Govt Asks Automakers to Justify Price Hikes

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Ministry of Industries and Production has informed the Public Accounts Committee (PAC) in a briefing that a monitoring committee has sought an explanation from automakers for frequently increasing car prices.

PAC Chairman Rana Tanveer Hussain questioned the industries ministry about the steps it had taken to keep a check on successive price hikes of locally assembled vehicles and their substandard quality. The ministry informed the PAC that in the automobile policy for 2021-26, the government introduced a monitoring committee, which had already sought an explanation from automobile manufacturers for increasing prices.

Related: Pakistan Auto Industry – What Is Going On…?

The committee would seek justification from the automobile sector and compare their statistics with the price increase in raw material and their operational cost. Besides, the committee would also examine the compliance of automobile manufacturers with the safety standards introduced in the next five-year policy.

According to a working paper of the ministry, the automotive sector’s production accounts for 3% of the country’s GDP. It employs 500,000 people and generates 2.4 million indirect jobs. It said Pakistan had achieved up to 73% localization in cars and light commercial vehicles (LCVs), 90% localization in tractors and 94% in motorcycles.

Related: Government Not Happy with Automakers’ Failure to Enhance Production

Engine parts and some critical parts that require heavy and hi-tech instruments to be built are being imported, whereas parts like structure, exterior, interior, suspension, brake system, etc. are being manufactured locally. The ministry’s stats also revealed that new entrants in the automobile sector had brought a $573.68 million investment.

MG cars port

During the meeting, PAC member Khawaja Asif accused a new entrant of importing vehicles through under-invoicing. He alleged that automobile manufacturers, cigarette makers and private power producers had become a mafia. “They are so powerful that they can influence the parliament,” he said. The PAC asked the industries ministry of taking steps to discourage the import of luxury vehicles.

Related: Government Officials Accused of Taking Billions from Auto Sector

However, the industries secretary expressed helplessness, saying that the ministry could only increase import duties in this regard. However, orders for sport utility vehicles (SUVs) are not declining despite increase in duties, the secretary said.

Source: Dawn

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