Government regulations effect on Automobile industry:

The government has announced "Automotive Development policy (ADP) IN March 2016 that is
applicable over a medium term horizon of 2016_2021.

ADP envisage development plan for automobile industry to facilitate higher volumes, attract investment
and ensure enhanced competition.

Main objective of this policy is:

 Create balance between industrial growth and tariffs

 Ensure sustainability for all stakeholders.

Government charge heavy duty tax on automobile products for example: Automobile products are
import from foreign countries, if the price of a product (Honda civic 2019) 23 million Rs. before tax, after
we include import duties and taxes in it will cost around 32 million Rs. This affects the sector negatively.

Tariff structure for new entrants and non-operational units is significantly lower than the tariff structure
for existing OEMs. Future new entrants are also allowed duty free import of plant and machinery for
setting up the manufacturing facilities.

Pakistanis automobile sector contributes 12 billion rupees to the GDP and 30 billion rupees to the
national exchequer in terms of taxes and duties.

Effect on consumer taste In Automobile industry:

Change in consumer taste effects Automobile industry in different ways some time positive and
negative in some situations things that most affect the taste are following:

 Features: consumer prefer new models with enhanced features that is why automobile
industry put a big part of investment on research and development department.
 Trends: trends play and important part in changing taste of consumer for example: after
the launch of sports model by Yamaha and Honda atlas consumer of 150cc bikes
preferring these models instead of old Suzuki and china sports bikes.
 Color: color is the matter in manufacturing because not everyone have the same choice
in color that is why every new model have variety of color range.
 Uniqueness: As we notice the customer use to modify cars and bikes in different styles
with unique body kits , parts and stickers so the manufacturers sense the likeness of
customers and make more designs.

Effects on demographic trends in Automobile industry:

Demographic factor are also matters in automobile industry like population, age, culture,

Height, customer awareness etc.

  Living standard: it directly affects the industry as in the countries having high living standard
manufacturer make the product in high quality and luxury and the counties like Pakistan
manufacturer assemble products in average quality and price.
 Age: in automobile sector age highly matter as they have to manufacture bike and cars for
young person's as the like sports bikes and cars with ultra high engine performance and on the
other side more than 30 years of age persons demand comfort and auto engines.
 Consumer awareness: most important factors advancing consumer right knowledge about
product as atlas Honda add shows " 1litter mai chaly 73 kilometer" because they know they
know the rising demand of low fuel consumption engines.
 Height: its most common example are Japanese with short heighted but they manufacture cars
for other countries according the average height of the consumer of importer country.

Sensitivity in season and economic cycle:

Most of People of Pakistan purchase cars, bikes, vans etc in the starting of the year because of new
models and as it is sales decrease in the end of the year and they also have a mind set to register their
vehicle number to coming year of purchasing.

 Basically following are the seasonal trends in Pakistan:

 New vehicle buyer:(purchase on starting of the year because of new model and registration
number)
 New vehicle seller: More sales on start of the year
 Old vehicle buyer: purchase end of the year (old model)

Key financial measure of automobile industry:

Financial measures are the indicators that shows the performance of a company. we can sort
out the industries performance after reviewing some main financial terms of some main
companies in whole sector.
 Pak Suzuki Motor company limited

Year ended 2017 (Rs.) Year ended 2018 (Rs.)

50,910,467 Assets 53,925,512
72,802,282 Sales 89,018,472
3,096,936 Net profit 1,392,439
37.63 Profit per share 16.92

Year ended 2017 (Rs.) Year ended 2018 (Rs.)

25,642,750 Assets 31,827,339
 64,534,021 Sales 77,478,845
3,752,479 Net profit 4,663,635
36.29 Profit per share 45.10
 Atlas Honda Limited

Year ended 2017 (Rs.) Year ended 2018 (Rs.)

3,561,538 Assets 3,607,124
84,517 Sales 52,656
13,212 Net loss 69,432
0.10 Loss per share 0.52
 Dewan Farooque Motors Limited

Source: Annual financial reports (Suzuki, Atlas Honda, Dewan motors)