Cabinet directs inquiry into auto companies

Published January 1, 2021
LOCALLY-ASSEMBLED cars are on display at a showroom.—File photo
LOCALLY-ASSEMBLED cars are on display at a showroom.—File photo

ISLAMABAD: The Fed­eral Cabinet has directed the Ministry of Industries to inquire into the production capacity of existing car makers, alleging that they have failed to increase their output as per the market dem­and resulting in overcharging and increase in prices of locally-assembled cars.

The minutes of the meeting held on Tuesday (Dec 29) stated that the “the cabinet directed the Minister of Industries and Production to look into the reasons as to why the foreign automobile manufacturers in Pakistan defaulted on indigenisation of motor vehicle manufacturing through deletion programme and make a presentation to the cabinet.”

Meanwhile, sources said that Prime Minister Imran Khan asked Industries Minister Hammad Azhar to look into why the three main auto companies that have been doing their business in the country for up to four decades were failing to localise manufacturing of spare parts and they were still importing majority of parts.

The issue was taken up after some ministers complained to the prime minister that the shortfall in the supply of locally assembled cars was leading to black marketing and the dealers were charging premium or ‘on- money’ for immediate delivery.

A senior official of the Ministry of Industries told Dawn that the demand for vehicles has increased after import of used vehicles has been restricted as strict conditions have been imposed. For their part industry players blame the government for delays in decision making.

“The industry has been demanding from the government to introduce taxes on resale of new vehicles within 90 days of first purchase — this will discourage the on-money as it will make the car too expensive for resale,” said a senior official in one of the auto makers, and added that the government has yet to formally issue an ordinance in this regard.

PM asks industries minister to find out why shortfall in vehicle supply persists

On the issue of localisation Chief Executive Officer of Indus Motor Ali Asghar Jamali said that all the authorities including the industries ministry was aware of the investments and efforts to promote localisation done by Toyota Pakistan as well as other companies.

He added that the fresh round of negotiations with the government were scheduled to start in near future over the new Auto Policy as the existing expires on June 30, 2021.

Mr Jamali said the issues related to prices of locally-assembled and manufactured vehicles, premium money as well as localisation were the main agenda items to be discussed in this round.

Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Abdul Rehman said that up to 65pc parts in various cars were locally made and this can be enhanced to 80pc. “But it needs coordinated efforts by all stakeholders, besides the government has to maintain its policies over a long period to ensure the confidence of investors to establish the industries.”

At the same time, he added that 100pc localisation was not the case even in Japan and Germany, because of various factors such as economies of scale, international trade requirements and presence of technical expertise.

Published in Dawn, January 1st, 2021

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Military option
Updated 21 Nov, 2024

Military option

While restoring peace is essential, addressing Balochistan’s socioeconomic deprivation is equally important.
HIV/AIDS disaster
21 Nov, 2024

HIV/AIDS disaster

A TORTUROUS sense of déjà vu is attached to the latest health fiasco at Multan’s Nishtar Hospital. The largest...
Dubious pardon
21 Nov, 2024

Dubious pardon

IT is disturbing how a crime as grave as custodial death has culminated in an out-of-court ‘settlement’. The...
Islamabad protest
Updated 20 Nov, 2024

Islamabad protest

As Nov 24 draws nearer, both the PTI and the Islamabad administration must remain wary and keep within the limits of reason and the law.
PIA uncertainty
20 Nov, 2024

PIA uncertainty

THE failed attempt to privatise the national flag carrier late last month has led to a fierce debate around the...
T20 disappointment
20 Nov, 2024

T20 disappointment

AFTER experiencing the historic high of the One-day International series triumph against Australia, Pakistan came...