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VOL 4, NO 4

FAILURE OF AUTOMOBILE MANUFACTURING IN PAKISTAN A CASE


OF THE REVO CAR
Memoona Rauf Khan
Engineering Management Department
Center for Studies in Engineering (CASE)
19 - Ataturk Avenue, G - 5/1, Islamabad, 44000, Pakistan
Yasir Ahmad (Corresponding author)
Engineering Management Department
Center for Studies in Engineering (CASE)
19 - Ataturk Avenue, G - 5/1, Islamabad, 44000, Pakistan
Abstract
Using the triple constraints of scope, cost and timing, this paper undertakes the project evaluation of a Pakistani
automobile manufacturing project by Adam Motor Company (AMC). AMC did not account for the global
nature of its product in design, marketing, maintenance, servicing or spare parts. AMC was forced to change
from its original scope of developing indigenous Research and Development capacity, and produce differentsized automobiles to specialize in the production of two basic Revo models. When consumers whose
perceptions had been shaped by the internationally available Japanese cars, ostracized the design of its models,
AMC executed technical and durable quality improvements. Unfortunately, it was still unable to capture the
small car market niche, as liquidity constraints and inability to attract foreign investment, prevented AMC from
launching an effective advertising campaign to sell the Revo models. In the absence of Government support, the
severely compromised project was closed down in 2006.
Keywords: Managing projects, Managing scope-work, Project evaluation, Automobile manufacturing
1.

Introduction

The automotive industry forms one of the largest market segments in world trade. The annual global turnover of
automotive industry during 2005 was $2.8 trillion while trade of $ 1,016 billion represented 9% of world
merchandise trade (Nag et al, 2007). The automotive industry is considered to be a vital sector in major car
producing countries such as US, Japan, Germany and Korea. These countries have given special incentives to
their industrial entrepreneurs to develop this sector systematically. Developing and emergent economies such as
India, China and Malaysia with a sizeable emergent middle class and a large market for cars have also
developed their automotive sub-sectors (Steffens et al, 2007).
On the supply side, the automotive industry plays a leading role within the industrial structure of an economy in
transition. It has many backward linkages within the industrial sector, particularly basic manufacturing
activities, such as metal processing, sheet metal, ferrous and non-ferrous casting, forging and plastics
processing. These basic industries are linked to the production of various automotive parts or automotive
components which in turn make intermediate products for the automotive sector. In 2005, Pakistan with its large

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population had a high demand for mid-sized cars, and an even larger potential market for small sized cars, some
of which had the potential to be satisfied by local production. Despite sporadic attempts, there was no
automobile branded as being made in Pakistan. The industry had grown in fits and starts. One major drawback
was that Government policy was inconsistent, sometimes affording protection to the industry but often
withdrawing it.
In Pakistan the growth of the indigenous car industry began in 1983

with the establishment of the Suzuki

Automotive car assembly plant in Pakistan, which relied on spare parts imported from Japan. The next
milestone in the growth of the automotive industry occurred in the 1990s with the establishment of Toyota and
Honda car assembly plants in Karachi having limited indigenization levels (Government of Pakistan, 2004). The
Suzuki Company produced small cars which dominated the market from the early 1980s to 2004 while Toyota
and Honda produced mid-sized to large sedan for the upper middle class and the upper classes of Pakistan. Thus
in spite of a high demand for automobiles in Pakistan, automobile assembling plants owned by the Big Three
consortium of Toyota, Honda and Suzuki dominated production and posed a serious challenge for indigenous
car producers. On the onther hand, low per capita income and increased inflation hampered the buying power of
the emerging lower middle class so that they could not even afford to buy a small car. While men rode
motorcycles, either alone or with their wives, even families with children had to meet their transport
requirements with a motorcycle, giving rise to the phenomena of whole families riding on a single motorcycle.
With the aim of producing an indigenous automobile to satisfy the local demand for cars, in 2005, a local
company named Adam Motor Company (AMC) started a major project to develop and design a basic
automobile model with a number of variations. The CEO of AMC had served as the Chairman of a successful
local automotive parts manufacturing company, Omar Jibran (OJ) Engineering Limited and had also gained
recognition as Chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers
(PAAPAM). The CEO introduced a passenger car named the Revo (derived from Revolution). Given his
success in the local automotive parts market, the CEOs over-riding vision was to build a totally indigenous car
using Pakistani skill and expertise to the maximum extent possible. He also wanted to utilize the least amount of
foreign expertise possible.
2.

