ISLAMABAD-Ministry of Industries and Production is in a fix as auto assemblers are exerting pressure to increase car prices, whereas Ministry of industries allied departments are demanding for more security features and lower car prices in new auto policy, which is in final stages of completion, The Nation learnt.
According to the Ministry of Industries official the top auto companies of the industry have deputed their representatives with huge budget to influence the new policy.
“Top motor companies have designated representatives in Islamabad, whose only job is to influence and lobby officials to raise prices in the new auto policy and to lobby for the objections raised by the government, an official of Ministry of Industries told The Nation. According to official data Suzuki, Indus Motors and Honda are the major players in Pakistani auto market. In 2012-13, Pakistan Suzuki Motor Company, Indus Motors Limited and Honda Motors were the major players with market share of 55 percent, 27percent and 18 percent respectively.
In new auto policy, the safety, quality and environmental standards, being followed by the three leading OEMs are now increasingly questioned by the policy makers as more and more incidences due to faulty critical safety parts come to the fore.
The Engineering Development Board (EDB) has raised serious questions about the quality of cars produced in the country and safety features provided by them in meetings of National Assembly Standing Committee on Industry.
EDB is the apex government body working under Ministry of Industries and Production and its job is to strengthen engineering base in the country. “In every part of the world car manufactures provide certificate of crash test, this test tells worth of car and also tell that in case of crash the passengers would remain safe or not, but in Pakistan no car assembler including Toyota, Suzuki, Honda is providing the crash test report for any vehicle assembled in the country, and we don’t have crash testing facility in the country,” an official said.
Pakistan is among countries with high road accidents deaths. It is hard to find collective and authentic data for car crashes, however, according to 2012 Federal Bureau of Statistics data, collected from Provincial Police Departments (Crime Branch) shows that there were 9,723 road accidents in which 4280 were fatal, 5,271 injured, while 10,822 vehicles were involved. In another report, in Karachi alone, 644 people were killed and 7,641 seriously injured in road accidents during 2013. The number of people died in road accidents was more than killed in terror activities in the city. According to the National Highway and Motorway Police data, reportedly, every year, up to 15,000 people die in traffic accidents, and cars turn into wreckages.
It was learnt that in absence of any standards car manufacturers were making cars lighter every year, hence making them more vulnerable to fatal accidents in case of any crash. “The technology of Mehran and Cultus is of 80’s, every year company do smaller changes make body lighter and market it as new model, Suzuki, Toyota and Honda all marketing obsolete technologies as compare to the prevailing technologies of the world and every year they increase prices with slight modification in appearances”, the officials said. It was learnt that Toyota was using same body (Shell) for its most of the models but there was a great disparity in the prices, Honda was no different. In developed countries safety features have gone to advance levels. The cars are judged on the basis of how well the vehicle’s occupants will fare in the event of a collision or a rollover and how likely the vehicle is to roll over. These crash tests are designed to mimic human physiology and thus to indicate the extent of injuries to the head, chest and other parts of the body. Contrary to world standards a leading company of the country even did not had the very basic safety feature of seat belt in its ‘Common Man’ car till few years ago. “These companies are playing with the life of citizens which is criminal, we have seen that in minor accidents these cars turn into wreckage, So much so that Suzuki 800 cc cars had no seat belt till five years back”, official said. It was learnt that there is a full fledge department named Pakistan Standard and Quality Control Authority is working under Ministry of Science and Technology and there are laws about the standard of cars which are assembled in the country, but it was unable to perform its duties due to lack of staff and availability of proper equipment. It was also learnt that all three major car assemblers companies have no warranty policy. In warranty policy, assemblers replace defected parts or recall cars in case of any major defect.
“Are they making faultless cars, which is impossible according to any standard of engineering, so why don’t they have recall policy, Toyota had a brake defect some years back, Suzuki had some other defects in certain models but did any assembler ever recalled their cars from the market”, an official expressed his opinion.
