Senate Committee Unhappy with High Car Prices, Prolonged Deliveries & On-Money
The Senate Standing Committee on Industries and Production was unhappy about rising car prices and prolong delivery period that led to heavy premiums being charged by dealers on locally assembled vehicles. A four-member delegation of the committee led by Senator Faisal Sabzwari visited the Lucky Motor Corporation Ltd (LMCL) and Indus Motor Company (IMC).
According to IMC chief executive Ali Asghar Jamali, the committee members asked him as to how “on-money” can be controlled. To which IMC chief suggested:
“I have given a suggestion to fix the registration of cars in the name of customers at the dealers’ end in Karachi, Islamabad and Lahore initially. Besides, we are also increasing production capacity to meet the increasing demand.”
Jamali claimed that the committee members did not ponder over rising Toyota car prices. However, he said, “we have shown a regional price comparison in which Pakistani made Toyota Corolla has still been the cheapest.” He informed the committee that the car prices comprise up to 40% of various government taxes.
On the other hand, LMCL chief executive Asif Rizvi said car prices had mainly gone up owing to rupee depreciation against the dollar. In May, one dollar was at around Rs 152-153 in the interbank market as compared to Rs 175 now, making imported kits more costlier. He said Lucky Motors had not raised the prices of its product for the last two years, except one model.
According to Asif Rizvi, soaring freight rates and logistic issues had further played havoc with the cost of production. One of the main reasons for late deliveries of vehicles was the world-wide non-availability of semiconductor chips, which has also affected the local auto industry, he added.
The committee was informed that the local industry is helpless in addressing the price hike issue which is related to the exchange rate, chip shortage and rising freight rates, the impact of which is now evident in car prices. Furthermore, freight costs are expected to increase further from January 2022. Asif Rizvi said the auto industry needs incentives and futuristic policies to promote localization levels in the vehicles in order to bring down prices and improve the country’s employment base.
Committee members said they would send their recommendation to the government based on the outcome of the plant visit. The main purpose of the visit was to have an in-depth insight into the quality, standards and manufacturing process of the auto assemblers in order to make substantial recommendations/proposals for the improvement of auto industry especially in keeping in view of the services and benefit to the consumers.