• Says small car prices will come down in a day or two after tax concessions
• Cabinet to approve new policy next month

ISLAMABAD: Minister for Industries and Production Khusro Bakhtiar has said that the government aims at creating nearly 400,000 new jobs with the increase in production of cars and motorcycles and expansion in the auto industry in one year.

Speaking at a news conference with Minister for Information and Broadcasting Fawad Chaudhry here on Wednesday, he said: “This year, Insha Allah, 400,000 new jobs will be created in the production of cars and motorcycles.”

While highlighting salient features of the new auto policy, he said it would be presented before the nation after its approval from the federal cabinet in the first week of next month.

The minister said the total capacity of the country’s car manufacturing sector was 415,000 units per year. Last year, 164,000 cars were manufactured and now efforts were being made to increase the production to 300,000 units this year.

For this purpose, he said, there was a need to reduce the prices of cars, which the government had already done through the federal budget.

Mr Bakhtiar said the government had already abolished Federal Excise Duty (FED), additional customs duty and general sales tax on small cars in the budget. He said that with these measures, there would be a reduction of Rs105,000 in the prices of Alto 660cc range cars manufactured by Suzuki, Rs142,000 in the prices of the cars up to 1,000cc and Rs186,000 in the prices of Cultus.

He said the new prices would be notified by the companies in a day or two. The companies were expecting a rise in the demand as well as the production of cars with these measures, he added.

The minister said with the increase in the production of cars, 300,000 new jobs would be created in the country this year. Similarly, he said, this year 2.6 million motorcycles were manufactured and next year, the production would increase to 3m. This increase in the production of motorcycles, he said, would further create another 75,000 jobs. He explained that new jobs meant new ventures for the people who would be involved in the production, sale, after-sale service, spare parts and dealership etc.

Mr Bakhtiar said they were creating facilities for those who wanted to buy cars for the first time for their families. He said the government had decided to reduce the upfront prices of the cars to 20 per cent, besides making the procedure of getting cars on installments easy.

The minister said that for making the country’s development sustainable, the government needed to develop the engineering and industry sector.

In the new auto policy, he said, the focus was on “localisation” of the auto industry, which generated Rs350 billion revenues. Moreover, he said, the government wanted to make the auto industry export-oriented. He said the foreign companies would be bound to export a certain number of vehicles in proportion to their exports.

With the reduction in prices, he said, the demand would increase and since production capacity took time to increase, there was a possibility that the country would face a “demand and supply gap” problem.

The minister said to overcome the issue of payment of extra amount to get early delivery of the vehicles, generally known as “own”, the government had decided that the purchaser would have to get the car registered in his name. In this way, he said, only that person would be able to get the vehicle registered, who would purchase it. He said people would only be able to get cars booked online so that the customers could see the stages of manufacturing of their booked vehicles.

Similarly, he said, if a manufacturer delayed the delivery of the car within 60 days, it would have to pay the compensation. He said the registration of vehicles would be time-bound after which the purchaser would have to pay heavy fine ranging from Rs50,000 to Rs200,000. And this fine, he said, could be increased up to the 10pc of the total price of the car to discourage the “own system” and to minimise the space for those who exploited the situation due to the demand and supply gap.

In the new policy, he said, the government would also focus on increasing and improving safety features in the vehicles in line with international standards. He said the government would give incentives for electric and hybrid vehicles.

Mr Bakhtiar said the auto sector was one of the major industrial sectors and it had the potential to drive the entire economy of the country as its share in large-scale manufacturing was 7.8pc.

Speaking on the occasion, Fawad Chaudhry said the economy had been put in the right direction during three years of the Pakistan Tehreek-i-Insaf government.

In reply to a question, he said Finance Minister Shaukat Tarin had proceeded abroad for medical checkup and he would be back on Monday.

Published in Dawn, July 8th, 2021