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AUTOMARK Pakistan’s premier magazine on automotive, engineering & energy sector

Editor M. Hanif Memon Sub Editor Dr. Raja Irfan Sabir

Technical Editor Muhammad Shahzad

Advertising Manager Abdul Khaliq

Circulation Manager Tahir Siddiqui

Computer Operator Salman Hanif

Web Master Mustafa Hanif

CONTRIBUTING IN THIS ISSUE Muhammad Shahzad Asif Masood Ali Hassan Ali Abbas M. Owais Khan

Advisors Imtiaz Rastgar CEO, Rastgar Group & CBI External Expert, Ex-chairman EDB Islamabad Abdul Majeed Sheikh President, AOTS-ABK Dosokai, Karachi Regional Center & Director (MME), NED University, Ex-Director Pak Suzuki Karachi M. Yakoob Gaziani CEO LORD Institute of Tech. Karachi Haider Nawab Advisor Planning & Development Toyota Southern Motors Toyota Defence Motors Karachi J. Pereira Senior General Manaer After Sales Service and Parts Master Motor Corporation Ltd., Karachi Engr. IHT Farooqui General Manager Plant Karakoram Motors (Pvt) Ltd., Karachi

The views expressed by contributing writers and comments do not necessarily reflect the views and policies of the Monthly AutoMark magazine's management. AutoMark REGD: SC-1330

Published every month by M. Hanif Memon Postal Address Active Communications D-68, Block-9, Clifton,Karachi Visit us: E-mail: Tel : 021-32218526 Mobile: 0321-2203815

Budget 2012-13 and propose strategy for economic growth The budget 2012-13 should be focused on energy sector as country’s economic revival hinges on availability of cheaper and uninterrupted power and gas supply. Austerity should be the theme of the budget document and for the purpose the government would have to cut off the unnecessary expenditures as excessive government borrowing was not only resulting in higher interest rates but also restricting availability of cheaper liquidity f or the privat e sect or. Government to broaden the tax net by bringing the agriculture and services sectors into the tax net. Public Sector Enterprises (PSEs) like PIA, Railways and Pakistan Steel Mills, generating a loss of Rs 400 billion annually should be managed professionally or be privatised to avoid the huge loss to the national exchequer. Rate of minimum income tax of 1 perent of turnover under section 113 is too high. It is suggested rate be reduced to 0.5 percent of the turnover. Minimum Turnover Tax u/s 113 shall not be levied on entities, which are bearing loses. If, however, government intends to apply the minimum tax rate, it should not exceed previous 0.5 percent tax of the turnover. While 0.2 percent rate should be applied on distributors, wholesalers and retailers, due to their very thin margin of profit. Corporate tax shall be reduced to 25 percent from 35 percent for limited companies quoted on stock exchanges. The rate of withholding tax on contracts should be reduced to 1 percent.

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Monthly AutoMark APMA supports BoI, PC, EDB for rationalizing tariffs under AIDP II Exclusive Article by Ali Hassan


EDB, auto sector at loggerheads over AIDP II tariff cut proposals Exclusive Article by M. Owais Khan


Thank you, Daewoo League Members


Chinese assemblers slow in implementing Euro II


APMDA submitt Budget proposal 2012-2013


Italian Ambassador Vincenzo Prati visited Ravi Automobile Corporate Event


Pakistan China Motorcycle Industry council (PCMIC) - An Introduction


Paapam calls for bringing untaxed sectors into net


Promotion of LPG as Substitute of CNG in Transport Sector by Asif Masood from Islamabad


Exclusive Interview of Yousuf Shaikh - Owner Moon Traders


Petromin launches first branch in Lahore 40 Corporate Event - Report Local Assembled/Imported car price


101 Ways to achieve better fuel mileage 44-45 Exclusive article by Mohammad Shahzad Maintain Maintenance Exclusive by Ali Abbas from Toyota Southern - Karachi


Motorcycles market prices



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Exclusive Article by Ali Hassan

Monthly AutoMark Magazine

APMA supports BoI, PC, EDB for rationalizing tariffs under AIDP II The Chinese bike makers, who have been kept aside by the government so far in policy making, are happy over the new policy initiative taken by the EDB. They also feel that “Planning Commission and Board of Investment are doing the right thing.”

The Engineering Development Board, a strong arm of the Ministry of Industries, gave a shock to entire auto sector mainly to the Japanese vehicles assemblers by proposing cut in duties for CKDs and CBUs under the new Auto Industry Development Plan (AIDP II) for 2012-2013 to 2016-2017. The salient features of AIDP II were presented during a meeting held between the EDB officials and all the auto sector people and vendors. Federal Industries Minister Chaudhry Pervaiz Elahi also attended the meeting. It is surprising that the EDB chief Aitzaz Niazi had proposed these tariff changes without taking into confidence the stakeholders who complained that these types of tariff reforms were never shared with them before. The EDB had completely ignored the proposals of vendors and auto assemblers sent much earlier. After a hue and cry by the auto sector people, the federal industries minister tried to cool down the temper of auto stakeholders during the meeting. This type of situation is not a new phenomenon in the PPP coalition government who after coming into power has remained least bothered over the negative repercussion of the decisions which the government has been taking without taking into confidence the industrial community. People in the local industries say they were already struggling for their survival

To justify the tariff

not only locally but also failing to compete in global markets due to rising cost of production on account of severe gas and power load shedding issues. The new tariff structure is set to create more problems for the entire auto sector. The auto sector is facing the wrath of the government’s targeted move to rationalize tariff under the guidance of Nadeem ul Haq of Planning Commission and Salim Mandiwiwala of Board of Investment aimed at paving the way for re-entry of a leading Japanese bike maker Yamaha. Industry people also hold National Tariff Commission equally responsible for not playing its due role in safeguarding the interest of local industries. Vendors believe that the Pakistani market is being opened to India to takeover Pakistan’s tiny market blaming Planning Commission mainly which is assigned to play havoc with the local market on the dictation of IMF.

restructuring move on bike sector previously, the government has now involved other sector like cars, tractor, LCVs, heavy vehicles etc by also cutting down their tariff on CKD and CBU so that one could not raise finger on the one sided move. On the contrary, the Japanese bike makers feel t hat t he Planning Commission, Board of Investment and National Tariff Commission, have become united to get their plans activated by putting the gun on the shoulder of EDB. The local industry is more cautious that Pakistan will become a trading country as its industrial base is being scratched gradually. The real problem will arrive when unemployment will take its toll when trading by market forces will get underway. However, the Chinese bike makers, who have been kept aside by the government so far in policy making, are happy over the new policy initiative taken by the EDB. They also feel that “Planning Commission and Board of Investment are doing the right thing.” Chairman Association of Pakistan Motorcycle Assemblers (APMA) Mohammad Sabir Shaikh represents Chinese bike assemblers’ point of view. | May-2012 | Page 14

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Monthly AutoMark Magazine

Exclusive Article - Continued

Vendors believe that the Pakistani market is being opened to India to takeover Pakistan’s tiny market blaming Planning Commission mainly which is assigned to play havoc with the local market on the dictation of IMF. He claims that their stake in Pakistan market is more than 70 per cent but the government has not invited in any meetings on AIDP 2. “Despite government’s step motherly treatment Chinese bike makers fully welcome the reduction in custom duty on CBU and CKD,” he says. However, he adds that classification on local parts should be subject to production of 70 per cent of Pakistani market demand of such part at least by three vendors. EDB should identify the name of local parts producers with their capacity to general public. Local parts classification should also be identified by motorcycle CC Capacity / Horse powers. APMA, he says, also welcomes the recommendation for new entrant as it will provide motorcycle with latest technology and new features to Pakistanis. It will also helpful in changing the existing motorcycle of 40 years old version besides helping in providing some price reduction in two wheelers. However, he recommends that the same facility should be available to the existing players in order to provide level playing field.

Sabir says he fails to understand why the main stakeholders or representatives of 70 per cent assemblers have not been consulted on the proposals for budget at any Forum in spite of several reminders. “Any policy or decision taken without APMA consultation will be unrepresented by major stakeholders,” he adds. On other issues, Sabir Shaikh says that FBR has instituted several FIRs on the plea of unlawful/Illegal input claimed by Sales Tax Payers and arrested some sales tax payers. They used their undue influence on tax payers and get the

liability accepted. Some of the tax payers filed the Constitution Petitions in High Court and get the Stay Order against FIRs. This step of FBR is illegal and unlawful as Sales Act, 1990 clearly give p r o ce d u re t o d e a l w i t h s uc h c i r c u ms t a n c e t h r o u g h p r o p e r audit/investigation. Moreover, FBR is unable to submit final challan in Court in spite of establishing FIR since one and half years ago. They implicate the entire supply chain in the FIRs without distinguishing between the genuine buyers or fake transactions. Some of our worthy members were also nominated in FIRs and there businesses are badly suffering due to this harassment. Due to this action of FBR, businesses are at the verge of closing down. As entire matter is pending in Courts and FBR will not get anything from this illegal action as a consequence businessman confidence is badly shaken and they are thinking of investing their capital outside Pakistan. On the other hand, the Government needed money to meet their development and nondevelopment expenditure. To resolve this dilemma APMA proposes that the Government should give amnesty scheme that tax payer should pay 15 per cent of Principal amount of Sales Tax identified by FBR without any additional tax or surcharge to get out from FIR or

any other legal action. 15 per cent of Princip al amount is su ggested considering the FIRs on entire supply chain has been instituted by FBR whereas FBR is entitled of Principal amount of sales tax from final consumer. PAAPAM looks more worried over new tariff structure under the proposed AIDP. Arshad Amin Awan

CEO, General Engineering Industries, a member of PAAPAM, that the government has actually increased the level of threat to the local motorcycle industry at the behest of just one new entrant, which will make the already p resent investment to fade away. The decision of the government to allow new entrant on duty free terms in the motorcycle industry will prove a deadly blow to the local manufacturing. 'This is foolhardy on the part of the government to attempt on this scheme, for it will dent all the prospects of local motorcycle for long-term sustained growth,” he says. The investment offer of $150m in ten years from Yamaha is a peanut against the relief in duties they will get in return, which will also cause huge losses to the national exchequer, he adds. Besides, the local industry in routine will be investing more than $150m during this period without demanding any further concessions from the government. It beats all logic as to why the government should allow billions of rupees already invested in the local industry be wasted just to favor a ‘on paper’ investment and that to on a ten year period. Awan says existing local manufacturers are being made victims for just one new entrant and this will be a unique case in the history of tariff protection not only in Pakistan but probably in the world at large where an importer’s interests are protected against a national industry. Oddly enough, the aspiring new entrant has been able to bend all rules and has seemingly prevailed over all of the | May-2012 | Page 15

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Monthly AutoMark Magazine

Automotive Sector - Update

Duty on imported parts of motorcycles slashed: Paapam regrets government The government has decided to slash duty for motorcycles on imported CKDs to 10 percent from 15 percent, locally manufactured CKDs to 25 percent from 47.5 percent and CBU 35 percent from 65 percent. For new entrants duty on locally manufactured CKDs will be 10 percent for three years. Dut y on engine and aut omatic transmission will be five percent. Pakistan's Honda motorcycle is likely to be massively hit by reduction in tariff on imported and local parts. National Tariff Commission (NTC) maintains that the industry survived behind high tariff walls. And due to lack of competition, industry could not develop as an efficient industry and remained a 'negative value added industry'.