Objectives

The objective of this paper is to undertake an in-depth post project evaluation of the Revo car project. It is
particularly important to critically assess the reasons for failure of this significant and one of a kind project in an
objective manner, in order to derive lessons from it. The following Research Question captures the central focus
of this paper: What were the consequences of overly ambitious scope, wrong timing and inadequate costing on
the Revo Car Project?
3.

Sequence of Paper

The researchers have discussed the significance of the car industry in the world. Then they describe the
evolution of the automobile industry in Pakistan from 1983 until 2005. The existing supply and demand
conditions in the industry are also described. They serve to give the background in which AMC entered the
market. The aspirations of the CEO regarding the production of the Revo car models are then given. The
objective of the paper, namely to do a post project evaluation has already been described, and the research

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question has been stated. The remainder of the research paper is divided into separate sections. The research
method chosen for project evaluation and the process of data collection followed are described next. Then the
analysis and evaluation of the project is described in terms of how each of the triple constraints of project scope,
cost and quality issues and timing impacted specifically the project. Separate sections on the industry demand
and lack of government support for the local industry as well as the marketing of the Revo followed by vendor
industry and maintenance support follow. The conclusions summarize the findings of the study followed by
lessons learnt. (Wohlin and Andrews, 2001)
4.

Research Methods

Post-project evaluation has been conducted in order to derive lessons on how to improve the design and
implementation of similar projects in the future (Williams et al, 2001; Williams, 2003, Wohlin and Andrews,
2001). The Project Management Institute (PMBoK, 2004) and Pinto (1999) have also reinforced the need to
document the causes of variances, types of lessons learnt and the logic behind corrective actions, through more
frequent project reviews.
This ex-post evaluation utilizes the standard theoretical framework used in project analysis consisting of the
triple constraints of scope, time and cost (Greene and Stellman, 2007). The researchers carry out a
comprehensive evaluation of this project by undertaking an in depth descriptive analysis of the impact of each
constraint on the outcome of project. The unit of analysis is the Revo car project which has not been critiqued
and analyzed previously. Secondary data consists of company press releases, newspaper and magazines articles,
as well as AMC and industry documentation. Due to the dearth of secondary data, the researchers had to gather
data through interviews and focus groups with AMCs CEO and senior and middle managers. One of the
researchers was able to access the managers and CEO of AMC as well as other entrepreneurs, vendors,
assemblers, managers etc of well-known auto parts, due to his extensive work experience in the automotive
sector. The consumer reaction to the Revo car was obtained by means of secondary data in the form of web
blogs, as well as primary data collection. Primary data collection consisted of a market survey conducted and
administered to 55 actual and potential automotive customers.
5.

Theoretical Framework of Triple Constraints

The triple project constraints of time, scope, and cost referred to, as the iron triangle, are interdependent, as each
constraint always has an effect on the other two constraints (Atkinson, 1999; Greene and Stellman, 2007). The
impact of the project scope plays a pivotal role on the two constraints of time and cost, and ultimately on the
overall project strategy and implementation. If management does not manage these constraints at the same time,
then the project may be late, over budget or unacceptable to customers. In a large scale industrial project, a
company will be unable to sell its products or withstand the successful tactics of its competitors, whether they
consist of a business cartel or smaller producers.
We start by finding out the impact of different components of project scope on the individual project indicators
and outcomes, as well on the overall outcome of the project.

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6.

