French carmaker Renault is set to enter Pakistan’s rapidly growing car market by opening a manufacturing plant in Karachi by 2018. Renault confirmed that Ghandhara and Al Futtaim Groups will partner with it in manufacturing its vehicles there.
Renault’s deal was possible due to Pakistan Government’s rule on new entrants that would allow Renault to import car parts at 10 percent custom fees, while existing players will have to pay 30 percent.
Japan’s Suzuki, Toyota and Honda dominate Pakistan’s car market currently. Locally assembled cars are sold at relatively high prices but lag behind imported vehicles in terms of quality and specifications.
As economic growth reached its fastest pace since 2008, demand for cars outstrips supply so customers in Pakistan have to wait up to four months for a new car after making a full payment. With the local currency stabilizing against the dollar and with the rapid rise of middle class, Renault has opportunity to tap into a market of nearly 200 million people.
About Ghandhara Nissan Limited
The Ghandhara Nissan Limited (GNL), was incorporated in 1981 as a Private Limited Company that distributed Nissan vehicles in Pakistan. In 1992 it was converted into a Public Company listed in Karachi Stock Exchange. Ghandhara Nissan has Technical Assistance Agreement with Nissan, Japan and joint Venture Agreement with Nissan Diesel Company, Japan for the progressive Assembly of Passenger Cars, Light Commercial Vehicles and Heavy Duty Vehicles. Ghadhara Nissan’s Car and Truck plants are located at Port Qasim, Karachi, adjacent to each other.
The Al-Futtaim Group is a large conglomerate operating in the United Arab Emirates. The group was founded in the 1930s and expanded rapidly in the 1940s and 1950s to become an integrated commercial, industrial, and services organization.
In September 2013, the group bid $86 million to take full control of the Nairobi-based car retailer CMC Holdings. Al-Futtaim Group employs over 44,000 people and operates eight divisions comprising automotive, electronics, insurance, services, real estate, retail, industries, and overseas.
Renault is a French multinational automobile manufacturer established in 1899. The company produces a range of cars and vans, and in the past has manufactured trucks, tractors, tanks, buses/coaches and autorail vehicles.
According to the Organisation Internationale des Constructeurs d’Automobiles, in 2013 Renault was the eleventh biggest automaker in the world by production volume, with 50.5% of sales coming outside of Europe. The French government owns a 19.73% share of Renault as of April 2015.
About Renault–Nissan Alliance
Renault–Nissan Alliance is a Franco-Japanese strategic partnership between automobile manufacturers Renault, based in Paris, France, and Nissan, based in Yokohama, Japan. The companies, which have been strategic partners since 1999, have nearly 450,000 employees and control nine major brands: Nissan, Renault, Infiniti, Renault Samsung Motors, Dacia, Datsun, Venucia, Lada and Mitsubishi. The car group sold 8.3 million cars worldwide in 2013, behind Toyota, General Motors, and Volkswagen for total volume.
The strategic partnership between Renault and Nissan is not a merger or an acquisition. The two companies are joined together through a cross-shareholding agreement. Renault has a 43.4% controlling stake in Nissan while Nissan holds a 15% non-voting stake in Renault. Carlos Ghosn is the current chairman and CEO of both company.