This conclusion was considered applicable to both motorcycle industry and the vendor industry. Pakistan Association of Automotive Parts Accessories Manufacturers (Paapam) has protested the proposed reduction in duties and for not taking the Association on board before proposing tariff reduction. "We regret that Paapam, a major stakeholder of the auto industry, has neither been informed nor consulted with regard to proposals. Local auto parts vendors' contribution has tot ally been ignored ," the Association added. Paapam claims t hat Pakistan's automobile industry went through a period of tremendous expansion, with investment of over Rs 40 billion and with volumes going up by over 100

percent. These developments made the auto industry one of the top five industrial sectors of the country in terms of contribution to tax revenue, acquisition of hi-tech manufacturing technologies and generation of employment, the Association continued. According to Paapam, unfortunately, due to import of used vehicles and other adverse policy measures, local industry is now suffering from excess capacity, leading to halting of investment by local parts manufacturers as well as international automotive assembler. Paapam believes that the auto industry can be one sector that, with proper focus, can be part of a quick fix to revive Pa ki st an' s i nd ust ri al sect o r. . ..

Government machinery to force its own terms of entry in the local industry. This f orced entry is in face of well documented opposition to the proposal of the Board of Investment (BoI) by the competent authorities including Ministry of Industries, Ministry of Commerce, the Federal Board of Re v enue an d t he En gi n eer i ng Development Board. Entry of Yamaha at such terms will definitely attract litigation at all levels on more than one ground and looks like another major embarrassment for the present Government in the legal arena. Existing motorcycle assemblers along with around 20 manufacturers of three wheelers are working in the present tariff structure that allows import of CKD at 15 per cent duty, and an approved assembler wanting to import certain localized parts is allowed to do so at a duty rate of 47.5 per cent. Under AIDP, the current CKD was supposed to be further reduced to 10 per cent in the current fiscal year.

Association in a recent letter to different Government functionaries that Yamaha is not a new entrant because they had suspended their operations in Pakistan as recently as in the year 2008 after 35 years in the country. Even now Yamaha brand is being produced in the country.

are other manufacturers of motorcycles like Dawoods in Pakistan which are producing 1.6m units of motorcycles a year. While the introduction of Chinese motorcycles in the country has also reduced the prices of motorcycles. With regard to the proposal of BoI to allow import of CKD at five per cent customs duty to a new entrant, Ministry of Industries is of the view that the same may invite litigation on the point of discrimination, as two separate tariff treatments for the same product cannot be accorded simultaneously. Since the components of CKD of a motorcycle are chargeable to customs duty at 15 per cent, an even lower rate for localized parts (as proposed by BOI) may lead to "Reverse Cascading" which is against the spirit of the scheme of Customs Tariff followed across globe. F inance Minister informed the C o mmi t t ee t hat t her e a re 8 3 stakeholders in this issue who need to be consulted. Similarly, Federal Board of Revenue (FBR) told the Committee that in view of the competitive nature of the market, level of indigenization in the sector and concerns of the vendors, review of the entire tariff regime and currently available concessions vis-Ă vis higher CBU rate FBR does not support any concession in present duty structure.....

One of the surprising aspect of this unique case is that Yamaha is being considered a new entrant, which has never been the case, as it was pointed out by Pakistan Automotive Manufacturers

The question is: How does the same company suddenly discover that its vendors do not have capacity to manufacture motorcycle parts in Pakistan? The answer, according to PAMA, is the obvious reason of their reentry is the attraction of relief in duties and taxes and the advantage of import of 100 per cent parts from its parent company at ridiculously low rates of may be five per cent. But all this package of benefits to Yamaha would upset the equation for e xisting Or ig ina l Eq uipment Manufacturers (OEMs) who have already invested billions to increase manufacturing capacity. On the other hand, according to the minutes of the meeting of Cabinet Committee on Investment (CCOI) held on January 10, 2012 headed by the Prime Minister, Secretary Industries informed that there | May-2012 | Page 16

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Exclusive Article by M. Owais Khan

Monthly AutoMark Magazine

EDB, auto sector at loggerheads over AIDP II tariff cut proposals The board is of the view that the local two-wheeler and car industry had been heavily protected since 1964 and 1980s, respectively, which had resulted in stagnation of technology. Lowering CKD rate and simultaneously keeping higher rate for CBU is not only in line with the trend followed by successful regional economies, but would also attract new investment, technology transfer and provide a level-playing field to existing assemblers and vendors in view of most MFN status to India. With many grey areas as identified by the auto assemblers and vendors in the Auto Industry Development Plan (AIDP II) relating to cut in CKD and CBU duties there is certainly a silver lining in the proposed tariff plan in terms of consumers’ point of view. At least the consumers will see some price cut on the basis of tariff rationalization for one time otherwise the car and bike assemblers had been rejecting the demand of Ministry of Industries on reducing car prices. Industry knows that prices are never reduced when demand is going up every month. A s the n ew Bud get 2102- 2013 announcement d raws near, the proposed tariff rationalization under AIDP II for 2012-2013 to 2016-2017 became a hot issue since the beginning of May. The entire auto sector vent their anger on EDB for coming out with a surprise tariff reforms on the dictation of Planning Commission and Board of Investment. Many car makers and vendors have now given a new name to the EDB which they feel that EDB now stands at Engineering Destruction Board. Before going towards the AIDP II, the previous statements of the EDB issued to the press in January this year holds a lot of importance reflecting a true tussle between the Board and car assemblers mainly on price issue, profit making etc. The EDB has not only accused the assemblers for raking unreasonable

profits from advance full payments typically deposited months before delivery of a car but also blamed them for raising prices. However, the EDB had never succeeded in forcing car assemblers to bring down prices ever. The Board found a way to provide relief to the consumers by proposing cut in CKD and CBU duties which was backfired by the entire auto sector especially car and bike assemblers. To some extent the EDB is right in dealing strongly with the local car assembler mainly accusing them time

to time for raising their voice against imports of used cars which they felt eating away their market share. The EDB argued that the three Japanese car assemblers, who share a market of 130,000 cars among them, regularly blame low volumes as main stumbling block impeding further indigenisation of critical parts and their efforts to give relief to the helpless consumers by way of rationalising cars' prices. Car assemblers take full money from the new buyers at the time of booking (inclusive of all taxes, duties, levies and the duties to be paid for import of CKD) but the buyers will have to wait for months to get a new car. As a result many consumers, who cannot wait for months, buy cars on spot at car assemblers’ authorised dealers’ showrooms who charge premium from Rs 20,000 to 100,000 for arranging the vehicle. The car assemblers, who are either involved in this practice or know this flourishing business, have hardly taken any action against their dealers involved in this practice. No one has ever seen a report in the newspaper that the company has terminated the dealership of its authorised dealers on charging premium. One can easily see this malpractice by paying a visit to the showroom as how cleverly showroom dealers deal with the customers who are in hurry to have a car on the spot. "If such is the demand position of cars in Pakistan, then why are the car assemblers making the buyers wait for | May-2012 | Page 17

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The representative of auto industry registered a strong protest against the EDB’s recommendations saying that these will affect the employment of over 1.5 million workers in auto and allied industries besides inflicting a massive damage to foreign reserves and national economy. such long periods, leaving them with no choice but to purchase imported cars? "This is despite the fact that sufficient capacities exist with the OEMs to cater to consumer needs within a more appropriate time frame. EDB had also accused car assemblers that a careful look at the profits of OEMs would show a sizable amount that fattens their account books, comes from interest income. Having low volumes means non-viability of indigenising critical parts thus making transfer of technology a far cry, paving the way for import of CKD and parts, thereby enabling vendor industries of the exporting countries to flourish and making huge dent on the ability of local vendor industries to indigenise and grow. The EDB also said instead of visualising the energy situation in Pakistan and defining a roadmap for developing fuelefficient cars for consumers, the world renowned OEMs operating in Pakistan resorted to CNG fitted cars, which actually are not technically designed for CNG, in the first place, thereby making the already expensive cars costlier by at least Rs 60,000 for the consumers and making the engines of their cars prone to rapid deterioration. Besides raising the prices several times every year, the quality of locally assembled cars is not up to the international standard as many buyers instantly face quality issues after two week of purchasing cars. The after sales service is perhaps the most expensive in Pakistan as authorized dealers charge exorbitant price for tuning, service and parts and even they sell lubricant at higher than market rates. The successive governments are equally responsible in giving a free hand to the car and bike assemblers to keep rolling out decade old models and even no serious efforts were made to check the deletion levels targets set by the government especially in cars. In bikes for example achieving 93 per cent

deletion in parts and engine in 70cc bike does not hold any significance when it costs over Rs 66,000. Car assemblers blame used car importers lobby for pocketing huge price from consumers on five year old cars but they cannot justify increase in locally assembled cars by three to four times a year on the back of losing value of the rupee against the Yen and Dollar. It means that they have not achieved the desired localization targets as fixed by the government. Many people feel that that whether the car assemblers are using gold parts in assembling a car which makes a serious impact on the cost of production and pricing structure. The government should investigate this issue on which the car prices are being raised frequently. Efforts are also under way to bring EURO 2 or Pak 2 models from July 1, 2012 but again the consumers will have to pay its price. The government should also check Pak Suzuki as its only Swift is Euro II compliant while all its models are decades old. Why EDB has taken the initiative to bring a change in auto sector. The EDB wants to enhance competitiveness through gradually reducing tariff protection, rationalizing prices of locallymade vehicles by introducing fair competition for existing assemblers, providing a conducive environment to attract new investment, rationalization of tariffs of completely built up (CBU) units to ensure availability of imported substitutes for consumers at affordable prices, rationalization of tariff of

completely knocked down kits (CKD) to provide fair competition to ex i st i n g p l ay e rs through new investment and more options for c o n s u m e r s a n d Ch. Pervez Elahi finally technological Sr.Minister Industries upgradation of vendor industry. The EDB believes that a higher rate of CBU import would e n c o u r a g e l o c a l assembly/manufacturing over imports, thereby attracting investment and simultaneously safeguarding foreign exchange reserves. The board is of the view that the local two-wheeler and car industry had been heavily protected since 1964 and 1980s, respectively, which had resulted in stagnation of technology. Lowering CKD rate and simultaneously keeping higher rate for CBU is not only in line with the trend followed by successful regional economies, but would also attract new investment, technology transfer and provide a level-playing field to existing assemblers and vendors in view of most MFN status to India, it said. In cars, the EDB feels that CKD rate was determined in late 1980s at 35 per cent to encourage local assembly by keeping tariff on CBU imports as high as 250 per cent. The car industry has attained sustainable growth with broad vendor base coupled with an increasing local demand. On tractors, the EDB says that CKD rates are proposed to remain the same while on localised parts the rate of CKD is suggested to be reduced to 30 per cent in 2012-2013 from the present 35 per cent and after subsequent decline in upcoming fiscal years, the rate by the end of 2016-2017 will come down to five per cent. The tractor industry will continue to experience unique situation as there will be no tariff differential in the CKD and CBU rate with both at zero | May-2012 | Page 18

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Monthly AutoMark Magazine

Automotive Sector - Update

Auto industry challenges cabinet committee’s decision Auto industry has challenged the decision of the Cabinet Committee on Investment (CCoI) regarding tariff reduction for new auto entrants and termed it discriminatory policy, according to a letter of Pakistan Automotive Manufacturers Association (PAMA) made available to media on last week. “The industry stands strongly united against discriminatory policy that will definitely disrupt the equation by unfair grant of relief in duty and taxes to a particular auto manufacturer,” it said. The industry favours the policy incentiv es for bringing in new technology, it said, adding that the incentives for complete knock down (CKD) rates should be allowed on new technology parts and components for producing environment-friendly motorcycles. However, the incentives should be supported by clear definition for such components and interpretation of the new technology, it said, and warned that the definition should also be agreed and notified, in advance.

