01 September, 2014 / Ziqa'ad 5, 1435

Customer comes first

Published Nov 18, 2012 12:10am

THE automobile industry in Pakistan is correct in registering its protest against the flood of used cars that have been entering the country for the last year and a half. It takes courage and tenacity in business affairs here to lay down large stakes in the economy, and substantial fixed investments require a stable policy environment in order to be viable. It’s true that in the past, demands for policy stability have been used to cover up rent-seeking opportunities. But this isn’t always the case, and the present situation with the automobile companies protesting against the tsunami of used car imports should not be seen as a demand for rentier protections. It’s a fair and reasonable demand for policy stability and the government needs to treat it accordingly.

But on the flip side, the government also has a point in underlining the rising costs of local cars, and the degradation of quality. The auto companies are reminding us all of the jobs that they create, and the foreign exchange that is saved through local assembly. But they should also recall that the main purpose of any business is to make money thro-ugh satisfying consumer demand. There are legitimate complaints of constantly rising prices of local cars and constantly falling standards of quality. The automobile companies need to understand that there are grounds for the suspicion that they are using the protections afforded to them as opportunities for making rentier profits. Of course some of the complaints are very challenging to address, such as artificial shortages created by speculators who buy up large quantities of new cars and then sell them on with ‘own money’ charges. But addressing these complaints must remain a priority, and the companies are welcome to publicly ask for the government’s assistance where it can help, such as in tracing speculative buyers.

So where does one take things when both parties have a valid point? In this case, the automobile industry and the government should sit down together to devise a long-term policy for the sector. The mixed experience of previous strategies should be allowed to become a source of discouragement. The last long-term strategy was the so-called deletion programme which sought to use the sector as a job-creating motor by emphasising the growth of indigenisation and local manufacture. Those are worthy goals, but in today’s world, where further liberalisation of trade is a certainty, the emphasis needs to be on competitiveness. And our auto sector can only hope to become truly competitive when it is more sensitive to the needs of its customers.


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Comments (6) (Closed)


Iqbal
Nov 19, 2012 03:37am
auto industry has enjoyed years of monopoly with illegal tactics... time for them to make their products competitive
introspecteeve
Nov 18, 2012 08:38am
A Mehran (799cc) in almost 6 lacs? This ought to have penalization on our auto industry. Thugs want to loot yet want a free hand.
Syed Muhammad Qasim
Nov 19, 2012 10:59am
I agree with Ahmed that in Pakistan customers get away with one initial huge payment, where even here in UAE there is heavy annual payment and hefty parking fee. But this does'nt give the automobile industry to charge high..
Syed Muhammad Qasim
Nov 19, 2012 10:56am
There are woes of auto industry, but they too have created monopoly in the market and selling cars at higher rates than international market. I think there should be more competition in the market for consumer friendly market rates.
Muhammad
Nov 19, 2012 01:35am
I agree with the article. Import of used cars is the right way to create competition, which will benefit the cosumer. It will also put proper pressure on the local industry to improve quality and control prices. It is also important to remember that the used cars are mostly sent to Pakistan by Pakistanis abroad, which does not involve Pakistani foreign exchange. Import of used cars must be allowed without many restrictions, and with minimum import duty.
Ahmed
Nov 18, 2012 03:48pm
but again there are no big car taxes, mandatory car insurance, parking fees and other costs here in Pakistan, customers also get away with only paying one time for costlier cars. For instacne cars in UK are very cheap (used one 800cc may cost as low as 500 Pounds/70,000PKR) but are associated with taxes as high as 1500 pounds per year Plus huge parking fees.