According to commerce ministry officials, the quality of locally-made cars was deteriorating with the passage of time. STOCK IMAGE
ISLAMABAD: The government has taken a strong notice of the hike in car prices and the slow delivery of vehicles to charge an extra amount from consumers and has taken the issue to the Competition Commission of Pakistan (CCP).
At present, the CCP is finalising an assessment study on the automobile sector and is also dealing with a case alleging cartel formation by the car dealers.
The government has brought into the notice of CCP the monopolistic practice of local car makers who had not cut prices and are using delay tactics in delivery of cars to consumers.
A senior government official said the Engineering Development Board (EDB) had written letters on February 4 to three local players in the auto industry, calling for an immediate reduction in car prices following a decline in the Japanese yen.
The official said that the EDB communicated in separate letters to the executives of these companies that the yen had led to a price hike in local cars when it was on the rise, but there has been no cut following a sharp decline in the currency.
Separately to the chief executive of a car manufacturer, the EDB said that it had received complaints that the company had been involved in slow delivery of cars to the consumers despite receiving money.
“We have received complaints that the company takes four to five months to deliver cars to the consumers, which is unjustified,” said the EDB, calling for an immediate action in this regard. The board also sent a copy of this letter to the CCP for action. The Ministry of Commerce has already expressed reservations about high prices and poor quality of locally-made cars as the manufacturers wanted to discourage the import of used cars in the new auto policy.
According to the ministry officials, the quality of locally-made cars was deteriorating with the passage of time. They said even the quality of imported used cars in Pakistan was far better and therefore consumers were switching.
According to officials, the Federal Board of Revenue (FBR) also argues that the government had given incentives to the local car industry but it had not flourished and consumers were even facing high prices.
The government now wants to announce some incentives for new entrants into the auto industry to ensure competition that would lead to a decline in car prices.
Published in The Express Tribune, February 18th, 2015.
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