The CCoI in its meeting on April 5, with chairman Planning Commission, Dr Nadeemul Haq, in the chair, has proposed, “Tariff reduction on CKD and CBU for new entrants from 15 percent to five percent for five years and CBU from 65 percent to 35 percent. The ministry of commerce would move a summary to the ECC accordingly,” said the minutes of the meeting also available with The News. There is a lack of policy for new entrants in the motorcycle industry and they are heavily dependent upon clones of “Honda CD 70” and Chinese parts only and the existing vendor base of the parts manufacturers helped mushroom growth of copying assemblers, but d is co ur age d t he r ese arc h an d development, the minutes quoting the findings of the National Tariff Commission (NTC) in support of encouraging new auto entrants, said. “It is not fair to allow any new investment by putting at risk the investment already there in far greater size and the existing investors had already expanded their capacities to

manufacture 2.5 million motorcycles in Pakistan,” according to PAMA letter written to the finance minister. This proposed policy shift to allow import of 100 percent parts at five percent duty rate is just to favour a single entrant, ‘Yamaha’. It showed that the new entrant will need to invest next to nothing to gain excess to this market, the PAMA feared. De puty chairman, Pl anning Commission, observed that artificial barriers need to be removed and there is no protection to the local industry after 40 years of its running, according to the minutes of the meeting. The holistic approach regarding duty is required rather than imposition and reduction in duty on components and sub-components, it said. “This package of benefits would upset the equati on v is-a-v is existi ng investment by creating an environment where existing players would be rendered uncompetitive and will be forced to adopt a business model where they bring in new models every five years,” caut ioned the PAMA. ..

per cent. This unique phenomenon is a product of varied interests in this lucrative sector. The representatives of local auto industry have strongly opposed the notion by EDB that the new AIDP will bring in more investment and technology to the country. They said that the EDB’s proposal will wi pe out t he local aut o parts manufacturers and the OEMs will prefer to import their models from Japan and other countries after a drastic cut in import of CBUs as manufacturing a vehicle and paying the duties on it will be more costly. The representative of auto industry registered a strong protest against the EDB’s recommendations saying that these will affect the employment of over 1.5 million workers in auto and allied industries besides inflicting a massive damage to foreign reserves and national economy. As per the EDB plan, for the two-wheeler

sector, 50% import duty is proposed on CBUs in 2012-2013 from the present 65%. While duty on non-localized CKD is proposed to be slashed to 5% from 15%, and the duty on localized CKDs is proposed at 25% in 2012-2013 from 47.5%. Similarly, after making reduction in the subsequent fiscal years, the duty on parts would be brought to five per cent by 2017-2018. On the other hand, the two wheeler industry had suggested the government to bring down the import duty on CKD kits to 10% from 15% and CBU rate to 55% from 65%. For cars, duty on nonlocalized CKD kits is currently 32.5% which the EDB proposed to slash at 20%, while on localized parts the import duty will be reduced to 35% from 50% next year, which will be further brought down to 20% by 2016-2017. The rate of duty on 1000cc CBU is suggested at 40% from 50-55% followed by 50% on 1,000-1,500cc from 60% in 2012-13, while CBU duty on cars from

1,500cc to 2,000cc is proposed at 60% from 75%. The EDB road-map also includes withdrawal of regulatory duty of 50% on cars exceeding 1,800cc being an impediment to growth in this segment, but the biggest gainers will be the importers of Pajero, Land Cruisers, BMWs and Merced es v ehicles. The automakers said that the policy will only benefit the luxury cars importers and the claim that consumers will get cheaper cars is baseless as cars above 2000cc are attractive for common man which proves that the policy and expected results are poles apart. Senior minister Industries Chaudhry Pervez Elahi has asked the EDB to take all stakeholders includ ing auto manufacturers onboard and reach to a consensus before proceeding further but the sources fear that the AIDP-II has already been finalized and EDB will only do a mock exercise to satisfy the minister..... | May-2012 | Page 19

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Message from Daewoo, Management

Monthly AutoMark Magazine

Thank You ‘Daewoo League Members’ The Management and Staff of Daewoo Pak Motors (Pvt.) Ltd., always bowed to its valued patrons and express Gratitude and Thank You to all ‘Daewoo League Members’ for extending their Confidence and Continued Support to Daewoo Bus. Today’s outcome; right or wrong is the yield of yesterdays dreams, forecasting and planning etc. Daewoo Bus- Korea and Afzal Motor-Pakistan timely envisaged the tremendous opportunities in Pakistan market and commenced the manufacturing in May 2010 of globally acclaimed Daewoo Luxury Buses through a Joint Venture Company “Daewoo Pak Motors” . It was than virtually beyond imagination for a common Passenger Bus Operators to consider huge investment in the period of economic hardship and stagnant business environment with little room for revenue increase and skyrocketing operating cost due to every day rise in fuel prices. The only viable solution was to acquire some solution that could not only attract a large chunk of passenger fed up of obsolete and unsafe buses but could also ensure High and Speedy Return On Investment.

Then came the solution: Daewoo Luxury Buses with Unparallel F uel Economy, Du rabili ty and Unbelievable Comfort at Very Attractive price that has revolutionized the public transportation and especially Inter City Bus Operations. It was not only the Daewoo Bus but evolution of a series of new Bus Terminals and Organized Operations countrywide by prominent bus transport companies. It is a famous saying that competition always results

Continued Support to Daewoo Bus. Daewoo Buses been proved best in all terrain from Karachi to Turbat to Kunjrab for Fuel Economy, Comfort, Safety, Endurance and Longer Life that has ensured Fleet Operators to get their Investment Return in Shortest Time Period compared to all buses in market. for betterment of the customers but force the organizations to tighten its belts as well for survival. The Ultimate Beneficiaries of New Daewoo Buses operating by Newly D ev elop ed Terminals was valued Passenger looking for alternates to get rid of few monopolies. The introduction of Daewoo Luxury Buses has created a healthy competition and beside lucrative returns for fleet operators, passengers also started to enjoy brand new buses with almost 50% less fair. The Daewoo buses have received tremendous appreciation and praise from the Prominent Fleet Operators and Passengers endorsing the Quality, Durability, Luxury, Economy and Comfort of these Buses. The Management and Staff of Daewoo Pak Motors (Pvt.) Ltd., always bowed to its valued patrons and express Gratitude and Thank You to all ‘Daewoo League Members’ for extending their Confidence and

The Daewoo Buses product Mix include the supreme model BH116, The first & only locally manufactured Luxury , Rear Engine Air Suspension Bus with 340 HP; Economic version model BH115 Rear Engine with 300 HP; and Super Economical model BF120 Front Engine with 240 HP and CNG model BH115, the first dedicated CNG Rear Engine Bus manufactured in Pakistan with 240 HP. Daewoo Bus Corporation-Korea and Daewoo Pak will remain committed for continuous improvements and up gradation of Daewoo Buses. The state of art Research & Development Centers in Korea strive hard to design and protect through patent and intellectual property of its Developed Designs, Shapes, Color of buses and bodies and components of Daewoo Buses being manufactured globally and in Pakistan as well by DPML. | May-2012 | Page 20

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Monthly AutoMark Magazine

Automotive Sector - Update

Chinese assemblers slow in implementing Euro II The SRO requires all petrol driven automobiles being produced in the country be compliant to the PAK H standards as of July 1, 2012. Barring Chinese bike assemblers, almost all the Japanese car and bike assemblers are making efforts to bring out EURO H compliant vehicles in order to meet the government`s deadline of July 1, 2012. The low-priced Chinese bike assemblers have not done anything in this regard so far as they feel that no warning has been issued yet by the government. Sources said that two models of Japanese assembled Honda bikes were already Euro-H compliant while another two models would be ready before the deadline. EURO H is a standard for measuring exhaust gases and noise levels. Products are to be measured against ECE-R40 which is an internationally recognised, accepted and widely adopted measuring cycle. The defined testing cycles have a common understanding world over and that is why they are called `Standards` As for the consumer they will have advance technology and cleaner environment in addition to the fulfilment of responsibility towards environment while the government will fulfil its commitment to international forums made at different stages. In Pakistan it will be known as Pak H. Sources said some of the responsible companies specially the key market players started working to meet the laid down standards for all models. Industry has invested in dies, moulds, tools, jigs, fixtures and inspection equipment etc. The exact amount cannot be calculated as it was a part of overall product development, however, it runs around Rs500 million per company. Since there is a huge unorganised sector in bike manufacturing it seems very unlikely that all the bikes made in Pakistan will be conforming to these st an dard s put ti ng t he socially responsible companies at a disadvantage as the conversion is capital intensive. On increase in bike price, the sources said the cost would increase as new parts

had to be added to achieve the emissions. However, the industry is considering number of options to avoid burdening the consumer but is not limited to asking for duty concessions against parts used specifically for EURO H emissions, the sources added. On quality of petrol to meet EURO H specification, the sources said Japanese bike assemblers were not worried on this issue. The petrol presently available was good enough for Euro-H, but poses problems for EURO-IV engines or where `Catalytic Converters` are used. However, adulterated fuel is more of a concern for bike and auto makers in EURO H scenario causing damage to the system due to substandard fuel. The government must address this issue as it will become a major issue in post EURO H environment. The SRO 72(KE) 2009 adopting PAK H standards was issued in May 2009 with defined milestones for conversion of products already being produced and the ones that were introduced aft er the introduction of the SRO. The SRO requires all petrol driven automobiles being produced in the country be compliant to the PAK H standards as of July 1, 2012. Sources said many industries had been making efforts since 2009 to achieve the PAK H (EURO H) targets but many bike players were unlikely to implement or adopt the standard, creating problems for implementation. The socially responsible companies` products will again be forced to be more expensive than its competition because of no fault of its own. The organised sector will once again be placed at a disadvantage. The law was forced upon the industry by the World Bank and the IMF and government has done nothing to educate or get it implemented since this SRO was issued back in 2009.`It will suddenly become an issue in June 2012 as all policies are implemented on

the organised sector which pays Sales Tax, Income Tax, follow EDB procedures (SRO 655, 656 and 693) PSQCA standards, EOBI, WPPF, Social Security. The un-organised sector has none of these costs,` the sources remarked. Meanwhile, Chairman of Chinese bike assemblers` body, the Association of Pakistan Motorcycle Assemblers (APMA), Mohammad Sabir Shaikh said that the Chinese bike makers had not taken any initiative on Euro II. `The government departments have not issued any warning yet,` he added. He claimed that Chinese bike assemblers were already in touch with their principals and all Chinese made models would change to EURO II standards in very little time. Meanwhile, an official in Honda Atlas said all the models of Honda Civic and Honda City already conform to EURO IV standards instead of Euro II. An official in Pak Suzuki Motor Company Limited said that currently only Swift meets the requirement of Euro II while efforts are underway to make all the models as per PAK II emission standards by July 1, 2012. A refinery operator said that refineries are already producing European standard petrol for the last many years but the government has given a deadline of July 2014 for producing Euro II standard diesel. Currently, diesel produced by local refineries contains 0.2 to 0.8pc sulphur content while Pakistan also imports diesel which carries 0.5pc sulphur content. As per government`s deadline, all refineries will produce diesel carrying 0.05pc sulphur to conform Euro II standard. However, a leading refinery has already started producing diesel with 0.05 per cent sulphur content. Refineries will have to invest $140-240 million for Hydro Desulphurisation Plant..... | May-2012 | Page 22