All car assemblers have recall policy and they had been recalling cars, whenever some major defect is identified. It was learnt that car assemblers have a meager budget of less than one percent of their total budget against the warranty account. It was further learnt that even this budget was not spent on warranty.
In addition to quality standards, pricing is another subject on which auto makers and government are not on the same page. Pakistan Ministry of Industry compares the prices of cars assembling in Pakistan with the neighbouring country India. According to data obtained from hondabharat.com, toyotabharat.com and marutisuzuki.com, the car prices are low in India as compare to Pakistan.
For example a Mehran VXR price in India is 230,285 Indian rupees which are equal to 375,365 Pakistani rupees. In Pakistan same 800 cc Mehran VXR is sold for 678,000. Suzuki Swift ZXI cost in India is 565,853 Indian rupees, equivalent to 922,340 Pakistani rupees, whereas it is sold in Pakistan for 1330,000.
(In India swift is 1200 cc, whereas in Pakistan it is 1300 cc). It was learnt that this huge price difference is due to absence of any competition in the Pakistani market. Chairman standing committee on industries Asad Umar while talking to The Nation agreed that safety and pricing have been major issues and had been discussed in different meetings of the committee. He said his committee has yet to forward recommendations, but after participating in meetings and hearing stakeholders and ministry point of view, he believes every company assembling cars in the country should produce crash test and other safety certificates according to the standards of the country it belongs.
“A Committee member suggested that in absence of crash test facility in the country, every car assembler should produce safety approval from concerning safety departments of his own country, it is a good suggestion and I fully endorse it”, he said.
He was of the opinion that in order to create a healthy competition in the market, government should lower import duties, if the prices of import cars will be lower, assemblers would automatically lower their prices, and that would break monopoly of major players in the market.
It is worth mentioning that last year car assemblers, reportedly, increased their car prices three times. Suzuki Motor Company increased its vehicles prices from Rs 40,000 to Rs 90,000 in total for different models that translated into an increase from 3.15 percent to 6.09 percent during 2013.
Indus Motor Company (IMC) raised its vehicles prices by 1.73 percent to 23.52 percent and Honda increased its prices from 3.34 percent to 41.33 percent in the year under review.
According to the Ministry of Industries official the top auto companies of the industry have deputed their representatives with huge budget to influence the new policy.
“Top motor companies have designated representatives in Islamabad, whose only job is to influence and lobby officials to raise prices in the new auto policy and to lobby for the objections raised by the government, an official of Ministry of Industries told The Nation. According to official data Suzuki, Indus Motors and Honda are the major players in Pakistani auto market. In 2012-13, Pakistan Suzuki Motor Company, Indus Motors Limited and Honda Motors were the major players with market share of 55 percent, 27percent and 18 percent respectively.
In new auto policy, the safety, quality and environmental standards, being followed by the three leading OEMs are now increasingly questioned by the policy makers as more and more incidences due to faulty critical safety parts come to the fore.
The Engineering Development Board (EDB) has raised serious questions about the quality of cars produced in the country and safety features provided by them in meetings of National Assembly Standing Committee on Industry.
EDB is the apex government body working under Ministry of Industries and Production and its job is to strengthen engineering base in the country. “In every part of the world car manufactures provide certificate of crash test, this test tells worth of car and also tell that in case of crash the passengers would remain safe or not, but in Pakistan no car assembler including Toyota, Suzuki, Honda is providing the crash test report for any vehicle assembled in the country, and we don’t have crash testing facility in the country,” an official said.
Pakistan is among countries with high road accidents deaths. It is hard to find collective and authentic data for car crashes, however, according to 2012 Federal Bureau of Statistics data, collected from Provincial Police Departments (Crime Branch) shows that there were 9,723 road accidents in which 4280 were fatal, 5,271 injured, while 10,822 vehicles were involved. In another report, in Karachi alone, 644 people were killed and 7,641 seriously injured in road accidents during 2013. The number of people died in road accidents was more than killed in terror activities in the city. According to the National Highway and Motorway Police data, reportedly, every year, up to 15,000 people die in traffic accidents, and cars turn into wreckages.
