1 History of Pakistan’s Automobile IndustryFollowing international trends, the automobile industry in Pakistan showed substantial growth in the years under review. The growth was aided by favorable government policies during this period and levy of lower import duties on raw material inputs and on intermediate products. A significant rise in demand for automobiles, propelled at least partly by easy availability of auto leases and loans from banks and leasing companies at low financial cost, was instrumental in the fast growth of the sector. The expansion in the sector, besides boosting the country‟s industrial output, also provided significant direct and indirect employment opportunities. In the past years, there has been a high growth of more than 40 percent per year in the automobile market. The growth declined somewhat in 2008 and 2009 due mainly to a dip in demand because of rising prices and lease financing becoming expensive for the consumers. Pakistan Car Industry The first automobile plant was set up in May 1949 by General Motor & Sales Co. It was set up on an experimental basis, however grew into an assembly plant. Seeing such progress, three major auto manufacturers from the US collaborated with Pakistani business men to set up; Ali Automobiles to manufacture Ford Products in 1955, Haroon Industries to assemble Chrysler Dodge cars in 1956, Khandawalla Industries to assemble American Motor Products in 1962, and Mack Trucks Plant in 1963. However towards the end of the seventies all automobile assembly in Pakistan stopped, until 1983 when Pak Suzuki started manufacturing their vehicles in Pakistan. Further Toyota Indus Motors was set up in 1990, followed by Honda. Today we have four major automobile manufacturing industries, these include, Toyota Indus Motors, Pakistan Suzuki, Honda Atlas, and Diwan Farooq Ltd. The most recognized are Toyota, Honda, and Suzuki; producing the majority of the light weight vehicles.Now in Pakistan the growth rate of sale of car is 49.63% in the recent year.
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History of Pakistan’s Automobile Industry Following international trends, the automobile industry in Pakistan showed substantial
growth in the years under review. The growth was aided by favorable government
policies during this period and levy of lower import duties on raw material inputs and onintermediate products.
A significant rise in demand for automobiles, propelled at least partly by easy
availability of auto leases and loans from banks and leasing companies at low financial
cost, was instrumental in the fast growth of the sector. The expansion in the sector,
besides boosting the country‟s industrial output, also provided significant direct and
indirect employment opportunities.
In the past years, there has been a high growth of more than 40 percent per year in
the automobile market. The growth declined somewhat in 2008 and 2009 due mainly to a
dip in demand because of rising prices and lease financing becoming expensive for the
consumers.
Pakistan Car Industry
The first automobile plant was set up in May 1949 by General Motor & Sales Co. It was
set up on an experimental basis, however grew into an assembly plant. Seeing such
progress, three major auto manufacturers from the US collaborated with Pakistani
business men to set up; Ali Automobiles to manufacture Ford Products in 1955, Haroon
Industries to assemble Chrysler Dodge cars in 1956, Khandawalla Industries to assemble
American Motor Products in 1962, and Mack Trucks Plant in 1963.
However towards the end of the seventies all automobile assembly in Pakistan
stopped, until 1983 when Pak Suzuki started manufacturing their vehicles in Pakistan.
Further Toyota Indus Motors was set up in 1990, followed by Honda. Today we have
four major automobile manufacturing industries, these include, Toyota Indus Motors,
Pakistan Suzuki, Honda Atlas, and Diwan Farooq Ltd. The most recognized are Toyota,Honda, and Suzuki; producing the majority of the light weight vehicles.Now in Pakistan
the growth rate of sale of car is 49.63% in the recent year.
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company
Limited Japan, and the Atlas Group of Companies, Pakistan.
The company was incorporated on November, 1992 and joint venture agreement
was signed on August, 1993. The ground breaking ceremony was held on April 17, 1993
and within a record time of 11 months, construction and erection of machinery was
completed. The first car rolled off the assembly line on May 26, 1994. Official
inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Leghari.
Mr. Kawamoto, President of Honda Motor Company Limited Japan was also present to
grace the occasion.