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Monthly AutoMark Magazine

Automotive Sector - Update

APMDA submitt Budget proposal 2012-2013 For the record, it is important to note that the local assemblers are not assembling cars of above 1800cc. The imports of above 1800cc cars and jeeps would not hurting the local auto assemblers. In 2005-2006 import of used vehicles which was permitted after a long gap of 12 years. This was subsequently restricted to import of used vehicles of three years old only in different schemes, as a result of which local assemblers acquired a monopoly on prices and supply, and the freedom of choice of consumers was severely restricted. In light of the above, the APMDA would like to make the following proposals for Budget 2012-2013. 1- Allow commercial imports of used vehicles of up to 10 years of age vehicles. Allowing commercial imports, in addition to existing schemes for the imports of used vehicles like Transfer of Residence Scheme, Gift Scheme and Baggage Scheme, would be in line with the Government’s policy of the documentation of the economy and would generate 100 % more revenue for the Government. It would also bring the imports of used vehicles business into the tax net and will help the Government expand its tax base. We suggest that only the certified members of APMDA should be allowed to import the used vehicles on commercial basis for the sake of transparency of the trade. The existing schemes for the imports of used vehicles are for the facilitation of overseas Pakistanis. It is recommended that in Transfer of Residence scheme there should be no restriction of age limit for the import of vehicle. The local assemblers are enjoying the monopolistic and consumer unfriendly benefits of a ban of used vehicles import for the last many years. They fleece common people in the shape of 100%

advance payment at the time of booking of a car and the delivery of a car takes three months to six months! As a result of delays in car delivery, the black marketer charges a hefty premium "on money" from innocent people. They arbitrarily increase the price for their car as and when they desire, resulting in significantly greater financial burden for the common man and profits for the auto assemblers than our neighboring countries. The promised levels of deletions have also not been achieved, despite the passage of many years. 2- Regulatory duty income decline has been a huge revenue less, which is verifiable from all the Collectorates of Customs. We would like to draw your kind attention towards the problems faced due to issuance of C.G.O. 01/09 dated 13-01-2009. This Notification has deprived the legal, social and ethical right to obtain the depreciation @2% per month on old and used vehicles of above 1800cc imported by Overseas Pakistanis. This facility was available for the last 30 years, before it was abruptly withdrawn. As per current S.R.O. the depreciation on the Taxes and Import value of old used vehicle is @1% per month. The importers are already high tariff rate on account of Regulatory Duty @50% on the vehicles of above 1800cc (Cars & Jeeps) and devaluation of currency. For the record, it is important to note that the local assemblers are not assembling cars of above 1800cc. The imports of above 1800cc cars and jeeps would not hurting the local auto assemblers, unless they are charging an unfair profit on their smaller capacity vehicles..

3 - T he go v e r n ment should impose a fixed rate of duty on the import of used vehicles of engine capacity of above H.M.Shahzad 1800 CC. It may be mentioned Chairman APMDA h er e , t h a t us e d vehicles up to 1800 CC were already subjected to fixed rate of import duty. It would help the government check the revenue loss suffered due to arbitrary fixing of import duty and will help to eliminate the variation of taxes in all the ports of country. In that result the collection of taxes will be increased. Sir, the simplification of the import procedure of used vehicles of all engine capacities and the fixation of duty for all used vehicles would be in line with the good governance policy pursued by the present Government. This would also help the government to enhance its tax base as well as the volume of revenue. The democratically elected representatives of the people, who look forward to their reasonable freedom of choice and financial benefit and for the people of this industry, whose livelihoods depend on your decisions.

Letter to Federal Minister of Commerece APMDA Chairman H.M. Shahzad send letter to federal minister of commerece on 8th May, regarding 'automobile trade with India', saying that government should allow automobile imports from India, and he have give various reasons for his recommedations like local automotive assembler are failed to provide low priced car to the nation.... | May-2012 | Page 23

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Monthly AutoMark Magazine

Corporate Event - Report

Italian Ambassador Vincenzo Prati visited Ravi Automobile Italy extends help in technical sectors Recently Italian Ambassador “Mr. Vincenzo Prati“ and the First Sectary Italy “Dr.Federico Bianchi” visited RAVI Automobile (Pvt.) Ltd. The Italian Ambassador and First Secretary visited different manufacturing facilities of Ravi Pakistan accompanied by Mr. Iqbal Khalid, Chairman Ravi Pakistan and Mr. Fahad Iqbal, D irect or Rav i Paki st an. The delegation was then briefed on the operations of group companies; Ravi Automobile (Pvt.) Ltd., Infinity Engineering, Ravi Spherocast, Ravi Agric, Ravi Resource, Aska Engineering. The delegation also visited the Ravi Piaggio Storm 125 assembly line after the press conference.In their Press conference they highly appreciated RAVI Automobile and were impressed by the quality of manufacturing at RAVI motorcycles’ manufacturing facilities. While addressing a press conference at the Ravi Automobile Ltd, a company of Ravi Pakistan. “We want to support Pakistan’s development process, especially on the mechanical sector, which is the strength of Italy,” he said, adding that Italy is well aware of the potential of Pakistan’s two-wheeler market and is ready to contribute to the development of this sector. He said that the prospects of Pakistan’s

economy were very attractive despite the crisis. “We are impressed by the quality of manufacturing at Ravi Motorcycle’s ma nu f ac t ur i n g fa ci l i t i es , ” t h e ambassador said after having visited different manufacturing facilities of Ravi Pakistan. He believed that Ravi Piaggio Strom 125, the motorcycle manufactured by Ravi Automobile, in collaboration with Piaggio Italy, was the real successor of Vespa, the Italian brand that dominated two-wheeler market in Pakistan for more than five decades. Appreciating the efforts of the Punjab chief minister for the promotion of bilateral economic relations of Italy and Pakistan, he said Shahbaz Sharif was very keen to enhance the trade relations between the two countries and sought Italian cooperation in this regard. Prati said Italy was well aware of the

economic problems faced by Pakistan and ready to contribute its share in the process of economic revival. “We to partner in the development of Pakistan,” he said. He believed that Strom 125 was the real successor of Vespa an Italian brand that thrived in Pakistan for more then five decades. “Collaboration of Ravi Automobile and Piaggio Group is very important in the bilateral relations of the two trading countries,” said Prati. He said Italy was in top 10 trading partners of Pakistan and third place in European Union after UK and Germany. During the visit, he said the Piaagio group had already focused on Asia and had started manufacturing in China, India and Vietnam and that Italy is trading with Pakistan in many sectors, including technology and garments. Ravi Pakistan Director Fahad Iqbal thanked the Italian ambassador and first secretary for their visit. He emphasised that Pakistan’s relations with Italy are vital for the economic growth of the country. The ambassador and first secretary visited different manufacturing facilities of Ravi Pakistan and were briefed on the operations of the Ravi group companies..... | May-2012 | Page 24

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Automotive Sector - Introduction

Monthly AutoMark Magazine

Pakistan China Motorcycle Industry council (PCMIC) The senior members of the PCMIC are Mr. S.M.Yousuf (founder & Central Chairman of PCMIC) and Mr. David McMullan (Chairman of China region of PCMIC). Yousuf and David are vastly experienced in this industry and they will both dedicate their time and efforts to help improve Pakistan-China relationships and are available for advice at any time. Last year Pakistan’s Dawn newspaper reported that the CEO Engineering Development Board Mr. Aitezaz A Niazi claimed that a total number of 1.535 million units of motorcycles were assembled in Pakistan during the 2010/2011 fiscal year. Of these 55% were Chinese branded motorcycles and 45% were Japanese. Mr. Niazi called on the Chinese motorcycle makers to seize opportunities in Pakistan and further increase their market shares. With this kind of news in mind the Pakistan China Motorcycle Industry Council (PCMIC) has been created as an instrument to aid the harmony between the Pakistani importer cum manufacturers and Chinese exporter. The PCMIC’s main goal is to smooth the way for further expansion by all parties and to aid in communication and develop better relationships. The senior members of the Pakistan China Motorcycle Industry council (PCMIC) are Mr. S.M.Yousuf (founder & Central Chairman of PCMIC) and Mr. David McMullan (Chairman of China region of PCMIC). Yousuf and David are vastly experienced in this industry and they will both dedicate their time and efforts to help improve Pakistan-China relationships and are available for advice at any time.

