Public Accounts Committee (PAC) has expressed its reservations over repeated car prices hikes and lack of safety features in locally assembled cars. The dissatisfaction was shared during a meeting of PAC, Ministry of Industries and Production, Ministry of Finance and Engineering Development Board.
During the meeting, PAC Chairman Rana Tanveer Hussain asked the industries ministry about its steps to keep a check on repeated price hikes of locally assembled cars. He also questioned the “substandard quality” of these vehicles.
Monitoring Committee and Car Companies
In response, the ministry said that the government established a monitoring committee under the new auto policy (2021-2026). “The committee had already sought an explanation from the auto industry over the issue,” the ministry added.
The ministry further added that the committee would seek justification from the companies and compare their statistics with price hike in raw materials and their operational cost. “The committee will also examine the industry’s compliance with safety standards,” the ministry said.
Safety Features
As mentioned earlier, PAC expressed dissatisfaction over the lack of safety features in locally assembled cars. Discussing this point, Engineering Development Board (EDB) that international auto standards will be implemented in a phased manner. “15 standards would become mandatory after July 2022,” the EDB head told PAC.
Localization
As per a working paper of the finance ministry, the auto industry’s production accounts for 2.8% of the country’s GDP. “The sector employs 500,000 people and generates 2.4 million indirect jobs,” the paper said. It further added that Pakistan had achieved up to 73% localisation in cars and light commercial vehicles, 90% localisation in tractors, and 94% in motorcycles.
If the numbers are true, then repeated price hikes are a serious concern. The companies, both car and bike, have mentioned increasing shipping charges and global raw material rates have led to price hikes, but it should not impact that much if up to 94% are locally assembled.
Does it mean that companies assemble just small parts locally and call it localization? Secondly, which formulas are these companies following to increase the prices repeatedly? We think there should be a proper body with the right authority to investigate this matter.
What do you think about the repeated price hikes? Do you think they are justified? Share your thoughts in the comments section.
In US they can price a graphics card as $1000. The price comes down sharply when no one buys that. Then some investors come for bitcoin mining and the card prices jumps to $4000.
Its all about demand and what the customers are willing to pay for it. We are willing to pay that amount for a crappy little car, why wouldn’t they not charge you for that. But if we stop buying, the prices will automatically come down.
Junaid is very right. When PK people are willing to buy a car at any cost, then why companies did not go for price increase? Even on this high price we are getting delivery date of 5-6 months means there is huge demand. We all are responsible for it. Just go for boycott the car purchase. Regards