Why cars are expensive in Pakistan?
What comes to your mind when you think about buying a car in Pakistan – taxes? Duties? Little or almost no safety and quality features or almost no value for your money?
That’s right; not only this is what produced and sold but, at the moment; there is no focus at all on the production of cheap cars having features of international standard.
Automobile industry
A talk show shed led on the issues pertaining to the automobile industry; pricing mechanism hurdles in localization of industry, protection of consumers’ interests, safety and quality standards, government’s role, future outlook, and the next five-year policy as well as the future of electric vehicles in Pakistan.
The hosts – Shahbaz Rana and Kamran Yousaf – discussed in detail the factors that influence the pricing mechanism; compared the brands with India and dug deeper into the issues being faced by the consumers.
Suneel Munj, the co-founder of PakWheels.com, said that there was no doubt that cars were not only expensive; but there was no clear policy to ensure safety and quality features in Pakistan.
“Cars are expensive but the real issue is that the buyers do not get the best value for their money,” Munj said; adding overpricing and that too without the international standard safety and quality features was the real issue.
MNA Ali Pervaiz said that “cartelization” is evident from the heavy presence of specific players in the automobile industry in the market. The lawmaker emphasized the need for providing a conducive environment and positive competition.
Pervaiz also blamed the ban on the import of cars for cartelization.
Engineering Development Board
Engineer Asim Ayaz of the Engineering Development Board (EDB) – the apex government body; under the Ministry of Industries and Production – however, said that the government did not control prices nor the features; adding that the EDB monitors Completely Knockdown (CKD) units’ imports. “Top-of-the-line vehicles have all the international features,” Ayaz said.
“Price control should a subject of the government instead of the auto industry,” Munj incorporated, adding that the industry should ask to explain how different things – taxes, dollar rate, and local production of parts – influence prices and the government should work on how prices can reduce. “The government should monitor the auto industry just like it monitors a retail shop,” he said.
Pervaiz said that reasonable competition should increase and defects in the fiscal policy pertaining to the auto industry must also identify, adding that increasing the car-manufacturing volume will reduce prices.
“The situation will get better when the competition will increase,” Ayaz said, adding that things will start getting better from this year as several new players have obtained licenses and a few have already started working in Pakistan.
“The government should effectively play a regulator’s role to protect consumers’ interests,” Munj said. On the auto policy, he said that “consistency is important”.
Reduce car prices
Suggesting a way forward to reduce car prices, Munj said, the government should begin; by reducing taxes and making it mandatory for the industry too to not increase prices.
Pervaiz suggested that the government should revive the Competition Commission of Pakistan; so that it could create a competitive environment for the industry. He was all in for promoting the “made in Pakistan” philosophy; saying the auto industry should also give reasonable protection.
Ayaz while emphasizing that the consumers should the No 1 priority for the government said the “big three” auto companies have also invested a huge amount of money in Pakistan.
During the discussion, issues pertaining to the import of cars, transfer of technology, upcoming auto industry policy, and electric as well as hybrid vehicles also discussed.
