The French carmaker Renault’s entry into Pakistan is good news for car buyers who want to break away from the monopoly of the ‘big three’ Japanese carmakers.

The announcement was made by Ghandhara Nissan Limited (GNL), cross-shareholding partners with Renault, last week in a notice to the Pakistan Stock Exchange (PSX).

The French carmaker will invest $100 million to expand the capacity of the GNL plant at Port Qasim, Karachi, where they will produce 18,000 units per month.

The introduction of these cars will give buyers more choice, improve competition and even lead to a reduction in prices of imported cars in the country.

The Government had long been trying to woo foreign auto carmakers into the country, not only to break the monopoly of the three major Japanese brands but to bridge the gap in the demand for new cars.

Initially the company intends launching its first-rate SUV Duster (2000 cc), which will be available for Rs2.5 million, along with 1200 cc cars, including CUVs (4x4 and 4x2) and sedans, which will be available within the price ceiling of Rs2 million. The cars will compete with existing 1500 cc Japanese models like Honda City 1.3, 1.5 Prosmatic, Corolla Altis 1.6 and GLI 1.3 and even SUVs like Fortuner (2694 cc).

As per the 2016-21 Auto policy, Renault will be able to initially import of 100 units of each of these cars as completely built units at 50% of the prevailing duty for solely for test marketing purposes. The policy also allows foreign entrants – in this case Renault – to pay fewer taxes on the imports of parts, machinery and plants.

Finance Minister Ishaq Dar and the Board of Investment Chairman Miftah Ismail held talk with representatives of European companies like Renault, Peugeot and Volkswagen recently to apprise them of the potential of the automobile sector in Pakistan.

“We are very optimistic about Renault’s future in the Pakistani market. We have been working on the feasibility study for over 15 months,” said Moazzam Pervez Khan, Director Marketing, Nissan-Ghandhara Limited.

“The company is bringing in Euro II/III, fuel efficient vehicles with world-class safety features at competitive prices.”

Along with Renault, Nissan also intends launching its Datsun model, which will be assembled at the same plant by 2017. The company discontinued car production in 2004-05 due to a variety of reasons, including poor after sales services and a failure to penetrate the Pakistani market and compete with brands like Honda and Toyota. Moreover, the company, which has been producing vehicles since 1996, failed to achieve localisation.

“No carmaker can survive without a dealership that offers proper after sales services,” commented a customer. “Those cars were good in their own right but couldn’t make their mark in a larger perspective.”

Responding to a question concerning GNL’s failure, Khan said, “Nissan at that point was not ready to localise, there was no succession plan and the company was introducing eight-year-old models.”

“Although we did try launching the N16 Sunny in 2007, but then Benazir’s assassination occurred and all the technical people left Pakistan overnight, which was very unfortunate for the company," he added.

“However this time, we have done our homework. We are targeting the lower medium segment and coming up with the Datsun Go hatchback, a small cheap car with value-added features like power steering, central locking, mobile docking station."

He was confident that with the launch of new model, the dominant cars in the segment targeting the middle class; including Suzuki Mehran, Cultus or WagonR would soon lose a major chunk of the market share . "Those models are obsolete in the rest of the world," remarked Khan.

According to officials, Renault and Nissan will initially import parts to assemble vehicles in Pakistan but by the end of the third year, the company will achieve 35-40% localisation.