On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and
Islamabad. Since the commencement of production in 1994, the company has producedand sold more than 150,000 cars till Oct, 2008.All dealerships are constructed in
accordance with the standards defined by Honda World over.
In 1996 the full model change was introduced, after just one and half year of
commencement of production. Three models in Civic VTI, EXI and LXI with 1.6L and
1.5L engines were introduced in VTI and EXI models respectively. In 1997 Honda CITY
1.3L car in ET and EX models and Honda City EXI with 1.5L were launched. Currently
they are offering 9 different models of Honda CIVIC and CITY cars in wide range of
colors with unique technological and other features.
Now the dealership network comprises eighteen 3-S dealerships in 10 major sites
of Pakistan and almost 57500 cars have been sold till March 2004.
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company
Limited Japan, and the Atlas Group of Companies, Pakistan. The company is listed on
Karachi, Lahore and Islamabad Stock Exchanges.The principal activities of this companyinclude assembling, manufacturing and selling of passenger cars and spare parts. The
company has introduced four new models of Honda Civic and four models of Honda City
and it introduced the third generation Honda City on January 31, 2009.
Honda Atlas registered a positive growth in vehicle sales. The Dealerships
Network has expanded and now the company has sixteen 3S (Sales, Service and SpareParts) and thirty 2S (Service and Spare Parts) Pit stops network in all major cities of
Pakistan.
Percentage of local parts conforms to the government's policy. Local vendors are
continuously patronized to develop parts locally. The quality of local parts is thoroughly
checked to meet stringent international standards. It is the constant endeavor of Honda
Atlas Cars (Pakistan) Limited to achieve No .1 Customer satisfaction. Honda Atlas Cars
(Pakistan) Limited is committed to meet customer expectations, and to provide goodvalue for money.
“Focusing on satisfaction (customers‟, associates‟ and shareholders‟) With challenging
spirit and flexibility, we are dedicated to supplying latest Generation cars with advanced
technology, greater fuel efficiency and Competitive prices, along with friendly andefficient after sales back up, Maintaining “quality” as core of all activities”.
“A dynamic growth oriented company through excellence in quality, dedication to
provide greater fuel efficiency at competitive prices, and service ensuring attractive
returns to equity holders, rewarding associates according to their ability and performance,
fostering a network of engineers and researchers ensuing unique contribution to thedevelopment of the industry, customer safety, satisfaction and protection of the
environment by producing emission friendly green products as a good corporate citizen
fulfilling its social responsibilities in all respects”
The Honda Accord was first introduced as a Completely Built Unit (CBU) import in
Pakistan on August 11, 2005. HACPL launched the new model of Honda Accord on July
20, 2008. The Honda Accord is available in 2.4L engine. It is available on confirmed
order basis for the customers .The All-new Accord comes with 5-speed Automatictransmission. The AT now has Shift Holding System which avoids unnecessary gear
shifting on winding roads and helps in hassle free drive. The 2.4L Honda Accord features
Marketing department is of special significance to the company. They use different
marketing strategies to promote a new product e.g. a new model of Honda Civic. Theyare in continuous touch with the market in order to get daily updates for their products
and new marketing strategies. Marketing functions are divided into Sales, Services and
Spare Parts.
All the departments of Honda Atlas Cars limited company are inter linked. Sales
department is responsible for sales to different markets and customers. Institutional sales
are made to private companies, government sector and tender business.
A relationship form is filled out by customer when customer comes for booking a
new car. Each customer car booking reservation is uniquely identified by dealership code
and relationship number. Honda Atlas Limited Company prefers demand draft and pay
order instead of receive cash payment. At the end of year all these receipts go to the
finance department. Then invoice is generated of each car on the basis of customer
orders. Finally cars load on trailer and give to the customer.
A Japanese term called Niguri which means long term and short term business plan.
