Although the major framework of the Auto Industry Development and Export Plan (AIDEP) 2021-26 has already been introduced along with the Federal Budget 2021-2022, the complete policy will reportedly be finalized in early August 2021.
Under the AIDEP 2021-26, the government plans to enable the local automotive industry to expand its operations and vehicle manufacturing resources while focusing on Hybrid Electric Vehicles (HEVs) and Electric Vehicles (EV) by offering them exemptions from various taxes and duties.
The government has developed the AIDEP-2026 to prevent distinctions between the existing players and the new entrants in the sector in order to ensure a level playing field for all the automakers.
While talking about this step, Asad Ali at KASB Securities said,
The policy with relevant concessions eyed for setting up Hybrid Electrical Vehicles (HEV) and Electrical Vehicles (EV) plants may invite ‘Japanese 3’ and ‘Korean 2’ to venture into HEV effectively increasing the industry capacity by 54 percent in our view. We reckon that the sector volumes will reach 264,000 units and 291,000 in FY22 and FY23, respectively.
He added that Toyota Indus Motor Company (IMC) is expected to be a first-mover in Pakistan’s HEV segment of Pakistan in order to capitalize on the concessions and to add value to its lineup.
The Pakistan Suzuki Motor Company (PSMC), which was previously planning to expand by 100,000 units, is most likely to finally act on this decision, while Honda Atlas Cars (HCAR) will presumably follow up on its City Hybrid plans along with further expansions.
Kia and Hyundai are also active players in the HEV and EV segments in the international markets, and it is possible that they will add HEVs and EVs to their lineups in Pakistan to take advantage of the AIDP-2026 concessions.
Ali said that the concessions for the HEV and EV segment in the AIDP-2026 will reveal the potential of the auto sector and will lay the groundwork for further investments by manufacturers. He also disclosed that 15 new vehicle models will be launched in the upcoming days and that the demand for spare parts, particularly for HEVs and EVs, is on the rise.