The story of PCMIC “The Pakistan-China Motorcycle Industry Council was jointly organized by Mr. David McMullan and S.M.Yousuf in China on 18th Oct 2011 and endeavors to open new avenues for the promotion of bilateral trade and economic relations between the two countries”, stated S.M.Yousuf Found er & C entral Chairman of Pakistan China Motorcycle Industry Council and Chairman China Region of PCMIC. During a meeting with Mr. David McMullan, S.M.Yousuf formed the

initiative for organizing the Pakistan China Motorcycle Industry Council, which he considered a natural followup to the decisions taken to enhance Pak-China bilateral trade during the visit of the Prime Minister to China. S.M Yousuf also discussed the forthcoming Motorcycle Trade and Industry Exhibition EICMA CHINA-2012 being organized CCCM, Eicma SPA and Genertec on April 15-17, 2012 and CIMA MOTOR-2012 by CCPIT on October 2012 in Chongqing and other matters of mutual interest for the promotion of Pak- Chin a eco nomic r elati ons. PCMIC intentions At the meeting it was also decided that S.M.Yousuf and David would make a combined movement in exploring the emerging Pakistan Motorcycle market particularly by increasing Pakistan’s participation at the Chinese exhibitions, which is the modern tool to penetrate the potential markets. M.Yousuf Shaikh having a long association with China stated that his dialogue with David in Chongqing has resulted in vast opportunities for Pakistani Importers & Chinese exporters and manufacturers of Auto sectors for participation in EICMA CHINA & CIMA MOTOR 2012. Consequently the share of PCMIC representation in fairs and forums has

increased manifold. Complimenting the offer made by exhibition organisers to the Pakistan China Motorcycle Industry Council, Yousuf said that “the economic r e l a t i o n s h i p M. Yousuf Shaikh Founder & Central particularly with Chairman PCMIC Chongqing of China Pakistan Chapter has increased significantly.” S.M.Yousuf who had also the privilege of being the Founder and President of the Association of Motorcycle Importers of Pakistan acknowledged that “Pakistan and South Asian Countries are emerging markets of for motorcycles with immeasurable potential and this is the right time for Pa k i st a n & C h i n a Mo t o rc y cl e Manufacturers to make the maximum use of these markets to gain footholds and maximum shares by the aggressive marketing of its products.” S.M.Yousuf was assured that David would continue extending his support to PCMIC for measures which will promote business activities in Pakistan & China. The Motorcycle Industry Council also exists to preserve, protect and promote motorcycling through government, communications and media relations, statistics and research, aftermarket programmes, the development of data communications standards, and activities surrounding technical and regulatory issues. As a non-profit, national industry association, the PC MIC seeks to support motorcyclists by representing manufacturers and distributors of motorcycles, scooters, motorcycles/ATV/ROV parts and accessories, and members of allied trades such as insurance, finance and investment firms, media companies and consultants..... | May-2012 | Page 29

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Monthly AutoMark Magazine

Automotive Sector - Update

Paapam calls for bringing untaxed sectors into net

Discussing the budget proposals prepared by the PAAPAM, he urged the authorities that import of auto parts, automobiles, 2/3 wheelers and specialized vehicles, from India, should be allowed only after compliance with PSQCA quality standards. The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM), the representative body of automotive vending industry, in its budget proposals submitted to the Finance Ministry and other concerned government agencies, has demanded the government to bring all untaxed sectors int o tax net , including agriculture, instead of twisting existing tax payers’ arm. The budget documents called for minimum rate of duty on import of raw materials along with well-targeted measures to discourage import of finished products to achieve the ultimate target of localisation. In addition, it urged the central bank to bring down the interest rate to single digit for being a prerequisite to expedite the process of industrialisation. “Presently, there are no incentives for the people who regularly pay their taxes. In order to encourage more people to join the tax net, special incentives should be provided to the scrupulous taxpayers as the undocumented economy is a very serious threat to the economy,” observed Syed Nabeel Hashmi, the chairman of PAAPAM and BFP. Discussing the budget proposals prepared by the PAAPAM, he urged the authorities that import of auto parts, au tomobiles, 2/3 wheelers and specialized vehicles, from India, should be allowed only after compliance with PSQCA quality standards. “PAAPAM favours step-wise trade opening with India after structural reforms, policy changes and capacity building of govt departments, besides managing Pakistan’s trade policies and import regimes.” He suggested the TDAP to initiate a detailed study on the impact of opening doors to India with a focus on auto sector. He said that the Paapam in its budget proposals, has requested that TDAP should be given a target of supporting over 200 auto parts

manufacturers annually with a target of $ 250 million export by 2014. The budget paper stated that change of auto parts import regime (PCTs) from Kg’s to units is necessary, urging the FBR to simplify auto parts import price valuations procedures. The auto vending industry demanded that turnover tax (1pc) should be dropped or reverted back to the previous rate of (0.5pc) to give relief to the auto an d v end o r in d ust ri es, who se p rof i t abi li ty has been d i smal. Manufacturers who are enlisted with Large Taxpayer Unit should be exempted from paying adjustable advance income tax under Section 148 on the import of raw materials and components etc for use in their own production. Withholding Tax on the proceeds of exported goods at 1pc should be reduced to 0.5pc as recommended by the Engineering Development Board (EDB) in the National Engineering & Exports Development Strategy (NEEDS) report in 2010. For documentation of economy, purchases of spare parts and accessories of vehicles from unregistered should be disallowed, while insertion of a subsection in section 21 of the Income Tax Ordinance, 2011, and 22pc sales tax should be imposed on imports of spare parts. Rs 5 million exemption cap on turnover should be removed for autoparts traders. Section 8-B of Sales Tax Act should be abolished while custom duty on cars and

motorcycles should be reduced as laid down in AIDP. To attract investment, corporate tax rate should be brought down from 35pc to 30pc. Syed Nabeel Hashmi Over the issue of used Chairman PAAPAM & BFP cars import, the PAAPAM budget papers suggested the govt to impose necessary safeguards for vibrant industry, however the industry must also respond with an aggressive localization drive that shall enable it to place better priced vehicles in the Pakistan market. It called for reintroduction of the scheme for refinancing facility for modernization of small and medium enterprises. Current SME is classified with assets under Rs 100 million which with existing inflationary trends is a very low bench mark. This may be enhanced to Rs 250 million. In order to make available affordable vehicles to the Pakistani public a special consumer finance/leasing schemes be reintroduced for cars (linked with local contents) to promote growth of local auto industries, besides creating emp loyment and generati ng investments in high cost components and assemblies. Centralized distribution and national grid regimes be done away with while all DISCO’s may be provincialized with individual distribution responsibilities and line losses elimination. Circular debt may be paid off from the PSDP and BISP funds and POL supply may be made only to 90pc+ efficient units on priority whilst old and inefficient units be upgraded or shut down. Natural gas availabilities and distributions be made transparent via internet on an online basis.... | May-2012 | Page 30

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By Asif Masood, Consultant Institute of Space Technology

Monthly AutoMark Magazine

Promotion of LPG as Substitute of CNG in Transport Sector The federal government’s proposed move to shift from Compressed Natural Gas (CNG) to Liquefied Petroleum Gas (LPG) hit a snag when the regulator, Oil and Gas Regulatory Authority (OGRA), strongly opposed it. Transport is the engine of growth for any country. It is an agent for economic and social development, provides equitable access to goods and services and plays an important role in improving quality of life of citizens of any country. The numbers of vehicle on roads in Pakistan have increased from 0.682 million in 1980 to 10 million in Year 2010-11 indicating compound growth rate. The abnormal growth is attributed by rising urbanization, higher incomes and affluence, and an increase in the private ownership of motor vehicles. Pakistan’s energy mix is highly dependent on oil and gas. Government has to spend around US$ 10-12 billion a year on import of crude oil and deficit petroleum products, mainly diesel and furnace oil. Pakistan is working on policies to substitute Compressed Natural Gas (CNG) with Liquefied Petroleum Gas (LPG) in a bid to cut down its load from gas to improve industrial and power sector. ENERCON adopted a strategy for promoting energy conservation that includes identifying appropriate energy conservation opportunities, undertaking pilot projects, training, education efforts, developing plans and policies that promote energy eff iciency, bu t unfortunately, the office was hijacked by bureaucratic channels. Two years ago, The U.S. Trade and Development Agency (USTDA) has provided a grant in the amount of US$482,118 to the National Energy Conservation Centre in accordance with a grant agreement. The grant provided to the National Energy Conservat ion Centre

(ENERCON), for feasibility study to examine the viability of liquefied petroleum gas (LPG) as a transport fuel for commuter bus operations in Pakistan. Specifically the study will assess the market opportunity, develop a business plan, recommend necessary technical requirements, and estimate costs to integrate LPG into the transportation sector in major Pakistani cities. The important clause of the agreement was “A well-qualified and experienced U.S. Contractor is needed to undertake this important Feasibility Study”.

Historical Background of Compressed Natural Gas (CNG) Pakistan has provided financial incentives and other commitments to consumers for the development of Compressed Natural Gas (CNG) as a transportation fuel. Unfortunately, CNG supplies are decreasing as domestic gas production falls and demand for gas increases. As the market conditions for CNG in Pakistan become less favorable, LPG becomes a potential alternative. While using LPG as a transportation fuel has been endorsed by the Ministry of Petroleum & Natural Resources (MoP&NR), but still it has not yet received the same financial incentives and other commitments as other alternative fuel sources. Compressed Natural Gas (CNG) is a substitute for gasoline (petrol) or diesel fuel in the past. It is considered to be an environmentally “Clean” alternative to those fuels. It is made by compressing

m eth ane ( CH4) extracted from natural gas. Argentina and Brazil are the two other countries with the largest fleets of CNG v e h i c l e s . T h e Asif Masood Compressed Natural Gas (CNG) sector of Pakistan by end of 2009 has attracted over Rs 90 billion investments during the last few years as a result of liberal and encouraging policies of the government. Presently, around 3,105 CNG stations are operating in the country in 85 cities and towns. It has provided employment to above 30,000 people in Pakistan. Over 3 million vehicles were converted to CNG as of end 2009, showing an increase of 35 percent yearly. All Pakistan CNG Association (APA) confirms that CNG stakeholders have invested Rs.90 billion in this sector and another Rs 20 billion investment is in pipeline. The CNG consumers had invested around Rs 60 billion in converting their vehicles to CNG. The CNG was replacing at least 6.12 billion liters of petrol every year and saving foreign exchange to the tune of billions of dollars. After huge private investment now, Petroleum ministry encourages use of liquefied petroleum gas (LPG) as transport fuel to replace petrol as well as diesel oil, to provide natural gas to thermal power plants using furnace oil, to increase local production.

What is LPG (Physical & Chemical Properties) | May-2012 | Page 35

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Monthly AutoMark Magazine

Energy article - Continued

OGRA chairman confirmed that the regulator is not in favor of using LPG in the transport sector, saying it would put people’s lives at greater risk. He also added that LPG as fuel is not an economically viable option for the public either LPG is synthesized by petroleum refining or "wet" gas, and is almost entirely derived from fuel sources, being manufactured during the refining of petroleum (crude oil) or extracted from petroleum or natural gas streams as they emerge from the ground. It currently provides about 3% of all energy consumed, and burns relatively cleanly with no soot and very few sulfur emissions. As it is a gas, it does not pose ground pollution hazards, but it can cause air pollution. LPG has a typical specific calorific value of 46.1 MJ/kg as compared with 42.5 MJ/kg for fuel oil and 43.5 MJ/kg for gasoline. However, its energy density per volume unit of 26 MJ/l is lower than either that of petrol or fuel oil. LPG evaporates quickly at normal temperature and pressure, is usually supplied in pressurized steel gas cylinders. They are typically filled to between 80% and 85% of their capacity to allow for thermal expansion of the contained liquid. The ratio between the volumes of the vaporized gas and the liquefied gas varies depending on composition, pressure and temperature, but is typically around 250 ratio1. The pressure at which LPG becomes liquid, called vapor pressure and varies dep ending on composit ion and temperature e.g., for pure butane, it is normally 220 kilopascals (2.2 bar) at 20 °C (68 °F), and 2.2 mega Pascal (22 bar) (319 psi) & for pure propane at 55 °C (131 °F). LPG is heavier than air, unlike natural gas. There are two main dangers from this. The first is explosion, if the mixture of LPG and air is right and if there is an ignition source. The second is suffocation due to LPG displacing air, cau sin g a dec rease i n oxy gen concentration. Fortunately, LPG is non toxic, so there is no danger of poisoning. In addition, odorant are mixed with all LPG so that leaks can be detected more easily. Large amounts of LPG can be stored in bulk cylinders and can be buried underground.

