The Ministry of Industries and Production has told auto manufacturers to justify the elevated prices of cars, failing which, the government will enforce the law on profiteering against them.
The directive was issued in a letter written by the Engineering Development Board (EDB) which is under the Ministry of Industries and Production and regulates the auto and cell phone industries.
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.
The General Manager (Policy) of the EDB, Asim Ayaz, revealed that “the Ministry of Industries and Production has asked the car companies to share their costing structure and justify any price hike”.
He added that EDB representatives met with car companies and they have asked the government to provide a standard format to supply the data as it will be easier this way.
In order to make cars affordable and to increase sales volume, the government had recently introduced its Auto Policy 2021-2026 under which automobile manufacturers were given tax incentives on Additional Customs Duty (ACD) and Federal Excise Duty (FED). This had reduced the prices of vehicles but manufacturers have been trying to raise prices again over the last few weeks while earning the disapproval of the government.