The marketing department is responsible for establishing the short term and long term
plan to enhance the future performance of Honda Atlas Cars Limited Company.The Honda Atlas Limited company use VPN (Visual Private Network) connection
mode that is the secured network. The workers of marketing department compare the
product specification of Honda product with their competitors to gain the distinct edge.
They also take the feedback from authorized dealer. They are responsible for booking of
genuine parts, service and parts‟ dealer coordination and proper management of demand
and supply.
Dealers are divided into Antenna Dealers (Responsible for fulfillment of warranty
deal with customer), Authorized Service Dealers (Responsible and trained by Atlas
Honda to work for them). They are encouraged to improve their shops, add more
facilities, try to cover all the expectation of the customers.
Honda Atlas Cars (Pakistan Ltd) has a separate production department which is headed
by Vice President (Production). A Japanese person is currently working on this seat. The
production department has a number of sections such as:
1. Vendor Section
2. Engine Section
3. Welding Section
4. Maintenance Section
5. Paint
6. Vehicle quality control.
Machinery
In production Department, HACPL use different kind of machinery that are as follow: Boilers Compressors Water treatment plant Ovens (for backing the body of cars) Spot welding guns.
Import Accounting deals with the complexities involved in the Import process of parts to
the company. The first step is the opening of L / C by importer in favor of supplier and
the insurance coverage etc. After L / C is opened by importer, supplier is informed by the
L / C Advising Bank in the supplier‟s country who proceeds with the document ation
needed (Supplier must submit sales invoice with the description of goods and their cost,
Certificate of Origin identifying the country where the goods were manufactured and
other relevant documents) The supplier sends his documents (e.g.: Bill of Exchange
(Short term financial instrument addressed by seller requiring buyer to pay a certain
amount of money at a future date), Sales Invoice etc.) to the L / C Advising Bank.
The bank examines the documents for compliance with credit terms. These
documents are sent to Issuing Bank who confirms the deal. Bill of Lading is issued bycarrier describing the goods accepted by the carrier and under certain conditions, and
serves as a receipt for goods to be delivered to a designated person.
Bill of Entry is taken to Customs House where importer tells them that goods are
coming at port and duties etc. are cleared (HS Code helps to identify the goods being
imported).
Cost and Inventory
Fixed Assets accounting is also done by this department. Costs associated with
developing and maintaining computer software are recognized as expense as incurred.
Dealer Accounting
The dealers after accepting payment from the buyer deposit the money in the respective
branch of the bank designated by Honda Atlas for this purpose. From there on, the
payment is transferred to the Central Branch of the designated bank.
The AHL Human Resource Philosophy is based on the conviction that the well being of
the company and the well being of its people are one and the same. The company is
dedicated to the belief that its most valued asset is its people. Our commitment is to
employ on the basis of Merit, Intellect, Integrity and Character to ensure that every
employee is treated with dignity and respect and in a fair consistent and equitable
manner; to create a stimulating and supportive atmosphere in which they may work; and
to aid and encourage them in the realization of their full potential.
We recognize that the success of this philosophy depends in the large measure on the
manner in which employee‟s at every level carry out their obligations to each other and to
the Company. Our philosophy will not work if employees do not have a feeling of mutual
confidence and loyalty, as well as respect of each other as human being.
In the same context of obligations and mutual trust and confidence, all employees are
expected to maintain certain standard in relation to their work, and in representing
themselves as employees of AHL.
HR Functions:
1. Recruitment and selection
2. Training and development
3. Performance appraisal4. Motivation
5. Employees services safety, health & welfare
6. Manpower planning
7. Salary administration
8. Industrial relation
9. Communication system
10. Negotiation with union
11. Terms and condition of employment
1. Recruitment and selection Forecasting for the vacant positions to be filled Advertisements for vacant positions Receiving applications and complete bio data
Building a pool of candidates Short listing the candidates and building a secondary and purified pool Written test 1st interview 2nd interview Final interview Medical test
2. Training and development Apprenticeship training Informal learning Job instruction training (JIT)
Tele-training Videoconferencing Job rotation
3. Off-Job Trainings Corporate universities association (LUMS), (PIMS) ATLAS development centers (ADC) seminars
Japanese tour for training Organizational Behavior Atlas Honda Ltd.
