Pakistan

Last modification: 29 Aug 17

Chapter 1: Economic and business environment

Demographics

188.924.870

Capital

Islamabad

Major cities

Lahore, Faisalabad, Rawalpindi 

Languages

Urdu (ur-PK), English (en-PK), Panjabi (pa), Sindhi (sd), Pushto (ps), Brahui (brh)

GDP

1,428.99 USD (2015)

Unemployment rate

6.7% (2016)

Main industries

GDP Composition by Sector:
Agriculture (21.8 percent)
Industry (23.6 percent)
Services (54.6 percent)

Industrial Production Growth Rate:
4.9 percent

Industries:
Textiles and apparel, food processing, pharmaceuticals, construction materials, paper products, fertilizer, shrimp

Currency

PKR Pakistani rupee

Interest rate

7,27%

Inflation

5,02% (2017

Chapter 2 : Automotive market, segments & sales

Total Car park

2.557.858 vehicles

Dealer network (including fleet dealer network)

Very limited dealer network, but remarkably professional and helpful.
Most of the car business is related to Japan import

Used car market/renewal cycle

Due to the shortage of cars in PK, the second hand market is big and vehicles are used, sold & bought as long as possible

Chapter 4: Taxation & legislation

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Chapter 5: Car policies

Company Car Entitlement:
Surprisingly many employees in PK have some sort of a company car. Ofter the car is offered in order to guarantee a safe home-office commute.

Which sectors provide most fleet cars? 
Most of the intermational corporates will offer company cars in PK

Which job functions often include a company car?
Traditionally Sales & Account management, but also in house functions might receive a company car

Reference cars:

Entry level / junior sales level Small and cheap vehicles, depending on the availability on the market.type FAW, Suzuki Mehran/Alto, …
Senior sales / Management level Honda City & Civic, Toyota Vitz
Executive level Toyota Fortuner

 

Chapter 6: Funding methods

Overview of penetration of funding methods (buy or lease statement) Purchase is by far the cheapest way of financing in PK. The only cheaper option would be cash allowance
Type of suppliers (captive versus multibrand, international versus local…) Operating lease : international suppliers (Hertz, Orix)
Other financing types : local players
6.1 Outright purchase:  
Definition Vehicle is registered as a fixed tangible asset on the balance sheet at the acquisistion value and depreciated over total useful economic life
Pro’s and con’s  
Economic & legal ownership Full ownership, included Risks asd Rewards
Business practices  
6.2 Renting (Finance lease) :  
Definition Is available in PK via banks or the limited number of leasing companies. Finance lease needs to be acceptable for the Islamic modes of Finance. Finance lease will typically include insurance and tracking device
Pro’s and con’s Not flexible. Fixed duration of 3 to 5 years
Economic & legal ownership The lessor / bank owns the car. Depending on the type of finance lease, the lessee can purchase the car at the end of the life cycle
Business practices Any type of leasing is still rather unusual in PK
6.3 Full service leasing (operational leasing)  
Definition Full Service Lease exists in Pakistan, but is expensive and not popular. There are only a very limited number of suppliers available.
Pro’s and con’s The leasing fee is deductible from corporate income tax, but still expensive in comparison with outright purchase
Economic & legal ownership The leasing company owns the vehicle
Business practices  
6.4 Fleet Management  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.5 Short term rental  
Definition  
Pro’s and con’s  
Economic & legal ownership  
Business practices  
6.6 Other funding methods  
   

Chapter 7: Fuel

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Chapter 8 : TCO components

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Chapter 9: Safety, insurance and telematics

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Chapter 10: Environment

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Chapter 11: Mobility

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Chapter 12: Key trends to watch

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