News Analysis |
After a seven-year break, the Shehzore truck has finally rolled out in the market, making it the first Brownfield project to resume production after the announcement of new auto policy in 2016. This time Dewan Group has partnered with Kolao Group, a South Korean automobile maker that has presence in 60 countries.
“We have faced extremely difficult times during the last seven years, knocked [on] many doors and then finally found a partner in Kolao Group,” Yousuf Dewan Companies Chairman Dewan Muhammad Yousuf Farooqui said during the launch ceremony of Daehan Shehzore truck at Mohatta Palace Museum, Karachi.
Pakistan’s light truck market segment is wide open for Shehzore due to a lack of competition. However, in the next few years a number of Chinese light truck makers are expected to assemble trucks in Pakistan with a corresponding increase in competition for Shehzore.
Dewan Farooque Motors Limited (DFML) was gearing up to resume vehicle production from February 2018 as it had received approval for its Brownfield plant from the Engineering Development Board (EDB), according to a stock exchange notice the company sent on 19th January 2018, Global Village Space earlier reported.
Initially, the company had announced that it will re-launch its popular Shehzore’s one-ton single rear-wheel truck. Later, it will roll out passenger cars and a sports utility vehicle (SUV). The company’s share price hit the upper limit during trading on Friday, ending at Rs. 38.62, up Rs. 1.83 from its last closing price of Rs. 36.79. Industry officials say the company’s focus is on its one-ton truck amid high demand of commercial vehicles in the country.
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In mid-2016, the company applied for resuming vehicle production by sending its application to the Board of Investment (BoI) and the EDB. Later, in September 2016 it announced that it would start production of vehicles by the end of October 2016.
Dewan Farooque Motors is returning to the arena with a toll manufacturing agreement with Daehan-Dewan Motor Company Private Limited; a joint venture between Dewan Yousuf Companies and the Laos-based Kolao Group. DFML’s plant has remained idle for a long time, but its share price has seen an extraordinary run in recent months.
Currently, the new joint venture company is producing Shehzore 1.5-ton truck with dual rear wheels for more payload capacity with plans to launch the single rear wheel version later.
In just the month of December, DFML’s share price has witnessed an increase of 52.2%, going up to Rs. 38.62 from Rs. 25.37 on December 19, 2017. A similar situation was also seen in mid-2016 when the company’s share price witnessed a 100% return in just five months. After noticing the activity, the Securities and Exchange Commission of Pakistan (SECP) issued a notice to the company in May 2016, asking it to explain the cause behind the surge.
Dewan Group entered into a joint venture with Kolao Group in April 2016 and formed Daehan-Dewan Motor Company, which has now started producing Daehan Shehzore at its previous assembly plant in Sujawal, Sindh. The production capacity of the factory is 20,000 units per annum on double-shift basis.
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Since the announcement of the five-year auto policy in March 2016, auto giants from South Korea, Germany and France have been drawn to the Pakistani market. According to a rough estimate, new investments of over $800 million are being made in the auto industry either through direct joint ventures between Pakistani companies and global auto giants or by domestic auto part manufacturers in Pakistan.
The earlier model of Shehzore was the result of a joint venture between South Korean giant Hyundai Motor Company and Dewan Group. Hyundai Shehzore remained in continuous production from 1999 to 2010. The new truck has a different design but its diesel engine capacity is still the same at 2,600cc.
In mid-2016, the company applied for resuming vehicle production by sending its application to the Board of Investment (BoI) and the EDB. Later, in September 2016 it announced that it would start production of vehicles by the end of October 2016.
“I promise that the new Shehzore will not be inferior in quality compared to its earlier Hyundai version,” Farooqui stressed. Currently, the new joint venture company is producing Shehzore 1.5-ton truck with dual rear wheels for more payload capacity with plans to launch the single rear wheel version later.
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“We have tested this truck in almost every tough terrain in Pakistan. So we expect it to meet the toughest criterion of Pakistani customers who usually overload their vehicles,” Daehan-Dewan Motor Company CEO Mohammad Saleem Baig said while speaking to a local publication after the launch ceremony.
Currently, Pakistan’s light truck market segment is wide open for Shehzore due to a lack of competition. However, in the next few years a number of Chinese light truck makers are expected to assemble trucks in Pakistan with a corresponding increase in competition for Shehzore.