Govt asks carmakers to explain price hikes

Published March 31, 2022
A member of Public Accounts Committee has alleged that automakers, cigarette companies and private power producers ‘have become a mafia’. —Reuters
A member of Public Accounts Committee has alleged that automakers, cigarette companies and private power producers ‘have become a mafia’. —Reuters

ISLAMABAD: A monitoring committee has sought an explanation from automakers for gradually increasing prices, the Ministry of Industries and Production informed the Public Accounts Committee (PAC) on Wednesday.

The ministry and the Engineering Development Board briefed the PAC on the automobile industry. PAC Chairman Rana Tanveer Hussain questioned the industries ministry about the steps it had taken to keep a check on successive price hikes of locally manufactured vehicles and their substandard quality.

The ministry informed the PAC that in the automobile policy for 2021-26, the government introduced a monitoring committee, which had already sought an explanation from automobile manufacturers for increasing prices.

He said the committee would seek justification from the automobile sector and compare their statistics with the price increase in raw material and their operational cost.

Besides, the committee would also examine the compliance of automobile manufacturers with the safety standards introduced in the next five-year policy.

According to a working paper of the ministry, the automotive sector’s production accounts for three per cent of the country’s GDP. It employs 500,000 people and generates 2.4 million indirect jobs.

It said Pakistan had achieved up to 73pc localisation in cars and light commercial vehicles (LCVs), 90pc localisation in tractors and 94pc in motorcycles.

Engine parts and some critical parts that require heavy and hi-tech instruments to be built are being imported, whereas parts like structure, exterior, interior, suspension, brake system, etc. are being manufactured locally.

The ministry’s stats also revealed that new entrants in the automobile sector had brought a $573.68 million investment.

The Auto Industry Development Export Policy includes the promotion of small cars, localisation, incentivising the introduction of new products in tractors and motorcycles, consumer protection, and the promotion of modern technologies, such as electric and hybrid vehicles.

Statistics show that 127,726 cars were locally manufactured during the first seven months (July to January) of this fiscal year.

Besides, 18,629 jeeps and sports utility vehicles, 6,407 LCVs, pickups and vans, 3,760 trucks, 339 busses, 32,585 tractors and 1,139,877 motorcycles were also produced during the period.

During the meeting, PAC member Khawaja Asif accused a new entrant of importing vehicles through under-invoicing. He alleged that automobile manufacturers, cigarette makers and private power producers had become a mafia. “They are so powerful that they can influence the parliament,” he said.

The PAC asked the industries ministry of taking steps to discourage the import of luxury vehicles.

However, the industries secretary expressed helplessness, saying that the ministry could only increase import duties in this regard. However, orders for sport utility vehicles (SUVs) are not declining despite increase in duties, he said. 

Published in Dawn, March 31st, 2022

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