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Scope of Project

The project scope refers to all of the work activities which had to be accomplished for the delivery of all of the
Revo automobile line of products and services. With specific reference to the Revo automobile, product scope
also refers to only those features and functions that characterize this product and the specific services attached to
it. There are different tools and techniques for defining project and product scope, including expert judgment,
product analysis and identification of alternatives (Pinto, 1999).
We start with the evaluation of companys intended scope in the light of the vision of its founder as projects are
affected by the leaders vision and dealings during the execution phase. Leadership style impacts team cohesion,
overall performance and the project scope (Wang et al, 2005). In this case, the vision of the AMC Company
revolved around the aspirations of its CEO, who had previously been very successful in manufacturing
automotive parts (Zuberi, 2005). The CEO communicated his aspirations in the rhetoric of pithy and catchy
phrases such as dream like Indian TATA, learn cost control from Japanese, learn technological desire from
German and learn marketing from the Americans. While this medley of ideas and exaggerated enthusiasm
made workers and managers feel good, they did not translate into practical and executable outcomes, as they
were not based on economic principles of minimizing costs. The practice of using maximum local content at all
costs was particularly detrimental to the company. For example, different vehicle parts could have been
procured from China at much cheaper prices. AMC planned to attain a deletion level of 100% for the Revo car
up from 67% and to indigenize manufacture of the Revo engine within the country whether the technology was
appropriate or not (Zuberi, 2005).
In 2005 there was lack of technology and in house R & D in the Pakistani automotive industry. The Pakistani
automobile manufacturers make cars by using models from their joint venture partners and obtain product
technologies from them due to the large stock of models which their partners can draw upon. Thus for a startup
company such as AMC, it was difficult to develop its own product technologies. However, the company
undertook the required complex engineering tasks without any foreign assistance by using local engineers who
were trained in Computer Aided Design (CAD) and Computer Aided Manufacturing (CAM) software (Rohail,
2008). AMCs initial deletion level of 67% for the Revo car was higher than deletion levels for comparable
models of well-known Japanese and South Korean automotive companies (Khan, 2005).
6.1

Vast Scope and Excessive Diversification

The overly ambitious goals of AMC indicated that the scope of work of the company was too vast for its
capabilities. It had a vision to emulate the dynamic learning of the Japanese automotive producers but forgot
that leading manufacturers such as Toyota and Hyundai had taken a minimum of seven years to start production
of their prototype models. Most importantly, the company forgot that it had to start in a small way. Thus a major
drawback in the strategy of the company was characterized by its excessive diversification in its initial stage.
AMC initially started the simultaneous production of a variety of different automobiles e.g. passenger cars,
jeeps and mini trucks, thereby, failing to do justice to any one of them. Being a new company with limited
resources, specialization in one market segment such as passenger cars right from the very start would have

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been a much better approach. AMC was forced to change direction and tried to specialize in one market
segment as already indicated, but by this time it had already wasted a great deal of time and resources.
AMC planned a four-phased technical strategy based on R and D, normally a strategy followed by wellentrenched companies rather than new comers to the market. While this strategy appeared to set a practical path
to make the company attain its anticipated goals, its ultimate goal of becoming an independent supplier of
technology, was probably unattainable.
In Phase 1 AMC was to indigenously develop seven different models of cars and mini trucks. In Phase 2 it was
to jointly develop new products with well-known international automotive and engine design companies. AMC
was also to train a number of engineers through cooperative programs with the Chinese automobile makers. In
Phase 3 AMC was to develop a number of economical car models independently in its R&D center thereby
upgrading its capability in new car development. In Phase 4, AMC was to establish mature R&D capabilities for
a full line of passenger vehicle products, ranging from practical cars such as the sedan, to luxurious sports cars.
During Phase 2 of its strategy AMC was unable to follow through on envisaged collaborations and cooperative
agreements with Chinese firms to develop engines and transmission technologies through cooperative
agreements with them. The companys ultimate aim of becoming a progressive manufacturer based on its own R
& D, with a strong focus on achieving the highest level of indigenization, could not be fulfilled because the
scope was too large and impractical.
6.2

Workforce Issues

AMC tried to augment its experienced CAD and CAM engineers from OJ engineering with fresh graduates from
NED University. All of the automotive companies, including AMC faced the problem of lack of specialized
technical human resources. The Government did not invest in developing expertise for the automotive sector. Its
negligence in this field was repeatedly pointed out by a number of stakeholders in the automotive industry,
including AMC. However, AMC did not plan for building up a cohesive and well qualified work force for its
future endeavors by setting aside resources for development of its human resources. Chinese car manufacturers
such as Geely on the other hand encouraged and sponsored their employees to study Automotive Engineering
and Designingii and thus built up a more specialized work force over a period of time.
7.

