Economic Pundits in the country came with the first-ever auto policy (2016-21) to encourage the new entrants to introduce their vehicles in the market. Fortunately, the trick worked. And, for consumers, was a sigh of relief – got a variety of sedans and crossovers but with a severe downside.
Pakistan Auto industry was introduced with a list of some primary objectives like to upscale the localization, control the burgeoning car prices, make a considerable dent to the established BIG 3 Japanese car giants, eliminate the ON money culture, and enhance the build quality of the vehicles. Surprisingly, with no objective fulfilled in the last six years, consumers got nothing out of this auto policy.
Previous government developed the Auto Industry Development and Export Policy (AIDEP) 2021-2026, announced tax exemptions for locally produced cars and special perks for automakers.
But local automakers have a different story to present; got thick incentives in the name of competition and, in turn, offered highly priced crossovers far beyond the reach of middle-class men. Again, the elite earned hefty profit with the least number of vehicles – no big volume and zero intention to ameliorate localization – intransigence prevailed.
Where the Problem Lie?
Claims are made that the local auto industry has surpassed the stagnant production volume but is still not able to produce more than 250,000 units in a year. The reason is simple – automakers are more focused on profit margins rather than increasing volumes.
Where the inflation-stricken masses demand small hatchbacks with efficient fuel averages, newcomers and even existing carmakers are introducing super-expensive cars, serving a limited class with strong purchasing power.
For instance, Honda Atlas is bringing hybrid vehicle HR-V with the whooping price of 8.5 million to 9.5 million. Similarly, Toyota also announced the launch of a CKD hybrid vehicle dubbed Corolla Cross, costing more than 8 million. Most of the companies never think of budget vehicles with 660cc to 1000cc engines but something which doesn’t meet the customer’s demand. Again, low sales volume in the face of an expensive option. Concerning new entrants, the story is the same.
Even after 35, the industry is an infant and will remain the same until the policies are designed for the industry’s development rather than those in charge.
I tend to agree with the author. I advocate that the policy should be changed so that new comers should introduce up to 1000cc cars first and when a certain volumes and localization is achieved then allowed to go for the higher cc’s. Higher cc cars are more profitable to the manufacturer and thats why all are going that route and because of “Barkat of Haram ki kamai” of most of the Pakistani elite, for them its an easy buy.