Compressed Natural Gas (CNG) Properties CNG is a highly environment friendly motor fuel for improving ambient air quality. It is lead-free fuel with negligible sulphur and particulate emissions. Carbon monoxide emissions are only one tenth as compared to petrol. It also produces much lower carbon dioxide emissions as compared to petrol and diesel oil. It thus helps in keeping our environment clean pollution free and also in mitigating global warming effect caused due to greenhouse gas emissions of carbon dioxide. Chemically it normally consists of, propane and butane, over 90 percent methane with smaller amounts of ethane, carbon dioxide and other trace gases. The high

methane content gives natural gas a high octane rating (120-130) and clearburning characteristics, allowing high engine efficiency and low emissions.

Comparison with Natural Gas In recent past, Pakistan has provided incentives, subsidies, and commitments to develop Compressed Natural Gas (CNG) as a transport fuel, a development which has led to the construction of filling stations and other supporting infrastructure. Unfortunately, CNG supplies for transport are decreasing as domestic gas production falls and demand for gas increases. Future CNG supplies will be more reliant on gas imports, which will require paying global | May-2012 | Page 36

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Face to Face - Exclusive Interview

An Exclusive Interview with Muhammad Yousuf Shaikh, Founder & Central Chairman of Pakistan China Motorcycle Industry Council (PCMIC) Pakistan Chapter by Hanif Memon By trade Muhammad Yousuf Shaikh is a p ro g re ss i v e as se mbl e r- c u mmanufacturer of motorcycles. He has been associated with the two-wheelers over the two decades working as authorized distributor for all major brands of motorcycles at the country's biggest motorcycle market, Akbar Road Karachi. He is currently the Founder & central chairman of Pakistan China motorcycle industry council (PCMIC) and he is also the President of Pakistan Motorcycle importers Association and Pakistan Motorcycle Importers Forum for many years. Yousuf's association with the two-wheelers dates back to 1989 that not only included trading but also imports of used Japanese motorcycles till 1998, the year the ban was slapped on the import of used twowheelers. He is the chief executive of Moon Traders which has technical collaboration agreement with the Chongqing Zongshen Motorcycle Group I/P Corp of China to assemble and

manufacture MoonStar , Winner & CityHero brand Chinese motorcycles in Pakistan. M.Yousuf Shaikh is the first one and leader in to introduce Chinese Motorcycle in Pakistan as he is the first one who Importing Chinese Motorcycles in CBU condition from China in 2003. You suf is previously imp orting completely-built-up Sinski , Jialing , Lifan , Kinlon, Kington & Yingang brands of motorcycle from China.

Monthly AutoMark magazine's Editor, Hanif Memon interviews Muhammad Yousuf Shaikh the President of the Association of Motorcycle Importers of Pakistan. Currently He is importing the semiknock-down units of the Zongshen brand of the two- wheeler at his own motorcycle assembling plant. Yousuf feels that local manufactur¬ing of Chinese motorcycles as well as its imports have not only offered people with affordable choice but also helped push the de¬mand of two-wheelers in the country for the overall benefit of the buyers. It has also helped force the traditional manufacturer s to substantially reduce the prices. AM: There are many who say that the Chinese two-wheelers, either locally produced or imported, are inferior to traditional Japanese brands produced locally. What do you say?

Monthly Automark Magazine | March-2012 | Page 37

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Face to Face - Exclusive Intervew Yousuf Shaikh: Chinese brands have been able to make sub¬stantial inroads into the markets to a level where they make up almost half of the entire twowheelers sale in Pakistan. They have also making a niche in the agriculture belts of Punjab. In short, they have been able to carve out a niche to push sales to record levels thereby bringing a real competition that was never there before. The very fact that the imported as well as locally pro-duced Chinese twowheelers have been able to bring competitiveness in the market otherwise monopolized by expensive traditional brands even when subjected to discouragingly high duties have not been at the likening of vested interests who wanted to keep on enjoying the monopolistic tenden¬cies in the absence of imports. AM: Discouragingly high duties? Please elaborate? Yousuf Shaikh: In the year 2010-11 all motorcycle assemblers of Pakistan produced record around 1.6 million motorcycles out of this 3 Japanese assemblers produced 705,884 units and all other Pakistani Assemblers affiliated with Chinese companies produced 889,550 units which was more than 60% of total production. Japanese assemblers were producing 40% of the market.Local Chinese bike assemblers were producing 60% of the market. Due to very high rate of duty on import of motorcycles in CBU condition the imported motorcycle business is closed in Pakistan. The small cars CBU duty in Pakistan is 50% but on motorcycles CBU duty is 65%. AM: For instance? Yousuf Shaikh: It ITP (Import Trade Price) for Chinese motorcycles & Parts is fixed on a much higher side irrespective of landed price. The fixing of ITP at high levels makes it impossible for the importers and the assemblers to pass off any benefits to the buyers even if the parts are im-ported at much lower prices. It de-prives the importers and the assem-blers of a level playing field to pass off any benefits to the buyers. As is, the assembling of Chinese twowheelers whose primary market comprises of middle and low income segments of the society is sub¬jected to higher duty on completely- built-up cars up to 1000cc which are subjected to 50 per cent duty com¬pared to 65 per cent

for cars. AM: Can you be specific about how high ITP discourages imports and local assembly? Yousuf Shaikh: The prices of completely-built-up motor¬cycles fluctuates wildly in China. The C&F prices of CD70 type 70cc motorcycle range between $200-215 while that of CG125 type 125cc fluctuates between $275-400 depending on the make and the manu-facturer. However, the ITP for the 70cc bike is fixed at $230 while that for 125cc is fixed at a high 420. Moreover, the ITP on the import of Partial CKD Kits of two-wheel¬ers is much high then the price of CBU. The total impact of duty and taxes— including 65 per cent duty, 16 per cent sales tax, 3 per cent income tax and other taxes — adds up to a dis¬couraging 105 per cent. That negates all norms of fair business and level playing field. The difference of a single dollar, thus, pushes the landed price and with the fixing of ITP at such high levels irrespective of lower import prices deny the buyers of much better prices on the one hand and instilling a real competition on the other. AM: What could be done? Yousuf Shaikh: The government should reduce CBUs rate of duty on Motorcycles from 65% to 35%, motorcycle CKD kits for new entrants and new products by existing assemblers from 15 percent to 5 percent and on motorcycle spare parts for replacement

market from existing 35 percent to 20 percent to curb its smuggling. He pointed out that at present the importers of motorcycle spare parts were paying 80 to 85 percent taxes including 35 percent import duty, 17 percent additional duty and 16 percent sales tax. He said that high rate of taxes was an incentive for smugglers to boost their illicit trade and causing the government loss of revenue. He claimed that import of spare parts through legal channel had declined whereas smuggling of the parts was on the rise. the increase in smuggling was destroying the local motorcycles spare parts industry. He opined that the reduction in import duty would not only result in increase of government revenue but would also help curb the smuggling and encourage import of the parts through legal channels. He assured the members of the PCMIC & association that he would make all out efforts to convince Finance Ministry's and Federal Board of Revenue's (FBR) authorities that lowering taxes and duties was the only solution to curb smuggling of motorcycle spare parts. Because this is in the favor of Pakistani motorcycle industry to introduce more models/designs after checking / testing through CBU imports. All over the world including China, India, Japan, Thailand and many countries have many models / designs in motorcycle industry but we have only few models / designs in Pak i st an mot o rc yc le i nd u s t ry .

Monthly Automark Magazine | March-2012 | Page 38

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Monthly AutoMark Magazine

Energy article - Continued market prices and greatly reduce if not virtually eliminate current subsidies. Current LPG imports (over 500,000 metric tons or about 5.8 million barrels) are based on global market prices. LPG is composed primarily of propane and butane, while natural gas is composed of the lighter methane and ethane. LPG, vaporized and at atmospheric pressure, whereas, it has higher calorific value i.e 94 MJ/m3 equivalent to 26.1kWh/m³, than methane with (38 MJ/m3 equivalent to 10.6 kWh/m3), which means that LPG cannot simply be substituted for natural gas. In order to allow the use of the same burner controls and to provide for similar combustion characteristics, LPG can be mixed with air to produce a Synthetic Natural Gas (SNG) that can be easily substituted. LPG/air mixing ratios average 60/40, though this is widely variable based on the gases making up the LPG. The method for determining the mixing ratios is by calculating the wobbe index of the mix. Gases having the same wobbe index are held to be interchangeable.

Environmental Effects Commercially available LPG is currently derived from fossil fuels. Burning LPG releases CO2, an important greenhouse gas, contributing to GHG gases. LPG does, however, release less CO2 per unit of energy than that of coal or oil. It emits 81% of the CO2 per Kwh produced by oil, 70% of that of coal, and less than 50% of that emitted by coal generated electricity distributed via grid. Being a mix of propane and butane, LPG emits less carbon/joule than butane but more carbon/joule than propane. LPG can be considered to burn more 'cleanly' than heavier molecule in hydrocarbons in that it releases very less particulates when burnt.

Relative CO2 emission from various fuels One liter of gasoline, when used as a fuel, produces 2.32 kg (1.3 cubic meters) of carbon dioxide, a greenhouse gas. LPG more expensive than both CNG and petrol and experts say it is more ‘dangerous’

Oil & Gas Regulatory Authority (OGRA) Reaction on LPG

The federal government’s proposed move to shift from Compressed Natural Gas (CNG) to Liquefied Petroleum Gas (LPG) hit a snag when the regulator, Oil and Gas Regulatory Authority (OGRA), strongly opposed it. Minister for Petroleum and Natural Resources, Dr Asim Hussain had offered to set up LPG auto filling stations for the CNG industry at existing sites as alternate means of business to safeguard their investment. His offer, however, was rebuffed by the CNG industry. Meanwhile, the regulator has also opposed the use of LPG in transport sector, instead of CNG, terming it ‘more dangerous’ and economically ‘unviable.’

Economic viability and safety LPG is expensive compared to both CNG and petrol. Local producers have raised the price of liquefied petroleum gas (LPG) by Rs 5,353 to a record high of Rs18,429 per tonne in accordance with Saudi Aramco Contact Price. The domestic price of LPG has been increased by Rs 5 to Rs135-145 per kilogram, and 11.8 kilogram cylinder by Rs 63 to Rs 1,520 to 1,580 and 45.4 kilogram cylinder by Rs243 to Rs5,850 to 6,075. During the recent past the LPG sale has declined by 40% to 50% due to high prices, which has further shrinked the business of more than 6,000 LPG distributors in the country and their survival is in danger. LPG Association of Pakistan (LPGAP) has urged P et ro leum Mi ni st e r t o red uce dependence on imported LPG and concentrate on enhancing local production. LPG Association of Pakistan (LPGAP) pointed out that state owned LPG producer, PARCO increased its base stock price from Rs 85,924 to Rs102, 000 per tonne, above mention increase in Saudi Aramco Contract Price for March which rose to a record high of Rs18,429 per tonne. OGRA chairman confirmed that the regulator is not in favor of using LPG in the transport sector, saying it would put people’s lives at greater risk. He also added that LPG as fuel is not an economically viable option for the public either...

