Master Changan Motors Limited (MCML) has fast become one of the most prominent carmakers in Pakistan due to its competent lineup. Like many other automakers, MCML’s debut was the result of the incredibly fruitful Automotive Development Policy (ADP) 2016-21. The company has made quite an impact with the launch of the Changan Alsvin sedan, a small passenger van Karvaan, and the Sherpa pickup.
With more launches expected soon, one of MCML’s most remarkable achievements has been testing self-driving technology in Pakistan. Last year, the company made headlines when one of its futuristic-looking SUVs — Uni T — was spotted on Pakistani roads.
ProPakistani spoke to CEO Danial Malik about the company’s success and its plans to cater to the fast-growing market of Pakistan.
Here’s how the discussion went:
How Master Group Started Out
Danial Malik: Master Group started in 1963 with Master Molty Foam — today, one of the most popular brands in Pakistan. From there, we branched out into textiles, home and office furniture, renewable energy, chemicals, and automotive.
Automotive is one of our most significant verticals. We started out with Procon Engineering in 1988, as one of the largest manufacturers of high-tech automotive parts and interior components. Procon has factories in Karachi, Lahore, and Faisalabad, one in each city. We are proud to say that 15 percent of every locally assembled car is made of Procon components.
In 2002, Nadeem Malik (Danial’s father) established Master Motors to launch locally assembled buses and trucks. Under this marque, we introduced brands such as Foton Daimler, Mitsubishi Fuso, and Yutong.
Yutong, in particular, is one of our most remarkable success stories as, within just three years, the company acquired 70 percent of the market share from a bus industry dominated by Japanese and Korean brands.
Our strategy has always been to bring the top Chinese automotive companies — in their respective segments — to Pakistan. This is why we introduced Changan to Pakistan in 2018, as it had been the number one passenger vehicle brand in China for the past decade.
Competition and Distinguishing Factor
Danial Malik: In terms of product competence, Changan has no real competition. Master Motor’s sole challenge is to negate the “status quo” by introducing technologically advanced and sophisticated vehicles for Pakistanis who have been starved for better variety in the market.
To achieve this, we formed a joint venture (JV) with Changan; the benefit here is that the transfer of technology becomes easier. Plus, the JV business model is more sustainable, as the principal investor is less likely to withdraw from the market. Furthermore, thanks to the incentives of CPEC 2.0, Changan sees Pakistan as its base for Right Hand Drive vehicle exports.
Other Chinese brands have made Malaysia, Indonesia, Thailand their export hubs; we plan to similarly establish a full-fledged manufacturing facility here, which will allow Pakistan to become the export hub for Right Hand Drive Changan vehicles.
Also, we are the only new entrant in Pakistan with an automotive background. We have the tools, the infrastructure, the experience, and the understanding of localizing vehicles in a sustainable manner, which will act in our favor going forward.
Changan is a certified top brand in terms of R&D and quality studies by J.D. Power — an American data analytics and consumer intelligence company. It is the first company to provide level-three autonomous driving in China, which is a feature normally offered only in ultra-high-tech luxury vehicles. As such, we definitely have a competitive edge over other carmakers in Pakistan.
Auto Policy Shifts and its Consequences
Danial Malik: In the last six to eight months, the Pakistani car industry has observed massive growth in terms of demand and sales. That was mainly due to accumulated disposable income as a result of COVID-19 restrictions on travel, dining, and other leisure activities, and lowered interest rates that gave rise to car financing.
The auto sector provides a lot of jobs and learning opportunities to the people of Pakistan and makes a huge contribution to the country’s economy overall. However, the recent massive influx of Completely Built-Up (CBU) vehicles from certain players in Pakistan has drained Foreign Exchange reserves, without adding any value to the industry.
To mitigate this, the government reduced taxes and duties for carmakers to incentivize the local assembling of vehicles, which has been a welcome step. However, local operations have taken a hit due to issues such as chip shortages and a general supply chain crisis, which has also increased lead times.
Witnessing increased lead times coinciding with the rising CBU imports, the government decided to increase taxes to stifle the rapid growth of the auto industry.
This step has harmed the industry slightly and also created a lack of trust among investors, owing to a lingering sense of uncertainty. That said, our request is for the government to create a consistent policy that allows for consistent growth.
Increasing Prices
Danial Malik: There are many external factors that are responsible for price hikes, ranging from increased freight charges, depreciation of the local currency, to increased taxes, swollen interest rates, etc.
There is no short-term solution to the price hike problem; in order to gain a long-term benefit, we need to localize. Making parts on Pakistani soil will result in reduced taxes, manufacturing costs, labor costs, logistics costs, etc. and this can eventually dampen the price hikes.
In this scenario, I see Changan fairing the best. With inflation limiting the public’s purchasing power, people have started looking for the best value products; Changan’s cars are certainly not the cheapest, but they offer the best value in the market in terms of features and performance.
Pakistani car buyers have become quite well-informed and intelligent as of late, and have started to lean towards products that offer the best values, which is why Changan has become one of the most popular car companies in Pakistan fairly quickly.
Alsvin’s Success and Company’s Plans for Small Car Segment
Danial Malik: As mentioned before, the Alsvin has become one of the most successful new vehicles due to the value it offers compared to its competition. Therefore, it will likely remain the only subcompact car in our lineup.
