Government swings into action against car manufacturers over possible price increase

The letter further stated that just weeks after the tax concessions were granted, the car manufacturers intend to increase prices.

Govt has swung into action against car manufacturers over possible price hike. The federal government has swung into action against car manufacturers over the possible increase in prices. In fact,  Just weeks after the federal government slashed taxes to facilitate price reduction, the auto manufacturers are again planning to raise prices.

Last month, Changan Master Motors increased the price of its all models. Later, the increase in price was suspended following government intervention. In a notification, the auto manufacturer said that it is holding up the price increase upon the request of the government.

Changan Master Motors price suspension notification. Govt Unhappy Over Possible Price increase:

The Ministry of Industries and Production has sought justification from the companies for jacking up car prices despite the tax concession granted in order to decrease the prices.

In a letter written to the Engineering Development Board (EDB) by The Controller General of Prices and Secretary Ministry of Industries and Production,  Kamran Ali Afzal said, “The government has very recently given significant tax concessions to automobile manufacturers in order to make cars affordable for the public.”

The newly launched Changan Alsvin in PakistanThe letter further stated that just weeks after the tax concessions were granted, the car manufacturers intend to increase prices. The letter further argued that the intended price increase makes no sense as there has been no increase in costs of production.

“This situation is clearly unacceptable, and the government may have no recourse but to initiate regulatory measures, which may include fixation of prices under the Price Control and Prevention of Profiteering and Hoarding Act, 1977.”

The 2020 corolla “You are, therefore, directed to instruct automobile manufacturers to provide their costing structures failing which, price fixation proceedings would need to be carried out unilaterally,” the letter further read.

The Engineering Development Board (EDB) General Manager (Policy) Asim Ayaz,  said that the Ministry of Industries and Production has asked the car companies to share their costing structure and justify any price hike. He further added that during the meeting with the car companies, they asked for a standard format to supply the data.

Moreover, Asim Ayaz said that under the recently amended Price Control and Prevention of Profiteering and Hoarding Act 1977, “the government can do anything.”

He did admit that wouldn’t be easy for the government “to control car prices since each company has a unique cost of production.” The auto industry is blaming the increasing costs of steel and shipping for their intended price hike despite the tax concessions.

Tax Concessions Granted By The Govt To Auto Industry:

  • The federal excise duty on all vehicles including the 1,000cc has been slashed by 2.5%.
  • Sales tax has been brought down from 17% to 12.5% on vehicles below 1000cc.
  • 7% additional customs duty has been removed on cars below 1000cc and reduced on cars above 1000cc to 2%.

Source: SAMAA TV

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