Dominant players: CCP initiates inquiry into price increase

Auto assemblers come under scanner of anti-trust watchdog.


Our Correspondent June 26, 2015
The inquiry has been initiated for putting unreasonable financial burden on the consumers of passenger vehicles without giving them value for money. PHOTO: REUTERS

ISLAMABAD: The country’s two largest car assemblers will face an inquiry for an apparently unreasonable hike in prices of their vehicles without justifying the raise with an upgrade of technology.

The Competition Commission of Pakistan (CCP) on Thursday announced that it has initiated an inquiry under Competition Act, 2010 into the possible anti-competitive behaviour of the two dominant car assemblers in the automobile sector. The inquiry has been initiated for putting unreasonable financial burden on the consumers of passenger vehicles without giving them value for money, according to a handout issued by the CCP.

There has been growing calls to regulate the automobile sector amid reports that the government is considering introducing a European brand in the next two years to break their monopoly.

The CCP started the inquiry after receiving various complaints and concerns highlighting the issues of high prices of Toyota and Suzuki vehicles, hefty advance payments, delay in delivery of passenger vehicles, charging of premiums for on-the-spot delivery and no facility to recall the vehicles.

The inquiry will initially cover the market for consumer vehicles ranging between the engine capacity of 800cc to 1,299cc in which Indus Motor Company Limited and Pak Suzuki Motor Company Limited are the dominant players, said the anti-trust watchdog.

One of the major concerns shared with CCP is the consistent upward trend in the prices of cars without upgrade in technology, it added.

Although prices of locally-assembled cars have increased manifold over the past years, the manufacturers have failed to take significant measures to upgrade the engines and add safety and other features corresponding with the increase in prices, the CCP observed.

Similarly, one of the gravest predicaments faced by the consumers of new cars is the requirement of hefty advance payments for placing the order to book a car.

The delay in delivery of vehicles is another burning issue. Despite having ample capacity, the delay is questionable particularly in the case of those models that have not undergone considerable changes and whose demand forecast can be made with relative certainty, said the CCP.

Published in The Express Tribune, June 26th, 2015.

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COMMENTS (7)

M M Malik | 5 years ago | Reply The Japanese auto business are silent on the un-ethical business practices of the local collaborators and corrupt bureaucracy.
Aneela | 5 years ago | Reply @ Asad Rizvi you made an amazing analysis and covered each and every part of this dirty friendly govrt policy for businesses. Thumbs up to you
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