LAHORE: The poor quality of petrol available in Pakistan is a major barrier to introduction of cars equipped with engines that meet the Euro 4 standards or above in this market, according to a senior executive of a South Korean auto manufacturer.

“We would like to bring more eco-friendly cars in this market. But such plans depend on the quality of the fuel available here ... the low quality of petrol is a problem because it is not compatible with eco-friendly engines,” Mr Hideo Takenaka, the Executive Vice President Sales and Marketing Hyundai Nishat Motor, said while speaking to Dawn.

“We can import sensitive Euro 4 standards (and higher) compliant cars if fuel quality is upgraded … even start assembly (of such vehicles locally) but for poor quality of fuel, a problem unique to Pakistan. We are still analysing the market though,” he added. Initially, his company plans to import and assemble Euro II and III compliant sports utility vehicles (SUVs) in Pakistan.

Honda Atlas was the first domestic assembler that had lodged a complaint about the poor quality of petrol marketed by the oil majors in Pakistan towards the end of 2017. Later Oil and Gas Regulatory Authority tested the fuel available in the market and confirmed that oil marketing companies and refineries were adulterating petrol with chemicals to increase the research octane number to meet the regulator’s standards.

The presence of a very high level of manganese in petrol being marketed across the country is responsible for choking cars’ catalytic converter, causes engines to knock, and adversely affects environment and human health. The oil marketing companies have since agreed to reduce the ratio of manganese in their products in a phased programme.

South Korean Hyundai that has partnered with the Nishat Group to invest $150 million in a new plant with a two-shift capacity to produce 30,000 units a year in Faisalabad is expected to roll-out the first batch of its locally assembled vehicles by the end of 2019. “We plan to start with the assembly of two models each of commercial vehicles and passenger cars and later add more models according to the market demand,” Mr Takenaka said.

He was hopeful that Pakistan’s car market size will grow from the existing 267,000 units to at least 400,000 units by 2025 as per capita income is also expected to rise from $1,600 to $2,000. “At present, the market is suffering because of hike in interest rates and currency devaluation … yet we are hopeful it will grow in the long run,” the Hyundai Nishat executive said. He also said the entry of new players in a market dominated by three Japanese car makers will make it more competitive and push its growth as envisaged in the new auto policy.

Mr Takenaka said that his company does not want to get in direct competition with the existing auto assemblers. “We are still analysing the market to see in which segment we have an opportunity … we have come to Pakistan to give the customers more choices, and not to follow existing players and sell cheaper or economical models. Hyundai is a premium brand and we believe that there is adequate room to cultivate a unique market for our cars. For example, we feel that there is a lot of room for our SUVs as the customers do not have much choice in this segment.”

Published in Dawn, February 26th, 2019