Following the recent spike in vehicle demand, imports of auto parts and auto prices have increased.
Prime Minister Imran Khan noted this problem and in the last week of 2020 ordered the Ministry of Industry and Production (MoIP) to investigate the reasons for the inability of existing car manufacturers to increase their production capacity to meet the growing demand for vehicles.
Pakistani auto companies attributed the jump in the prices of their vehicles to a rise in the dollar against the Pakistani rupee. As business restarted in the region, the rupee largely held its value against the dollar, but prices continued to rise independently.
The federal cabinet has instructed the MoIP to investigate why automakers failed to find auto parts. Finding auto parts can result in efficiency in cost and production time.
The cabinet reportedly pointed out that Pakistan’s three major auto companies, which have been in operation for about four decades, have not received locally made replacement parts, leading to higher prices and an extended vehicle delivery time.
This figure also fosters a “own money” culture in the market, where buyers have to pay the markup to the dealer at the auto maker’s original suggested price (MSRP) if they want early delivery.
About three weeks ago, the Association of Pakistan Auto Parts and Accessories Manufacturers (PAAPAM) praised Prime Minister Imran Khan’s tough stance on high auto prices in Pakistan, acknowledging that the non-localization of auto parts in the country has contributed significantly to the price of expensive vehicles.
Seeing this development, the PAAPAM representative stated:
“It’s time to deeply analyze the root cause of the high prices of cars in the country and devise a long-term strategy to duly produce vehicles in line with the demand, besides devising and implementing a 10-year ‘Auto Parts Localization Policy’ (APLP) to ensure the localization of all value-added parts.“