Government is not happy with local automakers’ failure to increase vehicle production in the country. According to a report by Profit, federal cabinet has asked the Ministry of Industries and Production (MoIP) to probe into the failure of assemblers in increasing production capacity as they are unable to meet market demand, causing black marketing of locally assembled vehicles and price hikes.
As per the report, the matter of shortage of locally assembled vehicles despite increasing demand was discussed during the cabinet meeting. The cabinet members had shown concern over major auto companies including Suzuki, Toyota and Honda not enhancing the capacity of production despite running businesses in the country for 30 to 40 years.
The federal cabinet was further informed that the Japanese companies had failed to achieve considerable localization as a large number of required parts were still being imported. Prime Minister Imran Khan has asked Minister of Industries Hammad Azhar to investigate this matter.
Responding to this, the CEO of Indus Motor Company (IMC) Ali Asghar Jamali said that they were open to any investigation. He said:
“Though I am not aware of the development, I welcome any investigation as we hide nothing. The relevant ministry is aware of the investment and localization by our company. I had requested the prime minister to introduce taxes on the resale of new vehicles within 90 days to discourage on-money. The government’s decision in this regard would hopefully address the issue of premium.”
It is pertinent to mention that to discourage the investor-made bookings and to eliminate the practice of charging on-money/ premium, the government has recently imposed a new withholding tax of up to Rs 200,000 on resale of new vehicles by original buyer within 90 days of purchase.
Furthermore auto companies and government will now negotiate the new auto policy in January 2021, which was originally planned to be discussed in December 2020. Issues related to the rising prices of local assembled vehicles and illegal premiums would also be discussed during this meeting. The current auto policy 2016-21 that went into effect in June 2016 will be expiring on June 30, 2021.