue.”
The size of the entire market for SUVs, luxury cars, double-cabin vehicles, and so on, Between 25,000 and 35,000 units of new and old entrants (Japanese, Koreans, and Chinese) enter Pakistan annually. These volumes will result in new EV and HEV purchasers.
He stated, “It is really difficult to estimate how this limited sales of EVs and HEVs will help reduce import bills for diesel and gasoline.”
He was concerned that the shift away from high-priced SUVs and sedans to electric vehicles would undoubtedly slow down the volume of sales of these fuel-driven vehicles, which could have a negative impact on their local parts manufacturers due to the low volume of sales of parts and accessories.
The new entrants are required to either begin local assembly with minimal localization or import vehicles to test the market prior to local assembly under the Auto Policy 2021-2026. He stated that for these players to survive, they have two years to generate demand for these electric cars and diversify their exports.
He went on to say that because there are no restrictions to boost localization, the newcomers are enjoying a honeymoon period. However, in order to maintain control over prices, they would need to increase indigenization.
According to Mr. Mashood, vendors typically sign on with Japanese assemblers two years before introducing a new locally assembled model.
New contestants need to cooperate with the distributing business to further develop localisation before the expiry of motivating forces under the Auto Strategy 2021-2026.
