Govt to conduct forensic audit of car prices

As the prices of cars have skyrocketed in the country for, what the automotive industry claims, devaluation of currency, freight price hike etc. the government has decided to carry out forensic audit/analysis of the price hike.

During a meeting of the monitoring committee for automobile industry presided over by Federal Secretary for Industries & Production Jawad Malik, the committee has expressed concerns over massive price hikes in the past 5-6 months and safety features in automobiles, sources informed.

According to insiders, though the representatives of the auto industry tried to convince the committee regarding price hike citing the reasons of devaluation of rupee against dollar and other reasons, the committee decided to carry out the forensic audit through a private firm.

As per officials the meeting was attended by representatives from automakers, Pakistan association of automotive parts and accessories manufacturer (PAAPAM), Engineering Development Board (EDB), Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Competition Commission of Pakistan (CCP) and Ministry of Science & Technology.

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The meeting had earlier sought factors and justification for recent price hikes in different models of cars across the board.

According to a representative of car manufacturers/assemblers, in the meeting it was informed that the recent price hike is due to dollar rate (USD to PKR), increase in freight charges and raw materials including operational cost. “Apart from the devaluation of currency, the freight charges have increased by 200 per cent and the same would ultimately be reflected in the prices of vehicles,” he said while talking to this scribe after the meeting.

“We would welcome any kind of probe or forensic analysis regarding the jump in car prices as there are solid reasons for the increase in cost of production,” he added.

According to sources, the Ministry of Industries and Production has decided to hire the services of private firms or experts to probe the matter. After due deliberations, the committee directed to carry out forensic analysis of car prices in comparison with factors indicated by the industry as a reason for price change through independent professional expertise. Secretary Industries, sources say, has instructed to complete the forensic analysis within two weeks. The Chair also asked the automotive industry to provide a localization plan with a time frame as well as safety features compliance report to the Ministry.

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During the meeting the auto industry representatives also provided details on causes of late delivery, CDK imports and production capacity.

During the meeting the local car assemblers were largely criticized for producing lower quality vehicles despite the high prices. On safety issues of the locally assembled cars, the meeting was informed that accession to WP 29 regulations was envisaged in Automotive Industry Development and Export Policy (ADP) 2016-21 and its role has been maintained in the new policy. Pakistan has opted for 17 regulations comprising brakes, steering, tires, lighting, safety belts, seats, airbags, collision, safety glazing, mirrors and cameras, anti theft devices etc. for cars and heavy commercial vehicles.

As per documents available, the automotive industry, being the fastest-growing industries in the country, employs a workforce of 500,000 and 2.4 million indirect employment.

The local car manufacturers/assemblers claim to achieve up to 73 per cent localization in cars and LCVs, 90 per cent localization in tractors and over 90 per cent in motorcycles. Mostly engine parts and some critical parts which require heavy investment and hi-tech parts are being imported while other parts including structure, exterior, interior suspension, brake system etc are being manufactured locally.

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