State-owned China FAW Group Corp. plans to start assembling cars in Pakistan to tap growing demand as measures to curb terrorism boost growth in the region.

 

The company seeks to sell 10,000 vehicles -- including vans, cars and pickups -- in 2018 after it begins local assembly of the V2 hatchback at year end, said Hilal Khan Afridi, CEO of Al-Haj FAW Motors Pvt., in an interview in Karachi.

 

Al-Haj FAW is the Chinese group's local venture and began selling imported V2's in January last year.

 

FAW will be the first carmaker in a decade to start assembling vehicles in Pakistan, where the economy is set to grow at the fastest pace since 2008 as Prime Minister Nawaz Sharif's government tackles power shortages and terrorism.

 

China's president, Xi Jinping, has also pledged to invest $45 billion (295 billion yuan) in the country, boosting the outlook for expansion.

 

"Initially we had a lot of difficulty to convince them to help us with technical expertise," said Afridi. "Now that the Chinese market has slowed down, they have increased their interest in international markets. It's a good sign for us."

 

Chinese spending on infrastructure may help Karachi-based Ghandhara Nissan double sales of Chinese Dongfeng trucks. Al-Haj FAW sold about 3,400 vans and pickups along with 535 locally assembled trucks last year. The company plans to invest $9.5 million to assemble cars in Pakistan.

 

"Things are looking up for the auto industry," says Ahmed Hanif Lakhani, analyst at Karachi-based Arif Habib. "The economy is growing and consumer demand is rising with low interest rates making leasing more feasible."

 

Pakistan's economy is estimated to expand 5.5 percent in the year to June, according to the Ministry of Finance. Car sales in the nation increased 52 percent to 15,724 vehicles in November from a year earlier, according to the Pakistan Automotive Manufacturers Association.