London Taxis come to Pakistan

Adil Najam

Pakistan will soon have around 300 ‘London Taxicabs’ plying the streets of Islamabad and soon thereafter a plant will be established to manufacture these for export elsewhere. According to a story in The Daily Times (June 16, 2006) the government has allowed the duty-free import of 300 London Taxicabs on a ‘trial basis.’ The reported highlight is that these will be “equipped with modern gadgets such as satellite tracking.”

Excerpts of the The Daily Times (June 16, 2006) report:

The minister admitted that the London Taxi International (LTI) was shrinking its business in the UK due to heavy cost. The government has allowed duty-free import of 300 taxis (CBUs), while the Prime Transport Limited, a company owned by a US-based Pakistani will invest one billion US dollars for the setting up of an assembly plant of LTI at Gharo in Sindh… He said the company would provide affordable fare (Rs 11.20 per kilometer).

Mr Ghuman said that LTI plant will assemble 18,000 taxi cabs every year in Pakistan, out of which 9,000 taxi cabs would be exported. The export of 9000 taxi-cabs will fetch $2.8 billion every year, he added. The 2400 cc (2.4 liters diesel engine) London Tax priced at 42,000 pounds in the UK will be available at around 20,000 pounds in Pakistan, he added.

The Minister also announced that Dubai World (DW) will construct modern cities at Clifton Beach, Sandspit & Manora and Hawkesbay & Cape Mount in Karachi and that Daimler Chrysler, Volkswagen, Renault and Jetta will also set up plants in Pakistan.

On the London Taxicabs, however, I recall that their economics did not even work out when people tried to introduce them in New York, so I am skeptical about it working in the long term in Pakistan. Rs. 11.20 per kilometer sounds like a good rate but even 20,000 pounds (nearly $40,000) is a fortune for a Pakistani cab driver (given that most Pakistani taxis are self-owned or leased). Plus, if they can be sold for 42,000 pounds on the international market, where is the logic of selling them for 20,000 pounds in Pakistan. Anyhow, I do not have enough information yet to make a definitive determination but on the face it it looks a little too good to be true (expect for the tax-free break for the first imports, which is clearly a sweet deal).