Nishat Mills finalises auto venture deal with Hyundai

KARACHI: Nishat Mills Limited on Thursday announced it has joined hands with South Korea’s Hyundai Motor Company (HMC) to start manufacturing passenger and commercial vehicles.

“Hyundai Nishat Motor, a subsidiary of Nishat Mills Limited has entered into a non-exclusive distributorship agreement with HMC, for the rights to distribution of passenger cars and one-ton range commercial vehicles,” the company said in notice sent to Pakistan Stock Exchange.

The statement further said that these vehicles would be in a built-up condition manufactured by HMC or assembled and/or manufactured under license from HMC and spare parts, replacement parts and accessories for such HMC vehicles.

The company said the agreement would expire on December 31, 2019.

The investment for this greenfield project, signed in June 2017, would be $164 million . Moreover the company expects to manufacture/assemble 7,000 units in first year of production line, going up to 30,000 units.

“The signing of the agreement with the South Korean company is a good sign and the country still has room to absorb the upcoming production line as economy is showing a steady upward trend”, said Abdul Azeem, head of research at Spectrum Securities.

Azeem added that beside economic growth, the China-Pakistan Economic Corridor (CPEC) related activity also justified installation of the new manufacturer. “Moreover it would reduce the volume of secondhand and imported cars,” he said.

Hyundai’s return to Pakistan will boost the government’s efforts to shake up the Japanese-dominated car market and loosen the grip of Toyota, Honda, and Suzuki, the trio of Japanese automakers that assembles cars in Pakistan with local partners.

Hyundai and South Korea’s Kia Motor used to assemble cars in Pakistan until 2004 but withdrew after their local partner Dewan Farooque Motors Limited went bust.