LAHORE, Aug 30: Automobile assemblers have reacted strongly to the recent government intervention in the pricing of cars as a result of which Indus Motors had to rescind the increase in rates of its cars.

"This kind of intervention by the government should only be an exception not a norm," said a senior executive of a car company. He said the company had revised the price of two of its models upwards after adding a few accessories to them.

"The assembler is absorbing the increase in the input cost for quite some time. The rising yen-rupee parity and enhancement of rates by local vendors has impacted upon the input cost in addition to the volatile rate of steel in world market.

In these circumstances, it is forced to raise its price which it has been maintaining since 2002," he said. The executive said the government should not try to interfere with the market forces because it would send a wrong signal to investors. "Customers and manufacturers must be free to determine their own relationship," he insisted.

He said the government in its budget for 2004-05 had already reduced duties on the import of new cars to create a competition for the local car assemblers. "Some of the high-end customers have already begun importing. So if an assembler raises its prices, he does it on its own risk and the government shouldn't interfere with the pricing of the locally assembled cars," he said.