Gratuity Provident Fund Group Life Insurance Health Insurance/Hospitalization Plan Personal accident Insurance Conveyance & Meal Allowance Compensatory Leaves Inconvenience Allowance Personal Loan Welfare Loan Traveling Allowance
Marriage Gift Award on retirement
5. Manpower Planning Computerized forecasting and planning Human resource information system Qualification inventories Forecasting Techniques
Candidates availability Computerized personnel placement Division of labor according to production and shops
7. Salary Administration Upward communication T.M.S (time management system) Leaves adjustment Sandwich deductions Salary slip Transfer of salary in employee account
8. Industrial Relations Relations with dealers ations with internal customers (employees)
Relations with external customers Relations with vendors 9. Communication System: Upward communication Downward communication Parallel communication Mediums of communication Lotus notes (email) Internal communication letter (i.Com) Letters Fax
Land lines and mobiles
10. Negotiation with Union Increase in basic pawelfare loan Disability coverage Award on retirement
11. Terms & Condition of Employment Probation
Duties Transfer within the company Transferred to sister concerns Termination Participation in union activities Registered Medical Practitioner
Every year all management staff prepares their next year objectives and action plan in
align with company objectives. These objectives are discussed and approved by
immediate supervisor/manager. These objectives also been reviewed by the senior
management on half yearly basis. Annual performance appraisal also based on
achievement of these objectives and reward recognition follows accordingly.
Culture:
AHL culture is a blend of Pakistan & Japanese culture. Its
main characteristics are as follows; Friendly & Safe environment Respect for every individual and recognition Easy access to the Higher Management Openness to share ideas Always welcome to suggestions Equal opportunities for personal growth Same uniform for everyone (White) Same cafeteria and meal for everyone
Sources of Information: Human Resource Deptt. Administration Deptt. Quality Assurance Deptt. Research & Development Deptt. Sales & Marketing Deptt.
As a responsible member of society whose task lies in the preservation of global
environment, company will make every effort to contribute to human health and the
preservation of the global environment in each phase of its corporate activity. Only in this
way we will be able to count on a successful future not only for our company, but for theentire world. We should pursue our daily business interest under the following principles:
1. We will make efforts to recycle materials and conserve resources and energy at
every stage of our products life cycle from research, design, production and sales,
to services and disposal.
2. We will make efforts to minimize and find appropriate methods to dispose of
waste and contaminants that are produced through the use of our products, and in
every stage of life cycle of these products.
3. As both a member of the company and society, each employee will focus on the
importance of making efforts to preserve human health and the global
environment, and will do his or her part to ensure that factory as a whole acts
Honda vehicles. At the same time, we are making an active commitment to enhance
safety for the occupants of other vehicles and even pedestrians. Honda has a long record
of industry leadership in the development and application of advanced safety technology.
Honda R&D safety research activities in Japan and the U.S. are playing a critical role in
the further development of Honda safety technology and the evolution of Honda's "Safety
for Everyone" concept.
"Safety for Everyone" is a comprehensive approach to vehicle safety that seeks to provide
a high-level occupant protection for all Honda vehicles, regardless of size or price, along
with increased compatibility with other vehicles and improved safety for pedestrians. As
a leader, Honda looks beyond government regulations, studying real world situations to
develop new safety technologies. Honda has always targeted mass-market models inorder to have the greatest impact on clean air and fuel economy. To this end, we work to
improve existing technologies while using The Power of Dreams philosophy to envision
and develop the vehicles of the future. We believe it is important to invest in the
continued advancement of internal combustion engine technology. Honda has introduced
a new generation of gasoline engines around the world that provide extremely low
emission levels and increased fuel efficiency while still improving driving performance.