We have priced the Alsvin such that it caters to the subcompact sedan and hatchback buyers. Not only that, but the Alsvin also competes with hatchbacks in terms of running costs due to its Euro-5 engine.
Having this engine allows the Alsvin to burn less petrol, emit less CO2, and be more fuel-efficient, which is a win-win formula for everyone. Hence, those who lean towards buying a Rs. 2 million-plus hatchback can instead go for the Changan Alsvin, which is just as affordable and is leagues ahead in terms of comfort and features.
An argument can be made that K-Cars are very popular in Pakistan and that more companies should introduce them, including us. However, their actual sales volume is mostly confined to Japan, where the state government mandates automakers to produce K-Cars to even out emissions rates.
However, the global market for K-Cars is not big enough for most automakers to invest a huge chunk of resources in. That is why Changan doesn’t have K-Cars in its lineup and it doesn’t plan on building one for just one market. However, if the government extends the tax benefits for up to 1000cc vehicles, the market could witness a significant increase in competition.
Changan’s Plans About Electric Cars
Danial Malik: EVs are the future of mobility, whether we like it or not. Our advantage — being a developing country — is that we can leap-frog to new technology, and become an EV development hub. People often make a big deal about the charging network and infrastructure which, I believe, can be developed quickly and easily.
Also, the company does make enough power to cater to EVs. As the global car industry currently stands, EVs are, by design, more expensive than Internal Combustion Engine (ICE) powered vehicles.
Therefore, EVs will come to Pakistan with more expensive CBU EVs coming first, whereafter the trickle-down effect will begin in terms of technology sharing, which will allow for the local development of cheap EVs.That is why, in the beginning, the EVs will only appeal to the upper socio-economic class, who will buy them as a part of their three or four-car garages.
In terms of the auto policy, the car industry would benefit more if the government opens it up for EVs of all battery sizes, to allow for the development of a diverse EV market.
This would aid in the identification of a large volume EV market, after which Pakistani automakers can start locally assembling EVs. We have selected a few EV models to introduce in Pakistan. However, we are currently working out the feasibility and waiting for the right time to launch them here.
Oshan X7’s Launch
Danial Malik: The testing for the locally assembled Oshan X7 SUV is already underway and we have also started lining them off. Bookings will begin next month; however, on February 7th we will start the volume production of the SUV ahead of its launch.
We intend to produce sufficient stock for the Oshan X7 SUV before its bookings begin, to ensure its immediate deliveries to the customers after booking. The Oshan X7’s launch in Pakistan will also be the global launch for the Right Hand Drive market, which is a huge milestone for our automotive industry.
The Oshan X7 offers strong numbers — 184 horsepower and 300 Newton-meters of torque from a turbocharged 1.5-liter four-cylinder petrol engine that is mated to a seven-speed Dual Clutch automatic gearbox.
This powertrain propels the Oshan X7 from 0 to 100 kilometers per hour in 8.3 seconds, making it one of the quickest accelerating vehicles in Pakistan. However, since it has a Euro-5 engine, it also has a great fuel economy as well.
It will be offered with a five-seat and a seven-seat configuration and a host of features that will place it in contention with SUVs above its class. In terms of pricing, we intend to position it between the compact and the midsize crossovers, such that it offers better value than its competitors.
Changan Uni T and Uni K in Pakistan
Danial Malik: The purpose of bringing the Uni T to Pakistan was to test level-three autonomous driving on the busy roads of Pakistan. Some of the relevant driver-aids from that SUV have been included in the Oshan X7.
As of now, I cannot state when the Uni T or the Uni K will be launched here — even though it received rave reviews from people for its futuristic design. Changan has an entire Uni-series for ICE-powered cars and an Avatar series for the EVs. The company plans to launch those vehicles in Pakistan, but right now, I cannot comment on when.
Localization of Changan Vehicles
Danial Malik: Recently, Procon Engineering has had a vendor conference with all major vendors in Pakistan. In it, we discussed strategies to take parts localization to the next level and have onboarded all vendors to begin localizing vehicle parts.
We differ from competitors in this regard, as Changan is pushing MCML to localize its cars to ensure its expansion not only in Pakistan but globally, by making us its Right Hand Drive vehicle export hub.
We have been given easy access to their technical data and designs so as to keep the localization efforts going without a hitch. We are currently pursuing localization quite aggressively and plan to achieve 70 to 80 percent localization of parts in the next two years.
Some might ask “Why not 100 percent localization?”; my answer is that there are several components, raw materials, and machinery that are not being made in Pakistan, which is beyond a car manufacturer’s control.
The other major components are the engine and transmission. These components carry two costs — the design, and the development, both of which are too high. Furthermore, given that EVs are the future of transportation, it wouldn’t be wise for Pakistani carmakers to begin investing in technology that will soon become obsolete.
It’s a better idea to have a fully-indigenous EV. We can take inspiration from Turkish automaker TOGG, which recently launched a fully indigenous EV. Likewise, Vietnamese automaker VinFast has been developing EVs for quite some time. We need to follow their approach and make future-proof investments that will serve the country well in the long run, and that is what Changan intends to do.
Source: Pro Pakistani