It is a matter of great concern that cars assembled/produced in Pakistan do not meet international standards and buyers are generally fleeced for want of a choice. According to a report in this newspaper on 9th December, 2014, Engineering Development Board (EDB), in a meeting presided over by the Minister of Industries and Production, Ghulam Murtaza Jatoi, expressed its serious concern on the quality of new cars, premium (money) on purchase of cars and some upfront payments. Advisor, Pakistan Engineering Council (PEC), and certain other participants were also reported to have pointed out that the quality of locally assembled vehicles was not up to the mark but consumers had no choice in purchasing various kinds of models of vehicles and upfront costs, advance payments etc had shaken consumers’ confidence. “Product recall” system was also not in place. Additional Secretary, Ministry of Commerce, stressed upon the need for adoption of standards and quality assurance for all the products and said that the absence of quality standards was seriously hampering the exportability of Pakistani products even in country’s long-established export markets. Pro-Rector, NUST, said that the Army had put in place various standards, including for motor vehicles and buildings which are observed while making procurement. Pakistan automotive industry was engaged in assembly operations that was not value-added manufacturing. General Manager (Business Development/Policy) of EDB, spoke about the present level of indigenization and said that 70 percent deletion had been achieved by M/s. Suzuki in the case of its Mehran model whereas other assemblers had achieved a 50 percent localisation.
Although the consumption of automobiles in Pakistan is much lower than other countries of the region, there is a latent demand and vast potential for the industry to grow due mainly to a fast-emerging middle class and insufficient availability of other modes of transportation. For a long time, it was believed that automobile industry in Pakistan was quite dynamic, and driven by consumers’ choice in respect of comfort, safety and design. However, during the last few years, such a myth has been shattered as complaints about shoddy works, poor finishing, sub-standard parts and unreliability of machinery have increased. The misery of consumers was further compounded as there was no proper mechanism for the redressal of complaints and ‘product recall’ system in vogue in other countries to facilitate consumers was not put in place. The best a client could do was to visit the designated workshops of various car companies which did not offer satisfactory service. The situation has almost deteriorated to an extent that while consumers are taken for a ride, car companies are making excessive profits due mainly to cartelization and by controlling supplies in the market. It is a captive market and the enterprises in the field still use the argument of “infant industry” to preserve their fiefdom. In the process, consumers suffer immensely due to high repair and maintenance costs, greater inconvenience and injuries or deaths in case of accidents due to poor quality controls. Besides, the country continues to be dependent on foreign sources for the assembly of cars and hardly has any chance to enter into the export market.
Various policies to manage the auto sector have been put in place by various governments to regulate the supplies in the market, incentivize car production locally and ensure the availability of various models to consumers at reasonable prices. However, almost every policy had certain drawbacks and stakeholders have continued to agitate against the perception of the government to favour one party or the other. Now that the government is in the process of framing a new auto policy, it needs to take care of the concerns of various parties and at the same time ensure that the sector gets the needed boost but is regulated in a way so that the customers are satisfied about the cost and quality of automobiles. Also, it is vital that the sector attracts adequate investment to meet the local demand and could compete in the international market without subsidies. Indigenization process, in particular, needs to be expedited and engineering universities and organisations need to be actively associated with the effort. It also needs to be analysed whether the import of a limited number of new cars could help in forcing the local assemblers in improving quality. Besides, the matter of enhancing the age of used vehicles for import from the existing three years should be decided once for all for removing policy uncertainty and attracting a higher level of investment. It may be mentioned that in its recently released Annual Report, State Bank has endorsed the assessment of Competition Commission of Pakistan (CCP) to reduce protection of the local automobile sector and allow the import of new cars. In short, the government needs to devise a new policy after a great deal of thinking on every aspect of the matter and without compromising the quality of the product. The sooner it is done, better it would be for the industry and auto customers.
Oct 22, 2016 0
Oct 22, 2016 0
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