Further in pursuit of our goal to improve energy efficiency, we have developed gas-
electric hybrid vehicles that achieve ultra-high fuel economy. This includes the Civic
Hybrid, the first mass-market car with hybrid power.
Developing vehicles that use sustainable energy sources is perhaps the ultimate direction.
Hydrogen-powered fuel cell vehicles have great potential for the future. Honda has
developed the first fuel cell electric vehicle in the world to be certified by both the U.S.
3. AHL conducts its operations in accordance with principles of good corporate
governance. It provides timely, regular and reliable information of its activities,
structure, financial situation and performance to all the shareholders.
4. AHL is committed to establish mutually beneficial relations with its suppliers,
customers and business partners.
5. AHL strives to be a trusted corporate citizen and, as an integral part of society,
fulfils its responsibilities to the societies and communities in which it operates.
6. AHL is committed to make continuous improvements in the management of
environmental impact. It works in partnership with others to promote
environmental care, increase understanding of environmental issues and
disseminate good practice.
7. AHL make innovations to meet consumer needs. It respects the concerns of consumers and of society. It works on the basis of sound research, applying high
quality standards.
8. AHL believes in fair competition and supports development of appropriate
competition laws. AHL and employees conduct their operations in accordance
with the principles of fair competition and all applicable regulations.
9. Compliance with business principles is an essential element. The Board of
Directors of AHL is responsible for ensuring that these principles are
communicated to, and understood and observed by, all employees. Assurance of
compliance is given and monitored each year. Compliance with the Code is
subject to review by the Board supported by Audit Committee of the Board. The
Board of AHL expects employees to bring to their attention, or to that of senior
management, any breach or suspected breach of these principles.
5-S is a Japanese technique that is used to ensure clean and pleasant work environment.
All associates should perform 5-S activities at their respective workplaces.
Sort: Clear out rarel used items b red ta inSet in Order: Organize and label a place for everythingShine: Clean the work placeStandardize: Display the operation standards at every work placeSustain: Use regular management audits
Core Competencies Largest Capacity Motorcycle manufacturing facility Vertically integrated high precision engine parts Flexible manufacturing facility Only company using ED-Paint Coating System Largest nation-wide exclusive Sales and Service network Capable of new model development by local R & D
Core Values
AHL core values have remained the same through out the years and are as follows: Strongly believe in that “Customer is King” Respect for individual Winning – remain ahead of competition through quality Continuous innovative & Value added services Best return on investment Hard-work & Continuous self-improvement & development Un ambiguous excellence in all aspects of the Company Corporate social responsibility
SWOT analysis is a strategic planning used to evaluate strengths, weaknesses,
opportunities and threats involved in a project or in a business venture. AHL SWOT
analysis is as follows; Strengths:
Largest manufacturing plant in Pakistan (Global Standard factory) World-renowned “HONDA” Brand Market leadership with precision quality Largest product lineup with four popular brands CD70, CD 100, CG125 and
CG125 DLX to meet the future challenges Widespread dealers network Professional management and high skilled staff
Weaknesses: Low manufacturing ability of vendors to supply parts for 500K motorcycles
annually Difficult to maintain high quality production at high market demand Complexity in coordination and communication among facilities, vendors and two
geographical locations i.e. Karachi and Sheikhupura plants
Slow response or long lead-time from the vendors High warranty claims pressure due to premium price product
Opportunities: Poor infrastructure of mass-transit. i.e., limited substitution of 2 wheelers Rapidly changing Market dynamics Being a largest manufacturer can enter India, China and other countries as per
WTO rules and regulations
Purchasing/Buying behavior is changing (more quality conscious) More investors in the vendor business to invest in latest technological specialized
manufacturing processes More inflows from the companies, growth in installment
Threats: Low barrier of entry of major players after WTO implementation Unpredictable frequent changes of government or its policies Bargaining power of suppliers (Vendors) Bargaining power of buyers (dealers/customers) Price war Threats of copy products Substitute services Indian & Chinese entry in Pakistan Market