Competition Commission of Pakistan (CCP) held an open hearing on 12-4-2018 (Thursday) regarding competition and consumer issues in the automotive industry. All the stakeholders were present at the hearing, and PakWheels.com was also there to represent the consumers.
At the beginning of the hearing consumers were asked to raise their concerns, many argued in front of the hearing committee, chaired by Vadiyya Khalil Chairperson CCP, that local automakers are not living up to their expectations. They harshly criticised domestic automakers for lack of innovation and sudden price hike etc.
Representatives of Indus Motor Company (IMC), Honda Pakistan and Pak Suzuki were also present at the open hearing. CEO IMC Mr. Ali Asghar Jamali represented local automakers and answered the questions raised by consumers and other automotive stakeholders.
The most asked question was what local automakers are doing to curb the menace of premium from the market. Mr. Jamali while responding to the question said that they regret that government has not taken a single step and has also ignored proposals presented to them by local automakers. So, automakers own their own are doing their best to filter out this malicious practice.
IMC has canceled the bookings of several of our cars and has even suspended two of our dealerships to curb the premium practices, Jamali asserted. The recommendations which were presented to the government were a retail mechanism for sale of vehicles and Transfer Tax etc.
Moreover, one of the participants inquired about the long delivery times of cars and their poor quality. Responding to these queries, Ali Asghar Jamali said all automakers work under technical assistance agreements (TAA) with their international counterparts and ensures all standards are met, i.e., quality. Under the new auto policy, 2016-21 automakers are required to give KIBOR +2 percent as a penalty if they fail to deliver the car in two months. CEO Indus Motor Company said that industry had paid 1.5 billion so far in penalties.
It is to be noted here that car makers give 5-6 months of delivery times to its customers. Car makers can easily avoid the penalty as they should place orders which they can deliver in two months period, avoid overbooking of the cars. Each automaker knows how much vehicles their plants can produce. It is surprising why automakers are booking more orders than their capacity, which leads to long delivery times that translates further into penalties.
According to Mr. Jamali IMC has invested $40 million to increase its capacity to lessen the delivery time and to cater the growing needs of cars; additionally, Suzuki has spent $63 million and is planning to invest $460 million, which is indeed a good step. Honda Pakistan is also expanding their operations in the country by spending $35 million in the industry.
In the meeting, it was revealed by Jamali that local industry had achieved 60 percent localization. However, it is worth mentioning here that raw materials for localized parts are still being imported.
While talking about the sudden hike in the prices of vehicles, CEO IMC said that car prices are up due to the devaluation of rupee, steel prices, and power outage, etc. The rupee has devalued almost 10 percent in short span of time; however, on the other hand, the prices of cars went up by 4 percent, he added.
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