ECC meeting: Locally assembled cars are costly, based on old technology

Assemblers earn hefty returns on advance deposited by customers.

ISLAMABAD:

Despite enjoying incentives from the government, car assemblers are fleecing consumers by selling vehicles based on obsolete technology at high prices and are also earning hefty profits on the advance deposited by the consumers before delivery of cars.

In a meeting held on October 2, the Economic Coordination Committee (ECC) of cabinet criticised car assemblers, saying they had been getting incentives for several years but did not meet the commitment to the government.



The apex economic decision-making body expressed concern when meeting participants said the car assemblers were exploiting the consumers as they were unduly keeping the latter’s advance for several months and earning profits on that before actual delivery.

According to documents, the ECC took notice of negative growth in the automobile sector, which had not been recording any growth for many years notwithstanding a host of incentives provided by the government.

Not a single car manufacturer in the country had been able to complete its deletion programme even after extension in the time frame.

Moreover, the meeting noted that products of the assemblers were costly and based on obsolete technology.

The meeting was told that an auto policy was being formulated and its first draft was ready. The ECC, however, stressed that the draft should be based on a thorough review of the facilities being offered to the auto industry, the need for new entrants, existing duty structure for import of motor vehicles, standards set by the Engineering Development Board, requirement of a long-term policy framework, etc.



The draft should also take into account proposals from the assemblers, dealers and vendors of the auto industry, it said.

The ECC decided to constitute a committee comprising the minister of water and power, Board of Investment chairman, Federal Board of Revenue chairman, industries secretary and Engineering Development Board chief executive to finalise the policy draft within 45 days and submit it to the committee.

The meeting participants told the ECC that large-scale manufacturing sector performed better and grew 3.7% in July this year compared to 0.1% growth in the same period last year.

The goods which recorded an increase in their production were paper and board, rubber products, coke, petroleum products, beverages and tobacco, fertilisers, electronics, engineering products, automobiles, iron and steel products, leather products, non-metallic mineral products and chemicals.

Exports rose 3.3% while imports increased 5.7%. As a result, trade deficit was $2.9 billion in July compared to $2.6 billion in the corresponding period last year.

Published in The Express Tribune, October 9^th, 2013.

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