Govt to Investigate Automakers’ Failure to Increase Production

In recent news, the federal government has instructed the Ministry of Industries and Production (MoIP) to launch an investigation in automotive firms to investigate their inability to increase their production capacity.

As per a report shared by Profit, some automakers had claimed to be unable to meet the market demand, which had resulted in the price increasing culture and dealers asking for premiums or ‘on money’ in addition to a Manufacturer’s Suggested Retail Price (MSRP).

Reportedly, the government is of the view that the shortage of vehicles in the market and the rise in their demand is what has led to the promotion of the culture.

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The Cabinet reportedly held a meeting on Tuesday to deliberate over this concern, following which Prime Minister Imran Khan directed the Minister of Industries and Production Hammad Azhar to launch a probe into the matter.

As per reports, the Cabinet also nominated the Toyota Indus Motor Company (IMC), the Pak Suzuki Motor Company (PSMC), and Honda Atlas Cars, saying that despite having been in the market for three to four decades, these companies had not been able to increase their production capacity to meet the rising market demand.

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The cabinet also discussed that the automakers had failed to localize vehicle parts and had continued to import them from Japan while allowing themselves to keep the prices of the vehicles high.

A representative of an automotive company, as per the report, said that the automakers had been requesting the governments for a long time to impose taxes on the resale of newly-bought vehicles in order to eradicate the ‘on money’ culture that had been created by the dealerships.

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He further added that setting up facilities to manufacture mechanical parts and various electric components in Pakistan would require a huge investment. That would only be successful if the government introduces a sustainable policy in Pakistan.

“Unfortunately, policies in Pakistan keep changing putting the investors’ plans for making a huge investment at risk,” he said.

The Engineering Development Board (EDB) was reportedly oblivious of the Cabinet’s directions and did not respond upon being reached by media. The report also added that the CEO of Indus Motors, Ali Asghar Jamali, had also been contacted by the media and he had remarked that he welcomes any kind of investigation that the government wishes to conduct in his company.