[VIDEO] Why are cars so expensive in Pakistan? | Reason EXPLAINED

Experts talks about the pricing factors for cars in Pakistan.

Why are cars in Pakistan so expensive?

In Pakistan, when a person thinks of buying a car, the first thought is never ‘what car should I be buying’? Instead, it’s always the keen contemplation of the amount of taxes and duties involved, safety and quality features, pricing of the vehicle, and more. 

Recently, an Express News talk show – The Review – shed light on the issues of the Pakistani automobile industry. The hosts of the show, Shahbaz Rana and Kamran Yousaf, invited a panel of speakers to discuss in detail many auto industry factors like:

  • pricing mechanism
  • hurdles in localization of industry
  • protection of consumers’ interests
  • safety and quality standards
  • competitor brands
  • government’s role
  • import of cars
  • transfer of technology
  • future outlook and the next five-year policy
  • the future of electric and hybrid vehicles in Pakistan

During the discussion, Suneel Munj, the co-founder of PakWheels.com, said:

There is no doubt that cars in Pakistan are expensive. But, along with that, there is no clear policy to ensure safety and quality features in Pakistan.

He continued to state:

Cars are expensive, but the real issue is that the buyers do not get the best value for their money. Overpricing and that too without the international standard safety and quality features is the real issue.

Competition in Pakistan increases as new car manufacturers enter the market.

MNA Ali Pervaiz said:

The “cartelization” is evident from the heavy presence of specific players in the automobile industry market. There is a need for a conducive environment and positive competition in the country’s auto sector. I blame the ban on the import of cars for this cartelization.

Engineer Asim Ayaz of the Engineering Development Board (EDB) – the apex government body under the Ministry of Industries and Production – also joined the discussion to defend the government. He said:

The government does not control prices nor features. Top-of-the-line vehicles have all the international features.

Munj countered Ayaz’s argument and said:

Price control should be a subject of the government instead of the auto industry. The industry should be asked to explain how different things – taxes, dollar rate, and local production of parts – influence prices, and the government should work on how prices can be reduced. The government should monitor the auto industry just like it monitors a retail shop.

Agreeing with Munj, Pervaiz said:

The government should increase fair competition and should identify defects in the fiscal policy pertaining to the auto industry. Increasing the car-manufacturing volume will reduce prices.

To all this, Ayaz answered:

The situation will get better when the competition is increased. Things will start getting better from this year as several new players have obtained licenses, and a few have already started working in Pakistan.

Munj continued talking about the government and said:

The government should effectively play a regulator’s role to protect consumers’ interests. They should bring consistency to the auto policy, as it is essential.

How should the government bring the expensive prices of cars down?

Suggesting a way forward to reduce car prices, Munj said:

The government should begin by reducing taxes and making it mandatory for the industry not to increase prices.

Following Munj’s suggestion, Pervaiz recommended:

The government should revive the Competition Commission of Pakistan to create a competitive environment for the industry. The auto industry should also be given reasonable protection, and the “made in Pakistan” philosophy should be promoted.

Emphasizing that the consumers are the No. 1 priority for the government, Ayaz said:

The “big three” auto companies have also invested a considerable amount of money in Pakistan.

Watch the full talk show discussion here:

What are your thoughts on this? Please share with us in the comment section below.

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