After Sugar and Power Sectors, Govt to probe Auto Sector Practices

December 31, 2020

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The federal cabinet has requested Ministry of Industries and Production (MoIP) to conduct an inquiry on the failure of auto firms in increasing their production capacities as there is greater demand than the supply of cars from these companies leading to black marketing of local cars and resultant price hikes.

The increased demand and lack of adequate supply of cars lead to black marketing practice known as ‘on-money’ or off-market premium on the purchase price.

As per the sources, Prime Minister Imran Khan has personally asked Minister of Industries Hammad Azhar to probe the matter.

Sources have also said that many cabinet members are also not comfortable with the fact that prominent Auto Brands in the country haven’t increased their production levels in the past many decades.

The Cabinet was also told that as per Country’s auto policy, the foreign brands have also failed in localising vehicles parts and the majority of parts are still being imported.

However, Automotive Companies have long been insisting on government to impose a resale tax to eliminate practise of “On-Money”. Indus Toyota COmpany had long been publishing Advertisements, whereby asking government to eliminate practise of “Off-Market Premiums.

Auto Companies are of the view that increasing capacities requires extensive capital investment in manufacturing plants of keeping in view the long term policy of the government and Long Term Demand. However, the Government’s policy keeps on changing.

Government has recently introduced a tax on the first resale of new vehicles within 90 days last week to curb “On-Money” practise.

One critical moment for Auto Sector is lined up in 2021 when Pakistan’s Auto Policy 2016-2021 expires. Hence, Government and Auto companies will be renegotiating the Policy matters pertaining to the sector. Auto Policy 2016-21, expires on June 30, 2021.