Government Considering to ‘Fix’ Car Prices in Pakistan

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Government is considering to ‘fix’ prices of local assembled cars in Pakistan since its not happy with local assemblers having learnt that they plan to jack up prices once again especially after the recent tax cuts. The government has already made one automaker withdraw the price hike and has threatened to fix car prices for all assemblers.

In a letter, the Ministry of Industries and Production has told automakers to provide justification for increasing car prices. It said the government reduced duties and taxes to enable the general public to buy cheaper cars and companies to sell higher volumes. The letter written to the Engineering Development Board (EDB) undersigned by Controller General of Prices and Secretary Ministry of Industries and Production Kamran Ali Afzal, reads:

“The government has very recently given significant tax concessions to automobile manufacturers in order to make cars affordable for the public. While the car manufacturers reduced their prices following the grant of these concessions, it now appears that they intend to increase prices even though it has been only a few weeks since the concessions were granted, and despite the fact that there has been no increase in costs of production. This situation is clearly unacceptable, and the government may have no recourse but to initiate regulatory measures, which may include fixation of prices under the Price Control and Prevention of Profiteering and Hoarding Act, 1977. You are, therefore, directed to instruct automobile manufacturers to provide their costing structures failing which, price fixation proceedings would need to be carried out unilaterally.”

The EDB General Manager (Policy) Asim Ayaz said that they (EDB) have met with car companies and they (assemblers) have asked us to provide a standard format to supply that data. It will be easier that way. Asim Ayaz added that healthy competition and a vigilant eye of the government can keep car prices in check, however, it will be a difficult task for the government to control car prices since each company has a unique cost of production & different product specifications etc.

Source: SAMAA

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