The coming of Skoda and Volkswagen to Pakistan marks the fact that the demand in the small-car market is growing. While the government has taken much of the credit for the recent growth in the automotive industry, it has not given the sort of consistency of policies that would encourage growth. There is no doubt that the lowering of the interest rate encouraged the offtake of leased vehicles, but with the interest rate being taken up again, it is certainly an act of commitment by the two new entrants, to invest in the Pakistani market and add to the variety of well-built cars currently available to consumers. While there have been a number of Japanese vehicles made for this segment, the entry of two European brands is an indication that the Pakistani market wants differentiation, and more choice than is being offered at present.
There are many specific measures that the government can take to encourage more carmakers to come to Pakistan, mainly to do with consumer care financing. However, perhaps more important would be to maintain a consistency in policy that has been lacking so far. There are many changes occurring in the automotive industry, perhaps more so than in other industries. The biggest change is that vehicles are to be powered by electricity, rather than the internal combustion engine, but there are also drastic changes in the vehicles themselves. Computerization is moving vehicles to being self-driven also. The government has apparently made no preparations for that, and has changed a progressive electric vehicles policy. Perhaps most crucial, it has not prepared the national grid for the burden of transportation that will be thrown on it by electric vehicles. Self-driving is an entirely new dimension.
The government needs to keep an eye on both current reality and future development. That applies to all things, but it applies in particular to the automotive industry. It is not merely to be trotted for praise when it does well, and forgotten if it does not, but it deserves close attention at all times. The government should also thank its stars that European manufacturers are showing an interest in Pakistan despite the hurdles put in its way.
