In an effort to break the auto manufacturers’ cartel, the government is considering establishing a pricing regulating board to regulate automobile prices.
According to reports, carmakers have assured the government that they would not raise vehicle costs as a result of a decrease in taxes on the sector in the financial year 2021-22 budget.
Sadly, they failed to achieve their pledge and raised automobile costs, which infuriated the Ministry of Industries and Production.
Authorities emphasized that carmakers had also managed to accept “own money” from customers in exchange for prompt delivery of new vehicles.
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They disclosed that in August 2021, the Ministry of Industries was due to submit an auto policy for evaluation to the Economic Coordination Committee (ECC). However, the programme was postponed due to an increase in automobile pricing by the manufacturers.
According to reports, the ECC discussed the content of the proposed car policy during its conference on December 10. The ECC’s technical advisory group, however, advised that the subject be rescheduled. Following that, the ECC postponed the policy review.
As per reports, the Ministry of Industries was also dissatisfied with the Engineering Development Board (EDB), which it felt was not doing enough to safeguard buyers.
During previous Pakistan Muslim League-Nawaz (PML-N) government’s term, then-prime minister Nawaz Sharif ordered to abolish the EDB after receiving charges of misconduct from various sources.
According to officials, a proposal was recently circulated that urged the formation of a pricing control board comprised of representatives from the Ministry of Industries, the EDB, and the auto sector to make judgments on automobile price revisions.
According to them, the minister of industry directed relevant officials in his ministry to get opinion from the Law Division on the plan.
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The EDB, on the other hand, opposed to the formation of the pricing regulating board. Currently, the EDB is the domestic industry regulator, including car manufacturers.
The previous administration also enacted an auto policy aimed at breaking the monopoly of domestic car manufacturers. It was noticed that manufacturers were utilising outdated technologies and had not completely implemented the auto components elimination programme.
It was taken seriously that carmakers were charging people a premium for new car delivery.
The previous administration also provided incentives to potential entrants interested in establishing vehicle manufacturing factories in Pakistan. As a result, numerous firms created production factories, which have since begun producing automobiles.
The present Pakistan Tehreek-e-Insaf (PTI) administration is likewise concerned about rising automobile costs and the extraction of “own money” from buyers.
Makhdoom Khusro Bakhtiar, Minister of Industries, promised a drop in car costs in July 2021, after tax and tariff savings on autos in the FY22 budget.
Read More: Government plans to raise taxes on vehicles above 1800cc
The government eliminated federal excise charge and extra customs duty on automobiles, as well as reduced sales tax on small vehicles.
The government reduced the federal excise charge on all automobiles with engines up to 3,000cc by 2.5 percent in the Finance Bill 2021. It eliminated excise duty on automobiles 660cc to 1,000cc and reduced general sales tax on autos up to 1,000cc to 12.5 percent from 17 percent.
Bakhtiar also indicated that subsidies and other methods were being used to expand automotive manufacturing to 300,000 units this year.