Govt to probe local carmakers

Monitoring body asks about factors, justifications for increase in vehicle prices

ISLAMABAD:

Amid talk of malpractices behind the massive jump in car prices, the government has decided to probe carmakers for their alleged intention to plunder the consumers.

In a meeting of the monitoring committee for the automobile industry on Thursday, the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) alleged that the local car manufacturers were involved in malpractices regarding
vehicle pricing.

The association also pointed to the deletion programme, which “automakers commit to in every auto policy, but fail to fulfil the commitment”.

Recently, the Public Accounts Committee (PAC) also expressed concern over the massive increase in car prices and directed the Ministry of Industries and Production to address the issue.

Previously, the government announced several incentives in the new auto policy and granted tax exemptions in order to reduce prices.

It also unveiled tax relief for the carmakers in the budget for the ongoing financial year, which was followed by the auto policy 2021-26.

Moreover, the government called for the withdrawal of tax incentives “if the carmakers increase prices”.

The automakers were committed to reducing the prices. However, soon after the budget, they announced an increase in vehicle prices that irritated the federal government.

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The government was set to announce a new auto policy in August last year but it was delayed due to the increase in car prices. In that regard, the government decided to conduct a forensic audit of the carmakers.

The Engineering Development Board (EDB) will hire an independent expert to conduct the audit related to the car prices.

EDB is a regulator of the auto industry. However, it has failed to play its due role to keep a check on car prices.

The previous government had even decided to wind up the EDB due to alleged corruption, but the decision was withdrawn later.

The industries and production minister floated the idea of setting up a price regulatory board to keep a check on prices of cars, but the EDB opposed the decision.

Even the experts were of the view that the government should set up such a board to keep an eye on the carmakers.

The high-level meeting of the monitoring committee for the automobile industry was held under the chairmanship of Federal Secretary for Industries and Production Jawad Malik.

The forum asked about the factors and justifications for the recent price hike for different models of cars.

The meeting was told that the recent price hike was due to the rupee-dollar parity, increase
in freight charges and raw material prices including the operational costs.

The industry also provided
details of the causes of late delivery, CKD unit imports and production capacity.

The monitoring committee expressed concern over the safety features in automobiles.

After due deliberations, the chair directed to carry out a forensic analysis of car prices in comparison with the factors indicated by the industry as a reason for price change through an independent expert.

The secretary also instructed the authorities concerned to complete the forensic analysis within two weeks.

The chair asked the automotive industry to provide a localisation plan with a timeframe as well as safety features compliance report to the ministry.

Representatives of automakers, Paapam, EDB, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Competition Commission of Pakistan (CCP) and Ministry of Science and Technology participated in the meeting.

Published in The Express Tribune, April 1^st, 2022.

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