The Federal Government is reportedly in no mood to press the local car manufacturers to reduce prices despite Prime Minister's directives that measures be taken to bring car prices down, sources close to Secretary, Industries, told Business Recorder. <ins style="display: inline-table; border: medium none; height: 250px; margin: 0pt; padding: 0pt; position: relative; visibility: visible; width: 300px;"><ins id="google_ads_frame5_anchor" style="display: block; border: medium none; height: 250px; margin: 0pt; padding: 0pt; position: relative; visibility: visible; width: 300px;"></ins></ins>
"We submitted the summary to the Economic Co-ordination Committee (ECC) twice or thrice, but the 'real players' did not take up this issue," sources said. The Minister for Industries and Production, Hazar Khan Bijarani, on a number of occasions told this scribe that personally he favours commercial import of used cars to bring down the prices of locally manufactured cars but, according to him, the ECC is the proper forum to take such decisions. "Our summary is going unnoticed by the Finance Minister, who is also Chairman of the ECC, which implies that someone is behind this move to block the proposal," sources added.They said that a meeting held under the chairmanship of Secretary Planning Division had discussed the issues of car prices and role and performance of Engineering Development Board (EDB). The representative of EDB gave a detailed presentation on growth, sales and profits of the three major automobile players in the sector. The meeting was informed that 99.7 percent market share in the car segment is held by Japanese car manufacturers. Being cost-effective, Pak Suzuki Motors has a major share of 48 percent in small cars market, while Indus Motors and Honda Atlas Motors remained at 39.33percent and 11.38 percent respectively during 2009-11. The Indus Motor Company's performance in terms of profitability was positive while Atlas Honda and Pak Suzuki showed negative trend during the period.The representative of EDB elaborated that the under-utilisation of capacity, high mark-up rate, yen-rupee parity, and price hike in the international commodity market account for a rise in car prices. He suggested that tariff reduction on Completely Built Up (CBU) and Completely Knocked Down (CKD), reduction in customs duty, deletion, indigenisation, extending age limit of imported used cars, and conducive environment for new entrants, etc would be helpful in reducing the car prices by Rs 40,000 -Rs 50,000.Secretary, Planning and Development Division, observed that the local market of cars had been distorted due to high rate of CBU and CKD. The tariff reduction and deletion was meant for localisation, which has not been done. It was further pointed out that in the absence of well established mechanism of consumers' rights protection, the reduction in tariff would be meaningless.It was also noted that the quality of deletion items had positive impact on the local manufacturing units which resulted in the highest sale of Suzuki Mehran cars compared to others. He further suggested that local manufacturing of gear boxes and transmission system would provide enabling environment for cost reduction. For this purpose, Machine Tool Factory of Pakistan needs to be upgraded.The EDB suggested that the only way to compel the local car manufacturers was to allow import of used cars of 3-4 years' age, in case of small cars, and 3-5 years in case of big cars.The representative of National Tariff Commission (NTC) argued that import of used cars may be generalised, otherwise some specific people would take advantage of this facility, and the majority would suffer.However, the representative of Ministry of Commerce said that the meeting was to explore the avenues and to chalk out strategy about the reduction in car prices rather than developing a consensus on tariff reduction on import of cars.
source :finance.kalpoint