Cost and Quality Issues

Pricing of automobiles depend on both supply and market demand conditions. Costs of production have to be
covered including high fixed costs as well as variable labor and material costs. On the demand side, prices are
determined by the oligopolistic market structure and consumer demand. The three Japanese car makers in
Pakistan collude to charge monopoly prices for their vehicles, so that the prices of the different models of
Toyota and Honda cars are much higher in Pakistan than in other countries such as the U.S. This can be seen
from Figure 1 which shows the prices of comparable car models in Pakistan and United States during the fiscal
year 2005-06.
Insert Figure 1 here

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Ensuring that the product is delivered in a timely fashion while meeting the constraints of cost and timing and
within its scope should ideally result in a good quality product. However, ultimately it is the customer who
validates the quality of a product (Greene and Stellman, 2007). Trading off low cost against good quality proved
to be a daunting task for AMC. Moreover, the Revo became mired in criticism pertaining to its quality from its
very inception. From its indigenous design to the selection of its vendors, AMC became known as the company
which was compromising on quality at every step, despite stringent denials by the company. The public
perception of the Revo was that of a lower quality car with poor maintenance support and after sale service. The
Revo design did not get favorable remarks from the general public and its design failed to create a favorable
perception on potential customers.
In retrospect, customers needs should have been assessed for their qualityiii . Incorporating their feedback could
have led to a better design and features. Ultimately, the design of Revo 80 Standard could not attract new buyers
who had the option of buying the Japanese brand 800cc Suzuki Mehran by paying an additional PKR 26 000
compared to the Revo 80 Std price of PKR 289 000. Customers also had the option of being able to purchase a
used car or jeep.
An alternative strategy which has been successfully applied by a number of automotive companies consists of
outsourcing design tasks to specialized parts and technology suppliers, such as Delphi, Bosch, Vision and AVL,
etc. This policy resulted in cutting costs while maintaining quality. In India the TATA Indica followed this
strategy for the production of their indigenous car, which is produced in India but designed in Italy (Bruce,
2008).

7.1

Pricing Policy

Ultimately, AMC decided to follow a price cutting policy, and reduce the profit margins on its vehicles, in order
to capture the lowest segment of the market. AMC limited itself to the production of only two low cost
passenger cars, the Revo 80 model and Revo 105 model each of which had distinctive price tags. The Revo 80
and Revo 105 models had an engine capacity of 800 cc and 1050 cc respectively. The graphs in figures 2 and 3
indicate that the prices of the Revo 80 ranged from US $ 4 800 to US $ 5 400, while the prices of the Revo 105
ranged from US $ 5 800 to US $ 7 000.
Insert Figure 2 here
Insert Figure 3 here
AMC tried to improve the Revo cars indigenous shape and style and achieve a unique and distinctive design by
emulating Toyota, Honda and Hyundai. AMC installed improved features such as better headlights, seat belts,
radiator assembly and seats. However, these features increased the price tag of the Revo car models. The cost of
the Revo car was still lower than comparable cars in Pakistan, but it could not achieve a significant enough price
differential comparable to Tatas Nano car in the Indian Automotive Industry. A basic low cost car model with
the price tag of Rs 200 000 or less may have proved to be more successful in Pakistan due to the large price
differential with well-known small contemporary cars.

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AMC also cut their price by utilizing the service of local experts rather than foreign professionals. Otherwise
AMC would have had to pay royalty to them, thereby incurring extremely high costs. The company also took
advantage of the system of supplying car parts devised by OJ Engineering Ltd, and hired vendors who were not
in partnership with existing Japanese and Korean joint ventures to cut costs.
8.

Launching the Revo: Timing Issues

One of the most important production constraints is the speed or pace with which a company devises and
implements production decisions from the conception stage to delivery to customers. The time required to
develop a product and to launch it in the market at the correct time are critical decisions. Businesses also sustain
growth by providing quality products at the right price and in the right time frame (Wang et al, 2005 and
Cheung et al, 2001). While, AMC proved to be flexible and changed its original plan and scope of the project by
making models for the small sized market segment alone, it wasted a great deal of time and resources in doing
so. AMC also responded to the market and consumer perceptions in a flexible manner by installing improved
features in its Revo models a timely fashion. It also cut its prices in a timely manner. Regardless, the Revo car
faced tough competition right from the very start. Moreover, due to a drastic change in the favorable
environment in which the project had originally been devised, the timely decisions made by AMC proved to be
inadequate. The major player in changing the environment proved to be the Government.
9.

