Renault to pull US $140 million investment out of Pakistan
Nothing seems to be going right for Pakistan economy, Renault is going to freeze its investment initiative in Pakistan. The project worth US $140 million with production targets as high as 50,000 units per annum is flying away.
Renault had joined hands with Al-Futtaim group to launch the brand for the local automobile market in the country. The group has not confirmed the news yet. Al-Futtaim is big private UAE-based conglomerate employing more than 44,000 people, operating in automotive, insurance, real estate, electronics, retail and overseas industries.
The cancellation of the franchise license can be seen in the wake of failing economy, rising inflation and taxes. The recent talks of PTI government with IMF have indicated bad signs for the economy and the situation is expected to go from bad to worse. Renault’s decision does not come as a surprise in a situation where the business activity is at its all-time low. The government policies regarding the auto industry are also not supportive. There is a 10% Federal Excise Duty (FED) on cars above 1700cc which is extremely bad for the sector.
For the last couple of years auto enthusiasts all over the country were eagerly waiting to see locally produced French cars on the road. Social media was abuzz with all kinds of speculations. But this is certainly sad news for Pakistan as well as the car lovers. Pakistani automobile industry needs more brands for the market to be competitive. For that to happen the economy needs to come back on track to make business activity possible.