LAHORE: The Auto Industry Development Policy (AIDP) for 2016-2021 is ending this year but numerous customer oriented objectives of the policy have not been achieved yet despite introduction of many new cars in the country.
A key objective of the AIDP was to ‘Ensure consumer welfare through provision of quality, safety, choice and value for money’ and in this regard the policy allows new entrants in the country to provide choice at affordable rates for a common man. However, despite the concession on duties, 50% on CBU import for 100 units and 10%/25% on CKD, no new entrant has been able to offer an impressive and competitive price so consumer welfare is still a distant dream.
Many new entrants have introduced vehicles in the price range above 4 million which by no means are meant for masses, who were more interested in categories below 1000 cc. Interestingly, only variants with 1000cc or below engine capacity have been launched in Pakistan (Kia Picanto and Changan Karvaan, both 1000 cc) and even after duty concessions, the prices of models that were already available in Pakistan (Suzuki Cultus, Suzuki WagonR, Suzuki Alto), were in same range.
Most attractive segment for new entrants was compact SUVs. No OEM has been successful to offer cheaper variants despite duty concessions. Even the Chinese cars including DFSK Glory and MG the price tag is reaching as high as 4.5 million and 5.4 million, respectively. The first compact SUV launched by a new entrant, KIA’s Sportage, is being sold at a massive price tag range Rs4.9 million to 5.4 million. The prices of Hyundai’s Tucson range from 5.1 million to 5.6 million.
New entrants have also increased prices within a couple of months of their launch. The Karvaan’s price last month was Rs1,435,000 but it’s now available at Rs1,490,000 with the price increase of Rs55,000. The price of Karvaan Plus was Rs1,555,000 last month and now its price is Rs1,640,000 after the increase of Rs85,000. Hyundai’s Tucson’s price was increased just after the announcement of the car.
Another disappointment is in terms of ‘on money’ being charged on these vehicles, which ranges from Rs100,000 on smaller cars and up to Rs1 million on compact SUVs. “Most of the cars launched by new entrants are quite expensive and in a short period of time prices of many cars have increased manifold. This is clearly against the objectives of the policy as it was meant to provide low-priced cars to consumers,” said Faizan Idrees, auto expert and CEO ARE Steels.
“Even with this much relaxation and concessions the customers in Pakistan are not getting cars at affordable prices and they still have to pay ‘on money’ on these expensive cars,” said Faizan, adding: “It is quite interesting that local customers have been deprived of any welfare by the government despite having a clear policy in this regard. Another issue here in Pakistan is that there is no government department or mechanism to check on the quality of vehicles.”
Copyright Business Recorder, 2021