Industry Demand and Government Response

At project inception in 2004, there was an excess demand for cars in the automotive market, which ranged from
15 000 to 20 000 cars. Cost premiums were being charged for the timely delivery of vehicles. Delivery time
ranged from two to six months. The Japanese producers tried to meet the excess demand but were unable to
expand capacity in the short run.
The government decided to liberalize the market for new and used cars in order to ease the demand for new cars.
They reduced the custom duties on imported cars in the Federal Budget for 2005-2006. Import duties on new
and used vehicles with an engine capacity of up to 1 500cc cars were decreased up to 50 per cent.
Approximately 13 000 used cars of 650cc to 3700cc, including jeeps, vans, pick-ups, and sports utility vehicles
(SUVs) were imported in 6 months from July to December 2005 compared to 8 700 cars etc during the whole of
the previous fiscal year. During December 2005 alone, over 4 000 cars were purchased. This consumer friendly
policy was effective in achieving its goals. As the import of used cars increased, the demand for locally
assembled cars decreased.
This large major influx of new and used imported cars did not prove detrimental to the Japanese automobile car
manufacturers and assemblers, which were already well-established. However, they presented a direct threat to
an incipient new comer such as AMC, in addition to the local manufacturers of different powered motor cycles.
AMC was stringently opposed to the reduction in import duties on new cars and used cars. The CEO of AMC
argued that government policies should support the development of the local automotive industry rather than
impact negatively upon it (Hassan, 2008).

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The then Prime Minister Shaukat Aziz promised state patronage to AMC, 3 months before the launch of the
Revo in 2005, in the form of tax subsidies and tax break incentives, as well as a commitment to buy at least
5000 Revo cars for various government departments. The Malaysian Government had been strongly committed
to the success of the Proton car, which was a strong factor in its success (Richardson, 1995). If the Pakistani
Government had bought the Revo car in significant numbers, it could have contributed to ensuring the market
presence of the car thereby attracting prospective buyers towards the new venture. However, before the first
Revo rolled out of the production line, the roads were already crowded with imported vehicles. Withdrawal of
government support proved to be a particularly serious and unexpected shock to the CEO of AMC (Hassan,
2008).

10.

Marketing and Financial Issues

AMC failed to promote its patriotic entrepreneurial spirit and enterprise goal as First Pakistani Car for family.
The claim that a Pakistani company has produced the countrys first national car took the market by surprise
and the perception of most people regarding Revo car appeared to be that it was a mediocre joint venture with
the Chinese. From April 2005 to 2007, AMC produced only 600 cars which consisted of 500 units of 800cc and
100 units of 1 050cc (Khan, 2007). These figures were far below the companys actual targets and expectations.
Meager initial sales hit AMC hard and the company could not recover from the blow.
During its startup phase, AMC should have specifically targeted the local market, as Chinese companies such as
Cherry QQ did. Cherry QQ first established itself in China and after its success moved to countries such as
Pakistan and other South and South East Asian countries.iv Lack of resources restrained AMC from pursuing an
aggressive marketing promotion campaign. AMC should have promoted Revo car as a sturdy and durable
Pakistani utility car for middle and low income families whereas the Suzuki Mehran, a more expensive car, won
and retained this title again and again. Thus the Revo failed to capture the publics imagination and acquire a
market niche based on this image, as a number of car models were able to do. For example, Suzuki Swift was
promoted as a car for youth, and the Hyundai Santro was labeled as sunshine car for freshness and youthful
attitude.v Thus AMC failed to change the loyalties of the Pakistani automotive market which was already
dominated by Japanese brand models.
Due to the sophisticated tastes of the upwardly mobile Pakistani middle class consumer and their familiarity
with the available Japanese car models, the purely indigenous style of the Revo was received with mixed
emotions by the Pakistani public. The companys excessive dependence on its indigenous and non-aesthetic
design and unconventional look made consumers perceive the Revo cars in a very negative light. Their unique
styling was poorly valued by automobile users. The most important thing for any manufacturing project is that
its end product should correspond to customer needs and expectations (Cardinal and Marle, 2006). During an
independent survey conducted by an automobile website (www.pakwheels.com), people verified their aversion
to the snub-nosed look of the Revo, to the extent of calling it a tractor, rickshaw or golf cart with car wheels.
AMC traded self-sufficiency in manufacturing for design. Thus it could not penetrate the market unlike other
new Chinese and Korean automotive projects. Due to its poor marketing, AMC failed to promote the technically
sound and durable quality features of the Revo. Safety features consisted of crash or crumple zones for
transferring the force of impact to the side walls (Zuberi, 2005). This safety feature resulted in additional weight

