Two big investments by foreign investors have put Pakistan on the verge of becoming self sufficient in car (PCR), truck and bus radial (TBR) tyres.
The process started with Servis LongMarch initiating a 800,000 tyres per annum factory in 2022. This factory has already doubled its capacity to 1.6m tyres, and has announced another expansion to take it to 2.2m tyres capacity.
Additionally, it is rumoured that Servis LongMarch has signed another JV for a 3m tyres per year PCR factory. This will bring Servis LongMarch investment in radial tyres to cross $300m by end of next year.
The new player in the game is Armstrong FZE – a project of Zafco Group from UAE. The Armstrong factory with 3m PCR tyres and 600,000 TBR tyres is already under construction in Gharo. They are likely to come into production by end of 2024.
Pakistan’s PCR market demand is only 6m tyres. With GTR already producing 2m PCR per year, with the entry of Armstrong and Servis LongMarch, Pakistan’s installed capacity will be 8m tyres. This will create an exportable surplus of 2m tyres per year.
Similarly, the TBR market’s annual demand is 1.6m tyres. Servis LongMarch and Armstrong will have an installed capacity of 2.8m, creating an export surplus of 1.2m tyres.
Servis LongMarch is already Pakistan’s leading export company. In the coming year, it appears that Pakistan could have zero imports in the tyre category- saving foreign exchange to the tune of $500m and having exports of over $200m dollars.
This is a good case study of what foreign direct investment can do for a country like Pakistan.
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