Dewan Farooque Motors declared in a statement submitted to the Pakistan Stock Exchange on Monday that it has signed a technology license agreement (TLA) with South Korean manufacturer Kia Corporation for the production and assembly of its vehicles in Pakistan.
Dewan Farooque Motors will establish an auto assembly facility in Pakistan using the TLA.
The choice is being made as the auto industry slows against the backdrop of a weak economy.
The auto sector is currently experiencing sluggish activity for several reasons, the primary among them being the decline in consumer spending power.
High borrowing rates, rising gasoline costs, and a decline in car production are further factors.
According to Abdul Rehman Aizaz, the former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), “There are not many details about the venture, however, such agreements are signed after years of working and negotiations.”
“Until April 2022, the auto industry was booming and the current situation was not in the wildest of dreams. Rising inflation, widening current account deficit, and fall in foreign direct investment are contributing to the slowdown in Pakistan’s economy,” he added.
Asad Ali, an auto analyst with Insight Securities, mentioned Dewan Farooque’s TLA and said that the development would put Lucky Motors in a position of direct competition with Dewan Farooque because Lucky Motors was already assembling Kia SUVs, crossovers, and hatchbacks.
To read our blog on “Prices for the Kia Sportage have dropped in Pakistan,” click here.