Pakistan Two Wheeler Market Outlook, 2017

Local tax and tariff structure and high raw material costs render Pakistani motorcycles uncompetitive internationally

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This Industry docket provides an insight into Pakistan's motorcycle market, along with its composition, market size, drivers, and industry structure. Motorcycle standards, government regulations and regulatory duties are also looked at. Currently, motorcycle production in Pakistan stands at 2 million. Pakistan has 65+ active players manufacturing / assembling motorcycles, with two dominant associations, namely PAMA and APMA. The docket also explores how an OEM can enter the Pakistan Motorcycle market, establish market presence and gain market share and is a ready reckoner for key automotive OEMs interested in setting up manufacturing and/or assembling set-ups.

Table of Contents

Pakistan Two Wheeler Market Outlook, 2017Frost & Sullivan AdvisoryOEMs should focus on the growing segments of 100cc and 125cc with prices positioned between Japanese and Chinese brandsScope & LimitationsScope & LimitationsOverview of Pakistan’s Motorcycle MarketRobust per capita income growth of MC* sees local motorcycle market shift to higher engine capacity; 100cc and 125cc share increasingLower oil prices, robust middle class consumption drove motorcycle sales to 2 Mn* units in FY2016 over FY2011’s 1.5 Mn; 12% growth in FY2016 Production of motorcycles grew to 2 Mn units in FY2016 from 1.5 million in FY2011, registering a 12% growth in FY2016Market Structure: APMA and PAMA Volume Share Analysis Pakistan’s two motorcycle associations - PAMA and APMA - contributed 41% and 59%, respectively, to production in 2016For PAMA, Honda accounts for 95% of motorcycle sales while DS Motors, United and Omega have ~48% of APMA’s shareLocal tax and tariff structure and high raw material costs render Pakistani motorcycles uncompetitive internationallyLow cost of bikes, wide availability of spares and easy servicing of bikes even in remote locations makes them popular in Pakistan Pakistan Motorcycles: Region-wise Sales TrendThe Punjab region comprises five major cities accounting for 51% of the total share of motorcycle salesHonda’s standard 70cc and 125cc models enjoy good sales in Punjab and Interior SindhOEM Analysis: Model-wise Sales TrendsHonda’s market share dominated by 70cc segment; there has been a recent market shift towards 100cc and 125cc segmentsOverall, Suzuki 2Wheeler sales have seen degrowth; Pakistan Suzuki concentrating more on 4Wheelers than 2WheelersLocal manufacturer, United Auto Industries’ sales on the rise; 100cc & 125cc increased from 11 to 13% and 4 to 5%, respectivelyOmega Industries’ 125cc footprint increasing slowly; major focus is on 70cc motorcycles which has 90% in Omega’s total motorcycle sales Share of 100cc segment has increased from 8 to 13% for NJ Auto Pricing TrendsFor 100cc motorcycles, the average price difference between Chinese and Japanese motorcycle is around 30-40%For 125cc motorcycles, the average price difference between Chinese and Japanese motorcycle is around 25-30%Government PoliciesNo labs in Pakistan to check compliance with Euro II standards. Therefore, assemblers must get a certificate from the importer for Euro II complianceTwo regulations exist for vehicle safety & environmental protection: Motor Vehicle rules 1969 for safety & EPA’s Euro II emission requirementsThe FutureDemand for 70cc to fall; growth to continue for 100 and 125cc segments; OEMs should target the 100 and 125cc segmentsKey Conclusions & RecommendationsOEMs to focus on growing segments of 100 and 125cc; price positioning should be between Japanese and Chinese brands operating in the marketMFN status is an advantage; 100cc and 125cc segments to be targetted and localisation brought in over the longer termAnnexure: Our ServicesMaximise opportunities from existing products and markets; systematically explore new products and markets including Inorganic OpportunitesGrowth Consulting – Service OfferingsLegal Disclaimer

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