Sustainable transport to be launched A five-year project Pakistan Sustainable Transport Programme (PAKSTRAN) is in process to be simultaneously implemented in Karachi, Lahore and Islamabad/Rawalpindi with the motive to reduce the demand for energy consumption. A senior IUCN official told APP last month that the project is aimed at reducing the related greenhouse gas emissions from the transport sector in Pakistan, whi le simultaneou sly improving urban environmental conditions and supplementing country’s trade competitiveness. The project is being initiated by IUCN Paki st an i n collaboration wi th UNDP/Environment Facility (UNDP/GEF) and other concerned departments including National Energy Conservation Centre (ENERCON,) Ministry of Water and Power, Sindh Transport Department, Punjab Urban Unit and Planning and Development Division, he said. The PAKSTRAN project to be completed in 2016 is being funded by GEF is urgently needed in the country as transport sector has grave environmental and economic impacts and impedes the overall development process of the country. The programme will also lead to policy level interventions and on-ground activities to promote sustainable transport by demonstrating replicable models in the urban centres of the country. Under PAKSTRAN a two-pronged approach has been outlined to address issues relat ed t o t ransp ort by introducing policy interventions, institutional strengthening and capacity building. Successful completion of the scheme, with all stakeholders on board is expected to make the transportation system efficient and green, which is in sync with the New Growth Framework Strategy of the Government of Pakistan.

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Monthly AutoMark Magazine

Automotive Sector - Update

Saudi Arabia’s leading lube producer distributes in 14 Pak cities

Petromin launches first branch in Lahore Petromin regards Pakistan as an emerging and potential market since it is listed as one of the N-11 (Next 11) countries along with Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Philippines, Turkey, South Korea and Vietnam At a ceremony attended by delegation of a senior officials from Petromin Saudi Arabia, representatives of Petromin mega distributors in Pakistan and leading Pakistani businessmen, Petromin, the foremost lubricants and grease manufacturer in the Kingdom of Saudi Arabia, inaugurated its business in city of Lahore. Thanking the attendees for gracing the event with their presence, Mr. Samir Nawar, President and CEO of Petromin said: “Our product launch in Pakistan shows how highly we value Pakistan market among more than 40 countries to which we export our products. Our appointed megadistributors have done an excellent job in introducing Petromin Brand in key cities of Pakistan, which is the main channel to East Asia, and the purpose of appointing our mega distributors, is to provide their distribution networks with the Petromin support, they need to further grow the Petromin brand in this strategically important market.” He went on to say: “Historically the nations of Pakistan and Saudi Arabia are bound together in Islamic brotherhood and it is with the grace and blessings of Almighty Allah that we are gathered here to celebrate the launch of our brand, further strengthens and enhances the warm business relations

that our two countries enjoy.” Petromin’s mega distributors M/s. Khooshgovar Impex, covers 13 cities in Pakistan including Shiekhupura, Manga Mandi, Mandi Ahmedabad, Faisalabad, Sargodha, Sahiwal, Bhalwalnagar, Vihari/Chistian, .Multan/Bhawalpur, Sailkot, Gujrat, Gujranwala, Peshawar. The new branch in Lahore will be the main supporter for these cities. Where our Mega distributor in South M/s. SAPA Enterprise, covers the south market. The N-11 are identified by Goldman Sachs . The bank chose these states as hav ing p romi sing outlooks for

investment and future growth. In particular, the Pakistan market has unique market challenges and offers significant potential. The Petromin product range includes s y nt h et i c o i ls fo r a u t o mo t i v e applications, gearboxes, transport line and industrial oils including , turbine oils, hydraulic oils, grease, engine oils and a range of other premium products. Its commercial activities cover more than 40 countries in the Middle East, S Asia and Far Asia, where it is a strongly established and highly reputed brand with customers.... | May-2012 | Page 40

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Automotive Sector - Update

Castrol awareness campaign for engine oil

Automotive legend dies aged 76

THE designer of the iconic Porsche 911, Ferdinand Porsche, has died aged 76. The grandson of the company founder, also named Ferdinand, was also the designer of Porsche sports cars including the 904 which is regarded as the world's most beautiful race car. Porsche left the family business in 1972 when it became a public company and started Porsche Design. Ferdinand Porsche retained a close lifelong association with the car company Porsche AG as a partner and member of the Supervisory Board. Even after stepping down from front-line business operations, he contributed to the design of Porsche's sports cars over many decades. In 2005, he stood down from his Supervisory Board role in favour of his son Oliver and assumed the mantle of Honorary President of the Supervisory Board. | May-2012 | Page 41

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Car / Light Vehicle Price List




Price Price Rs. 520,000 Rs. 591,000 Rs. 572,000 Rs. 640,000 Rs. 737,000 Rs. 821,000 Rs. 1,096,000 Rs. 1,176,000 Rs. 945,000 Rs. 1,015,000 Rs. 1,411,000 Rs. 1,351,000 Rs. 547,000 Rs. 621,000 Rs. 599,000 Rs. 663,000 Rs. 675,000 Rs. 736,000 Rs. 565,000 Rs. 1,999,000 Rs. 2,074,000 Rs. 1,974,000 Rs. 2,123,000

Karakoram Motors Model Chery Standard Petrol Chery Standard CNG Chery Deluxe Petrol Chery Deluxe CNG Gonow Victor Gonow Troy Standard Gonow Troy Deluxe Gilgit (Double Cabin) Pet. Gilgit (Double Cabin) CNG Kaghan XL Petrol Kaghan XL CNG

Price Rs. 7,20,000 Rs. 7,70,000 Rs. 7,70,000 Rs. 8,20,000 Rs. 1,499,000 Rs. 9,99,000 Rs. 1,049,000 Rs. 3,85,000 Rs. 4,20,000 Rs. 1,285,000 Rs. 1,375,000

Honda Honda Honda Honda Honda Honda Honda Honda

Model CRV Automatic 2400cc Japan Accord Automatic 2400cc Japan City Manual 1300cc HYUNDAI City Automatic 1300cc Civic VTI Manual 1800cc Civic VTI Manual SR (Oriel) Civic VTI Prosmatec 1800cc Civic VTI Prosmatec SR (Oriel)

Price 7,117,000 6,617,000 1,419,000 1,560,000 1,821,000 2,013,000 1,941,000 2,091,000

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

TOYOTA COROLLA Model Model XLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.3 M/T 1299cc Petrol GLI VVT-i 1.6 A/T 1599cc Petrol XLI VVT-i 1299cc ECOTEC GLI VVT-i 1299cc ECOTEC 2.OD STD 2000cc 2.OD SALOON MT 2.OD SALOON SUNROOF ALTIS 1.6L Dual VVT-i MT ALTIS 1.6L Dual VVT-i MT SUNROOF ALTIS 1.6L Dual VVT-i AT Cruisetronic ALTIS 1.6L Dual VVT-i AT SUNROOF Toyota Avanza (Standard)

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Toyota Avanza (Up Specfication)

Rs. 2,160,000

Price Price 1,477,500 1,602,500 1,772,500 1,602,500 1,732,500 1,607,500 1,809,000 1,914,000 1,842,500 1,932,500 1,932,500 2,022,500 1,960,000

Hilux Pickup 4x sc Model


Brand New Toyota Hilux Pickup, 4x2, Single Cabin, (Local Assembled)

Rs. 1,614,500

Hilux Pickup 4x4 D/C Model


Toyota HILUX 2494cc, Diesel Turbo Charger Common Rail Engine, 4x4 Double Cabin - Standard Model

DAIHATSU Model CUORE CX std CX ECO (CNG) CX ECOMATIC Terios 4X2 lwb at Terios 4X4 lwb mt

Price Rs. 8,47,200 Rs. 8,97,200 Rs. 9,58,200 Rs. 2,770,000 Rs. 2,770,000

Rs. 2,489,000



DEFENDER STATION WAGON 90 Rs. 3,560,000 STATION WAGON 110 Rs. 3,960,000 Soft Top 90 Rs. 3,336,000 Price updated May- 2012

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Subscription Form Monthly Automotive Magazine

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Monthly AutoMark Magazine

By: Mohammad Shahzad S.A.E; D.M.P.

101 WAYS TO ACHIEVE BETTER FUEL MILEAGE (In four parts series, 1 of 4) The automobile has become an integral part of our society and millions of people rely on their automobiles, whether they are using to earn a livelihood or just commute, to go on vacation or just to go to a corner store. For most of us, our automobile is the second biggest purchase after housing, we will ever make. Besides costing a lot to begin with, it also consumes many of our hard earned money just to keep it going. With the gas/fuel prices skyrocketing and on roller coaster ride every day due to serious fuel scarcity on international level, and these are uncontrollable factors for common motorist. I remember my old days in Karachi, back then in 1960, I used to fill my half gallon 50CC motorcycle at the rate of Rs. 2.50 per gallon and today you know better the price range in your area. Now the average fuel price in Pakistan is over Rs.100 per litre and expected to go high in the future. Due to fuel crises, now no one can predict what’s next. However, as a consumer, we have no control over the world oil market, but we have influence over four controllable factors by which we should improve fuel mileage by stretching every limited expensive litre of diesel, petrol or CNG to its maximum. We all take extreme measures and caution when it comes to save household energy cost, by setting heating or A/C thermostat, and conserving wisely and fewer utilities like water and electricity,

maintenance, insurance, depreciation, and parking can be a continual drain on your budget. Fuel cost alone can easily account for more than half of annual automotive expenditures, excluding depreciation.(Based on study in North America). Let’s start first, by choosing a fuel-efficient model to save money on fuel cost to begin with; consider the following factors before making any purchasing decision. we can apply similar approach for automobiles to save fuel cost. If you want to pump fuel wisely and keep your wallet from draining as fast as your fuel tank, simply follow the 101 ways to improve fuel/gas/CNG mileage. These steps do not require any special tools, add-on gadgets, or specialized automotive knowledge, just miser wisdom is enough to trim your car’s fuel consumption. To make it easy to understand, I have divided these 101 ways into four important segments and presenting in four parts series for easy to follow simple as A,B,C and D. Keep reading The Automark magazine for more to come on your way.

