Govt to investigate the failure of automotive firms in increasing production

The federal cabinet has reportedly directed the Ministry of Industries and Production (MoIP) to probe the failure of automotive firms in increasing production capacity as they have been unable to meet market demand thereby causing a surge in prices and black marketing of locally produced vehicles.

According to a report by Profit, the Cabinet met on Tuesday to discuss the shortage of locally manufactured vehicles despite increasing demand. As a result of the inability of production capacity to catch up with demand, black marketing of vehicles and the purchase of vehicles ‘on money’ have risen.

The report states that according to a source, Prime Minister Imran Khan himself ordered Minister of Industries Hammad Azhar to investigate the matter.

The source went on to claim that members of the Cabinet had expressed concern over major automotive companies, including Honda, Toyota, and Suzuki not being able to enhance the capacity of their production despite running their business in the country for more than three decades.

The Cabinet was informed that as per the auto policy, the Japanese companies had also failed to localize vehicle parts and were still importing the majority of parts from Japan.

However, a representative of an auto firm claimed that auto companies have long been advising the government to impose taxes on the resale of new vehicles for a given time period to discourage premiums.

According to Profit’s report, the representative further said that setting up manufacturing plants of various parts needs huge investment which could be made according to space in the market, keeping in view the long term policy.

“Unfortunately, policies in the country keep changing which risk the major investment of investors,” the representative stated.

Interestingly enough, officials of the Engineering Development Board (EDB) were unaware of the Cabinet’s direction. Despite repeated attempts made by Profit to get in touch, secretary Industries did not attend the phone to comment on the issue.

Furthermore, sources said that the demand for vehicles in the country has increased after the government’s decision to restrict the import of used vehicles through imposing strict conditions.

“The restrictions on the import of used cars through the baggage system have almost halted imports,” the sources reportedly said.

According to Profit, Indus Motors Chief Executive Officer (CEO) Ali Asghar Jamali said that they were open to any investigation.

“Though I am not aware of the development, I welcome any investigation as we hide nothing. The relevant ministry is aware of the investment and localization by our company,” he said.