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and reduced fuel efficiency which the company could have justified but the companys emphasis on safety could
not be made public and it was unable to influence its potential consumers in choosing a cheaper and safer car
over other contemporary costly unsafe cars. Iansiti (1997) argues that a companys process for rapidly and
efficiently translating its R&D efforts into products that excel in satisfying the markets needs is more important
than the R&D spending.
The use of the Chinese engine got negative publicity creating the perception that the Revo was a Chinese
venture in the Pakistani automotive market. Although the same engine was utilized by General Motors in China,
this salient feature did not get the chance to be show-cased. The general public was also unaware of the
Companys ambitious strategy of manufacturing engines and transmissions indigenously.
Due to its financial constraints and with limited orders in hand, AMC was unable to follow through on its
strategy and run an aggressive marketing campaign. Faced with tough competition from the very start and
striving to attain ambitious goals, the company was severely constrained by inadequate financial resources
(Khan, 2007).Hopes were raised at AMC, when a Kuwaiti investor showed interest in investing in AMC, but he
soon withdrew from AMC, due to the volatile political environment prevailing in the country. The company
obtained the same response from an investor from Dubai.
11.

Vendor Industry & Maintenance Support

AMC undermined its own strength when it shifted from relying on quality vendors to relying on local vendors
classified as being secondary or Class B vendors by the Big Three automakers. At the time of the launch of the
Revo car, AMC chose those vendors which it felt had been unfairly marginalized in the industry and by the
three major automotive companies where as for the automotive sector it has been found useful to classify and
manage suppliers according to their involvement in new product development (Ziropli and Caputo, 2002). The
company engaged a number of companies to supply parts and accessories including tires, sheet metal parts,
mirrors, gaskets, engine valve, camshaft, oil pump gears, pistons, radiators, seats, dashboard, and axles. While
there was a great deal of competition among the vendors and there did not appear to be overly technological
dependence on a specific company or technology source, this strategy created the image of Revo as a car made
with low quality spare parts. The company ultimately appeared to be ineffective in assessing the quality and
technology of its vendors for appropriateness. But the low sales of Revo car not only deterred the confidence of
selected vendors but also prohibited others from joining the fleet of vendors. After sometime the vendor industry
indicated their inability to support the specialized design parts in the limited quantities required by AMC. This
situation proved detrimental to the consolidation efforts of AMC and subsequently prevented the company from
pursuing the production of engine assemblies with the help of local and or foreign vendors.
Another essential feature required to attract customers to buy the Revo was the availability of its parts and after
sales services as well as its re-sale value. However, on all of these issues, AMC faced constraints to such an
extent that buyers were dissuaded from purchasing the Revo. As local mechanics did not support the Revo
models, their after sales service support also proved to be inadequate.
12.

Conclusions

This paper investigates the causal factors responsible for the failure of a promising automotive project.
Development of the Revo car in the presence of an established market dominated by the Three Big companies

