Auto Sector Seeks Growth via Diversification

Amidst the challenges faced by the auto industry, several local companies have embarked on diversification strategies to mitigate losses and tap into new revenue streams. Numerous engineering companies within the auto sector have pivoted towards manufacturing a diverse range of products to serve both national interests and their own profitability.

Speaking to The Express Tribune, auto sector expert and Director of Mehran Commercial Enterprises, Mashood Khan, who is also the former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) said:

“They can deploy their resources— existing technologies to reduce the swelling import bill and develop local products while benefiting locals and the country. We should continue the diversification process and form a cluster of Small Medium-Sized Enterprises with a view to manufacturing a host of products and try our best to make brands from within the country catering to both the local and international markets.”

He said that by producing small machines (or parts that are currently being imported), the auto industry, which is actually an arm of the engineering industry and has been in operation for more than 35 years, can use its equipment and knowledge to support a variety of industries, including textile, leather, chemical, and pharmaceutical. But Mashood was careful to note that the industry might encounter similar difficulties in 2024 as it did in the year before due to operational setbacks.

The Alson Group is one such company that has successfully diversified, with over 70 years of experience in precision engineering and production in the country’s automotive, aerospace, defense, energy, oil and gas, lighting, and medical device industries. According to Akbar Allana, Director of Alson Group:

“Diversification is imperative as the automotive industry continues to experience fluctuations. While our core business revolves around auto parts, we’re expanding our product range to mitigate losses and cater to high-demand innovative products.”

He said now the group has been manufacturing defense items, a complete range of lighting products, auto parts, various assemblies, fixtures CPAP (continuous positive airway pressure) medical devices, state-of-the-art electro-mechanical ventilators including a range of ventilation, auto lock, accuracy, user-friendly, waveforms display, touchscreen LCD, trolley, and humidifier option. Akbar explained that the company started as a clock manufacturer in 1953 and then expanded into the production of timing devices and artillery fuses after being approached by the Pakistan Army in 1965.

By the late 1960s and early 1970s, it had completed the move to diversify its product range. The group has since become a key supplier of defense products to Pakistan Ordnance Factories (POF) and has expanded its reach globally, exporting to countries including Germany, France, Switzerland, Spain, Belgium, and others. Its exports are valued at approximately $6 to $7 billion annually.

Similarly, Sherani Engineering, a company with three decades of experience, has diversified into manufacturing welding jigs, armored vehicle jigs, molds, and machine fixtures, among other products. Director Saad Sherani of Sherani Engineering highlighted the pivotal role his company plays in meeting the demands of both local and international markets with a diverse product range. Additionally, he outlined the company’s expansion into manufacturing jigs for Original Equipment Manufacturers (OEMs), thus enhancing its portfolio. Sherani Engineering also specializes in producing dies, molds, and fixtures for both internal and external clients, further solidifying its position as a versatile industry leader.

Source: Tribune