Senate panel, auto industry discuss ‘on-money’

Published December 1, 2021
Lucky Motor chief executive Asif Rizvi told Dawn that he informed the committee that the car and SUVs prices had gone up owing to rupee depreciation against the dollar. — File photo
Lucky Motor chief executive Asif Rizvi told Dawn that he informed the committee that the car and SUVs prices had gone up owing to rupee depreciation against the dollar. — File photo

KARACHI: The members of the Senate Standing Committee on Industries and Production on Tuesday were critical about rising car prices and long delivery period that led to heavy premiums being charged by dealers on locally assembled cars.

A four-member delegation of the committee led by Senator Faisal Sabzwari visited the Lucky Motor Corporation Ltd (LMCL) and Indus Motor Company (IMC). The committee members also included Shaheen Khalid Butt, Fida Muhammad and Saifullah Sarwar Niazi.

Indus Motor Company (IMC) chief executive Ali Asghar Jamali told Dawn that the committee members asked him as to how “on-money” can be controlled. “I have given a suggestion to fix the registration of cars in the name of customers at the dealers’ end in Karachi, Islamabad and Lahore initially. Besides, we are also increasing production capacity to meet the increasing demand.”

Mr Jamali claimed that the committee members did not ponder over rising Toyota car prices. However, he said, “we have shown a regional price comparison in which Pakistani made Toyota Corolla has still been the cheapest.”

He informed the committee that the car prices comprise 35-40pc of government taxes.

Lucky Motor chief executive Asif Rizvi told Dawn that he informed the committee that the car and SUVs prices had gone up owing to rupee depreciation against the dollar.

In May, one dollar was quoted at Rs152-153 in the interbank market as compared to Rs175 now, making imported kits more costlier. He said Lucky Motors had not raised the prices of its product for the last two years, except one model.

He said soaring freight rates and logistic issues had further played havoc with the cost of production.

One of the main reasons for late deliveries of vehicles was the world-wide non-availability of semiconductor chips, which has also affected the local auto industry, he said.

The committee was informed that the local industry is helpless in addressing the price hike issue which is related to the exchange rate, chip shortage and rising freight rates, whose impact is now evident in car and SUV prices. He said freight costs are expected to increase further in January.

Mr Asif said he had urged the committee members to ask the government to make an effort for encouraging local production of a “Pakistan” car which would bring about real localisation, boost employment, save precious foreign exchange being spent on procurement of imported raw materials and encourage new entrepreneurs towards future investment in the auto sector.

He said the industry needs incentives and futuristic policies to promote localisation levels in the vehicles in order to bring down prices and improve the country’s employment base.

However, incentives which were specified originally in the new Auto Policy 2021-2026 for incentivising the production of ‘Pakistan’ car had been removed in the new draft. He urged the committee members to look into this matter.

He said the committee members said they would send their recommendation to the government based on the outcome of the plant visit.

The main purpose of the visit was to have an in-depth insight into the quality, standards and manufacturing process of the auto assemblers in order to make substantial recommendations/proposals for the improvement of auto industry especially in keeping in view of the services and benefit to the consumers.

Published in Dawn, December 1st, 2021

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