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namely, Toyota, Honda and Suzuki was an ambitious project. Its CEO in particular, had the vision of AMC
becoming a progressive manufacturer based on its own R & D, with a strong focus on achieving the highest
level of indigenization. The overly ambitious vision and goals of AMC indicated that the scope of work of the
company was too vast for its capabilities. Thus the project scope was so diversified that AMC initially started
simultaneous production of a variety of different automobiles. To its credit, AMC was able to narrow down its
production line to two basic Revo car models for the small car market segment. While it undertook some
Research and Development (R & D) with skilled Pakistani manpower from the local industry, it could not
implement cooperative agreements with Chinese firms to develop engines and transmission technologies.
Although the company tried to tackle its problems as they arose, the severity and magnitude of these problems
multiplied with the passage of time so that the company was unable to deal effectively with them. AMC
particularly did not take into account its consumers perceptions towards the two basic Revo car models.
Consumers particularly perceived the snub-nosed design of the Revo with dislike. This design was the
unfortunate consequence of the nationalistic AMC creed to produce its vehicles with maximum local content.
Hence AMC did not import economical and workable designs for its parts and car design as Indias TATA etc
had done. While AMC was successful in adding technically sound and durable quality features to the Revo, in
the face of funding constraints it failed to market these features to an increasingly hostile public. Consequently,
the two Revo models were unable to effectively capture a market share in the small car market segment nor win
the hearts of customers who had the option of buying a tried and tested car by paying some more money, or
buying a second hand car. Thus the company failed in its goal of producing the First Pakistani Car for the
Family.
The Revo was also mired in price and quality issues right from its inception. While AMC initially used well
known vendors to manufacture its spare parts, later on it started using Class B vendors. Customers expressed
their concerns due to the poor quality spare parts produced by these inappropriately selected vendors, as well as
well as the poor quality of car maintenance and after sales service provided by AMC. Such concerns made
buyers as well as experienced personnel, vendors etc leave AMC.
Due to inadequate contingency planning AMC could not also not overcome its financial constraints and
inadequate marketing nor could it attract investment. As a result, the project was severely compromised and
could not be sustained. The company also suffered from trade liberalization policies implemented by a
Government favoring consumers rather than local producers. Government support which could have proved
very beneficial was also not forthcoming. Ultimately AMC could not compete against achieve international
standards of product development, production management and service quality. Thus production of the Revo car
ended in the year 2008.
13.

Lessons Learnt

While product development projects in dynamic business environments, rarely proceed according to the original
plan, it is important to start small and then expand (Hyun, 1995). Thus proper definition and planning of project
scope was important in this case. Given a highly competitive market dominated by Japanese companies and the
ambitious R & D objectives of the AMC behooved that it should have involved an experienced foreign partner

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for its own gradual learning and enhancement of its capabilities. It also appeared to ignore best practices in
identifying where to obtain the best kind of technology or designs for the Revo car and limited itself to the local,
under-developed market for illogical reasons. These factors appear to be critical issues for the project failure. A
certain amount of time was also lost in circumscribing the scope of the project. During its startup phase, AMC
should have specifically targeted the local market, in the way that Chinese companies such as Cherry QQ did.
After its success in China, Cherry QQ was able to expand. Customers needs could also have been assessed for
their quality. Incorporating their feedback could have led to a better design and features.
Moreover, while initially the public perception of the Revo of a lower quality car may have been unfounded, it
proved to be a self-fulfilling prophecy, due to subsequent AMC actions. Thus it used inappropriate vendors etc
and provided poor maintenance support and after sale services. Another lesson which is important is that in such
a globally competitive market, some level of government initial commitment and support at least, is important
for development of the local industry.

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Annexure
Figure 1: Price Comparison for Pakistan and USA Markets vi

Figure 2: Revo 80 Model Price vii

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Figure 3: Revo 105 Model Price viii

Endnotes:
i:Automobiles assembly was initiated with the Bedford truck followed by Ford Perfect, Ford Cortina and Dodge Dart.
Less than 20% of these vehicles were made up of locally produced automotive parts with the exception of Bed Ford
truck for which deletion level of 80% was achieved. However by the late 1970s all automobile assembling in Pakistan
stopped due to the worsening economic and political situation. In 1983, Pakistan Suzuki Motor Company (PSMC)
started assembly of a small model car the Suzuki FX whose engine had 800 cc capacity followed by upgraded models.
ii:Geely Report (2009). To Take an Independent Road and Witness an Innovative Career. Initial Issue by Geely
Automotive Company, China
iii:According to the concept of the House of Quality (HoQ) by Dr. Shigeru Mizuno and Dr. YojiAkao of Japan
iv: Dr. Michael Sikora, Going Out - Strategy of Chinese carmakers: Ambitious goals within reach Automotive
Business Consulting Limited, Shanghai.
v:Haresh B, (2007). Santro: The Sunshine Car Retrieved on May 21, 2010 from
http://marketingpractice.blogspot.com/2007/12/santro-sunshine-car.html,
vi:Pakistan Auto car price lists on <http://www.pakautocar.com>
vii: Adam Motor Company. homepage . <http://www.adammotor.com/products//Revo 80 plus.htm>
viii: Adam Motor Company. homepage . <http://www.adammotorcompany.com/products/Revo 105 plus.htm>

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