(A) BUYING FOR FUEL ECONOMY (Part 1 of 4) Buying a new or used car is an expensive undertaking and challenge. The purchase price represents only capital cost and the tip of the iceberg, on other hand operational cost such as fuel,

1. Do you really need a vehicle or any additional car for the family? If you need it only once in a while, consider renting a car/van for long trips or family vacations. Use public transit system Bus/Train if it’s convenient for you to manage. 2. Consider buying a Bicycle or Motorbike if that full fills your needs in summer. It also easy on gas / parking budget and good for short trip to nearby amenities. 3. Make a wise decision and choose the most fuel-efficient vehicle that just meets your everyday needs. It can save you money while helping the environment. 4. Consider buying a small car with a small engine that meets your family daily traveling needs. If your family needs big car only once or twice a year for a long vacation trip consider renting subcompact or minivan. 5. Avoid SUV,Jeep and 4W drive if you can manage without them. 6. Hybrid, electric and fuel cell cars are definitely better for the environment | May-2012 | Page 44

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Monthly AutoMark Magazine

Automotive Sector - Update

Due to fuel crises, now no one can predict what’s next. However, as a consumer, we have no control over the world oil market, but we have influence over four controllable factors by which we should improve fuel mileage by stretching every limited expensive litre of diesel, petrol or CNG to its maximum. and good for long term savings on fuel, provided these alternatives/bio fuel driven cars are easily available in Pakistan. 7. Choose diesel powered car that’s more economical than petrol/CNG. 8. Choose a lighter car with small frontal area. Aerodynamically designed car have less co-efficient of drag. 9. Specify an over-drive feature, when selecting transmission option. When you use overdrive gearing option on highway, your engine RPM goes down. This saves fuel and reduces engine wear. Prefer features such as real time fuel consumption eco gauges, engine cylinder deactivation and variable valve timing, these are long-term saving options. 10. Prefer a car with manual transmission, better on fuel and prolong engine life too. Check if you have a fuel economy reminders or eco warning indicator, this light will guide you to shift for the best possible fuel economy. 11. Avoid power accessories, less weight -less maintenance cost. Avoid remote starter to cut down excessive idle time and protect from car burglars. 12. Avoid A/C option if you are living i n c o l d c l i ma t i c a l l y z o n e o f Pakistan.Considering using car’s fresh air ventilation system, select cool/ light outer color with the tinted glass. A/C can increase fuel consumption by as much as 10 to 20% in city and 3 to 4% at highway. 13. Choose cruise control option and save gas on highway driving with constant speed. Driving at 90km/hr can save 20% fuel compared to driving at 120 km/hr. 14. Avoid trailer towing packages, if you are hardly using. Rent one for occasional need. These can affect your vehicle’s fuel efficiency by adding extra weight and draining power from the engine. 15. Avoid the permanent roof rack,

17. Use only recommended octane fuel grade, but don’t overbuy. Most car runs fine on regular petrol as long as you main t ain /t une - up y ou r e ngi n e service/lubrication on time.

18. Don’t filler up fuel all the way while driving in city. Keep ½ tank to avoid carrying extra weight. This will also avoid engine check light on dash due to fuel over-filled. 19. Buy gas from self serve station if available to save extra cost.(May not apply in Pakistan) 20. Use gas nozzle downward to get nearly half cup which you have already paid. 21. Use gas coupon or card offered by some gas companies or car dealers to save money. front and rear or side wind deflector all cause friction drag. 16. Buy maximum tire size all season or snow tires recommended by vehicle manufacturer. Avoid wide tread/over width tires. Prefer features such as tire pressure monitoring systems. Avoid aftermarket fuel saving devices or gadgets or fuel additives unless approved by your manufactures.

22. Buy gas now and pay later by credit card save money on interest and maintain record for you budget 23. Select alternate fuel option such as propane, natural gas, ethanol etc. if you have bio-fuel system. 24. Buy good brand gas/CNG during late evening, before fuel station closed-down days due to its cheaper and with less line-up.( Applicable in most cities in Pakistan due to fuel shortage) 25. Don’t waste fuel while trying to save money. Don’t wait in long lines at the pump. This exclusive article on 101 ways to achieve better fuel mileage has been written by Mohammad Shahzad S.A.E., D.M.P (Automotive Engineer/Doctor of Motors) He is a Senior Group Manager for Customer Management Operations with The Brimell Group, Brimell Toyota and Brimell Scion in Toronto, Canada. Free advice for Automark readers; please do not hesitate to contact him at or Next article: 101 ways to achieve better fuel mileage. (continued) | May-2012 | Page 45

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Monthly AutoMark Magazine

Exclusive Article by Ali Abbas

Maintain Maintenance Any sweet voice ever called you for your vehicle maintenance, ever wondered why your vehicle broke down in the way giving you all the embracement, you would have thought that in spite of all the expenses you had done on your vehicle still the car failed right in the midway. The reason, you had carried out the Repairs on your vehicle as and when required but if you had carried out regular maintenance may be you could have saved yourself from undesired situation. Repair and Maintenance, is there any difference between them. Repairs are services you require, when some parts of the vehicle stop functioning or start malfunctioning like breakage of axle, engine related problems, inefficient braking system, if you had checked your vehicle on regular base that is maintained your vehicle it is possible that all such problems which were over looked could have been noticed and rectified at correct time. To repair something is to fix something which is worn or broken. To maintain something is to keep it well so it does not break, this is the basic difference between repairs and maintenance. That is to keep something running smoothly and prevent it from premature failure we need to maintain it.

There are different types of maintenance Periodic maintenance or Pr e v e n t i v e m a in t e n a n c e i s maintenance or care done by the owner for the purpose of maintaining the vehicle in satisfactory road worthy condition, by having systematic inspection, for detection and correction of anticipated failures of parts before they occur or develop into major defects. Normally Periodic Maintenance is Time and Kilometre bounded, as provided in the owner’s manual of the vehicle. We can divide periodic maintenance in two sub groups. Usually it is said “Before such and such kilometres or within this period whichever comes first.” This means that that periodic maintenance is determined by time and by kilometre. T h e a c hi e v e me n t o f p e r i o d i c maintenance is to avoid the failure of

the vehicle; this may be by preventing the failure before it occurs. Which is achieved by Planed Repairs, t ermed as “Correct ive Maintenance” are breakdown repairs or repairs carried out for the defects identified during periodic / preventive repairs. Whereas Periodic maintenance is carried out to keep the vehicle running and extend the life of the vehicle by proper care The misconception about periodic maintenance is that following a maintenance schedule may be costly over repairs but the benefits of periodic maintenance over corrective maintenance is cost saving, for example for doing a major maintenance service one can be prepared for the cost and time but in case of a severe break down cost and time won’t be at one’s hand. Proper maintenance saves unexpected breakdowns and expenses and prolongs the safety and the life of the vehicles, but it is interesting that only 47% of the owners follow the schedule provided by the manufacture. Long term benefits of periodic or preventive maintenance includes, improve vehicle reliability, decreased cost of replacement, decreased vehicle downtime (vehicle time spend in workshop). Long-time effects and cost favours periodic maintenance over corrective maintenance. It should be noted that the corrective maintenance cost increases as the corrective maintenance time increase that is the less periodic maintenance is performed. When doing maintenance program, one must determine not only which Preventive Maintenance (PM) routines to be done, but how often should it be done. One proven theory is that the Preven ti ve (PM) t o Correct iv e Maintenance (CM) work ratio which should be about 6 to 1. This theory assumes that the PM inspection should reveal some type of corrective work that should be done on the vehicle on average every 6 times PM is done. That is if we are doing periodic or preventive maintenance six times the corrective maintenance should be done one time. The assumption is that, if the ratio is greater than 6:1 you are performing the PM too often; if the ratio is less than 6:1,

you are not performing it often enough. (The “6 to 1 Rule”, proven by John Day, Jr., Manager of Ali Abbas Engineering and Ma i n t e n a n c e a t Alumax of South Carolina, during the period when Alumax of South Carolina was certified as the first “World-Class” maintenance organization). The question is “How effective is your PM program?” The answer is – If your PM program isn’t finding problems, it isn’t effective. How often should we perform PM procedure? The frequency of performing a PM should be based on vehicle’s MTBF rates (Mean Time Between Failure) rather than the NON-failure rate. If you run your vehicle to failure, fix it, then run it to failure again, you know its MTBF, Knowing the MTBF, you should be able to calculate a realistic time frame where one can perform some routine checks and preventive measures on the vehicle, you have the opportunity to identify potential problems and fix them, significantly extending the MTBF. And this is the primary goal of maintenance. Moreover proper maintenance helps in maintaining the warranty of the vehicle as some manufactures do not provide warranty if their maintenance schedule is not followed. Good PM work order history will point exactly to the right frequency as you continue to experiment with periodicity for the PM. Periodic maintenance schedules are provided in the owner’s manual by the manufacture. One has to go through them for better understanding of his vehicle both for the component operations and for the maintenance of his vehicle in normal and sever driving. It can be safely said that, with the exception of Emergency work, all of the other types of work are predicated on finding and fixing the problem before it becomes a “down time” event, we can categorize all maintenance except emergency repairs under the heading of“PreemptiveMaintenance.” Maintain your vehicle and your peace of mind through proper maintenance.. | April-2012 | Page 46

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70cc Motorcycle

Sr./ Product & No. Model Name 1. Aan AI-70 2. Asia Hero AH-70 3. Bionic AS-70 4. Crown Lifan CRLF-70 5. Challenger BA-70 6. Diamond SD-70 7. Dhoom YD-70 8. Eagle DG-70 9. Ghani GI-70 10. Guangta GT-70 11. Grace CT-70 12. Hero RF-70 13. Hero RF-70 Plus 14. Habib HB-70 15. Honda CD-70 16. Hi-Speed SR-70 17. Jinan JN-70 18. Leader LD-70 19. King Hero KH-70 20. Moon Star MT-70 21. Master MD-70 22. Metro Hi-Tech MR-70 23. New Asia NA-70 Price updated May-2012

Retail Price Rs. 42,500/= Rs. 41,000/= Rs. 41,000/= Rs. 42,000/= Rs. 40,000/= Rs. 40,000/= Rs. 49,000/= Rs. 39,000/= Rs. 45,000/= Rs. 41,000/= Rs. 41,000/= Rs. 46,000/= Rs. 47,000/= Rs. 41,000/= Rs. 66,500/= Rs. 43,000/= Rs. 40,500/= Rs. 40,500/= Rs. 40,500/= Rs. 40,500/= Rs. 40,500/= Rs. 44,800/= Rs. 40,000/=

Sr./ No. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46.

Product & Model Name Pak Hero PH-70 Raftar KM-70 Ravi Premium R1 Ravi Hamsafar-70 Road Prince RP-70 Royal Star RS-70 Royal RL-70 Racer AS-70 Safari SD-70 Sakai SK-70 Star DL-70 Sohrab JS-70 Sonica SM-70 Super Asia SA-70 Super Star SS-70 Super Power SP-70 Super Power Delux Toyo TG-70 Target TT-70 Unique UD-70 Union Star US-70 United US-70 Zxmco ZX-70 | May-2012 | Page 48

Retail Price Rs. 42,500/= Rs. 42,000/= Rs. 47,700/= Rs. 46,200/= Rs. 41,000/= Rs. 41,000/= Rs. 42,500/= Rs. 41,500/= Rs. 40,000/= Rs. 39,000/= Rs. 39,900/= Rs. 41,500/= Rs. 42,400/= Rs. 39,500/= Rs. 41,500/= Rs. 40,500/= Rs. 45,000/= Rs. 41,000/= Rs. 40,000/= Rs. 42,000/= Rs. 42,000/= Rs. 40,000/= Rs. 42,000/=

Generated by Foxit PDF Creator Š Foxit Software For evaluation only. | May-2012 | Page 49

Generated by Foxit PDF Creator Š Foxit Software For evaluation only.

Monthly Automark May 2012  

Monthly Automark May 2012

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