Industry Information and Company Profile:
To the country’s manufacturing sector, auto sector contributes 16% with Japanese
companies dominating by producing and selling most of the outputs. Majority of annual
demand of auto parts of $0.96 billion is manufactured locally and around 22% is imported.
(Rohail, 2008) Currently there is investment of PKR 98 billion (Pakistan Today, 2011) in
the auto sector and its contribution to the GDP is more than 12 billion rupees and to the
national exchequer is PKR 40 billion (Toyota, 2011a). EDB is seeking to even increase this
contribution. Moreover, EDB is trying to enlarge the production capacity and to gain US
$3 billion investment in the industry and attempting to grow exports to US $650 billion.
(Haq, 2009) However, the local industry is facing pressures from the government as sales
tax raised from 16% to 17% and depreciation allowance on imported cars increased from
50% to 60% (Honda Atlas Cars (Pakistan) Limited, 2011a). Inflation and exchange rates
variations have strained costs. Another challenge for the local carmakers is the increase of
age limit of imported used cars from 3 to 5 years (Khan and Khan, 2010). HACPL is one
of the major car assemblers in Pakistani market (Khan, 2011). It is controlled by Honda
Motor Company Japan which holds 51% shares. It has its Sales, Services and Spare Parts
dealership networks spread around in all the major cities of the country. It offers four
brands: Honda CR-V, Honda Accord, Honda Civic and Honda City.
HACPL’s management were unable to predict the economic recession and enhanced
