ISLAMABAD: Prices of vehicles are governed by a free market mechanism and not regulated by the government, the then minister for industries and production, Makhdoom Khusro Bakhtiar, said on Sunday.

He was responding to a question asked by Member of National Assembly (MNA) Saad Waseem in the National Assembly. Mr Waseem had asked whether the government had noticed that various car makers including Chinese ones had increased prices of their pre-booked units by thousands of rupees.

However, in a written response, Mr Bakhtiar attributed multiple factors such as the rupee-dollar parity that affected the increase in prices of cars. Improvements in vehicles and introduction of additional features and the jump in international prices of raw materials of the vending industry such as steel, plastic, and rubber as well as shipping costs were also reasons for increase in prices of units, he added.

“Currently, the rise in prices of vehicles is mainly due to the rupee-dollar parity, hike in input material prices and shipping costs in the international market, which is beyond the control of the government and the original equipment manufacturers (OEMs),” he said.

According to the ministry, OEMs had to increase the prices to cope with the rapidly changing environment in the international market.

“Moreover, the second increase was made subsequent to restoration of federal excise duty (FED) and sales tax (ST) by the government,” he said.

In response to another question on percentage of spare parts, he said localisation levels of old OEMs was at an average 53.4 per cent and different manufacturers had achieved different levels of localisation.

Most of the auto parts used for assembly of vehicles especially sheet metal parts, plastic, rubber and glass parts were completely localised except high tech parts such as engine and transmission parts (to mention a couple), which were being imported.

As Suzuki was producing more than 60pc parts for its Swift, WagonR and Cultus, Toyota was producing more than 60pc parts of its variants of Yaris and Corolla. Similarly, Honda was producing 58pc parts for its variants of Civic and 68pc parts for variants of City. However, only 11pc parts for Kia Sportage were local and 15pc parts of Kia Picanto were locally produced.

Published in Dawn, April 4th, 2022