Govt Threatens To Enforce Law Against Car Price Hikes 👊

Shortly after reducing car prices, automakers in Pakistan are planning to hike the prices back up. But their plans won’t go far as the government takes a stand against the unreasonable car price hikes. As per a recent media report, the government has demanded the automakers to justify their price hikes and threatened to enforce the law of profiteering against them.

 

Why is the government upset with the automakers?

For the first time in the history of the Pakistani automobile industry, the government reduced taxes on all locally assembled cars back in July. Under the tax relief, all automakers reduced car prices. But something was off about the auto companies doing what they were told to do, so we had our doubts all along. We sensed that the companies would turn things around and hike the price back up. 

 

Things went exactly as we feared. Only a month later, one company tried to increase the prices again. Lucky for us, the government intervened and asked the company to hold the price hike. That was the first red flag for the auto companies, but they continued planning to increase the prices. The government had no choice but to come clean and give an upfront warning.

 

Government’s warning letter to the automakers 

Addressing the matter of car price hikes, the Ministry of Industries and Production (MoIP) has sent a letter to the Engineering Development Board (EDB). The letter read:

 

“The government has very recently given significant tax concessions to automobile manufacturers in order to make cars affordable for the public. While the car manufacturers reduced their prices following the grant of these concessions, it now appears that they intend to increase prices even though it has been only a few weeks since the concessions were granted, and despite the fact that there has been no increase in costs of production.

 

This situation is clearly unacceptable, and the government may have no recourse but to initiate regulatory measures, which may include fixation of prices under the Price Control and Prevention of Profiteering and Hoarding Act, 1977.

 

You are, therefore, directed to instruct automobile manufacturers to provide their costing structures failing which, price fixation proceedings would need to be carried out unilaterally.”

 

Well, if that’s not a wake-up call for the automakers, don’t know what is. 

 

The government has put its foot down so the car companies can no longer play with the price whenever and however they want. Let’s see how the companies respond to this warning.