It was learnt that in absence of any standards car manufacturers were making cars lighter every year, hence making them more vulnerable to fatal accidents in case of any crash. “The technology of Mehran and Cultus is of 80’s, every year company do smaller changes make body lighter and market it as new model, Suzuki, Toyota and Honda all marketing obsolete technologies as compare to the prevailing technologies of the world and every year they increase prices with slight modification in appearances”, the officials said. It was learnt that Toyota was using same body (Shell) for its most of the models but there was a great disparity in the prices, Honda was no different. In developed countries safety features have gone to advance levels. The cars are judged on the basis of how well the vehicle’s occupants will fare in the event of a collision or a rollover and how likely the vehicle is to roll over. These crash tests are designed to mimic human physiology and thus to indicate the extent of injuries to the head, chest and other parts of the body. Contrary to world standards a leading company of the country even did not had the very basic safety feature of seat belt in its ‘Common Man’ car till few years ago. “These companies are playing with the life of citizens which is criminal, we have seen that in minor accidents these cars turn into wreckage, So much so that Suzuki 800 cc cars had no seat belt till five years back”, official said. It was learnt that there is a full fledge department named Pakistan Standard and Quality Control Authority is working under Ministry of Science and Technology and there are laws about the standard of cars which are assembled in the country, but it was unable to perform its duties due to lack of staff and availability of proper equipment. It was also learnt that all three major car assemblers companies have no warranty policy. In warranty policy, assemblers replace defected parts or recall cars in case of any major defect.
“Are they making faultless cars, which is impossible according to any standard of engineering, so why don’t they have recall policy, Toyota had a brake defect some years back, Suzuki had some other defects in certain models but did any assembler ever recalled their cars from the market”, an official expressed his opinion.
All car assemblers have recall policy and they had been recalling cars, whenever some major defect is identified. It was learnt that car assemblers have a meager budget of less than one percent of their total budget against the warranty account. It was further learnt that even this budget was not spent on warranty.
In addition to quality standards, pricing is another subject on which auto makers and government are not on the same page. Pakistan Ministry of Industry compares the prices of cars assembling in Pakistan with the neighbouring country India. According to data obtained from hondabharat.com, toyotabharat.com and marutisuzuki.com, the car prices are low in India as compare to Pakistan.
For example a Mehran VXR price in India is 230,285 Indian rupees which are equal to 375,365 Pakistani rupees. In Pakistan same 800 cc Mehran VXR is sold for 678,000. Suzuki Swift ZXI cost in India is 565,853 Indian rupees, equivalent to 922,340 Pakistani rupees, whereas it is sold in Pakistan for 1330,000.
(In India swift is 1200 cc, whereas in Pakistan it is 1300 cc). It was learnt that this huge price difference is due to absence of any competition in the Pakistani market. Chairman standing committee on industries Asad Umar while talking to The Nation agreed that safety and pricing have been major issues and had been discussed in different meetings of the committee. He said his committee has yet to forward recommendations, but after participating in meetings and hearing stakeholders and ministry point of view, he believes every company assembling cars in the country should produce crash test and other safety certificates according to the standards of the country it belongs.
“A Committee member suggested that in absence of crash test facility in the country, every car assembler should produce safety approval from concerning safety departments of his own country, it is a good suggestion and I fully endorse it”, he said.
He was of the opinion that in order to create a healthy competition in the market, government should lower import duties, if the prices of import cars will be lower, assemblers would automatically lower their prices, and that would break monopoly of major players in the market.
It is worth mentioning that last year car assemblers, reportedly, increased their car prices three times. Suzuki Motor Company increased its vehicles prices from Rs 40,000 to Rs 90,000 in total for different models that translated into an increase from 3.15 percent to 6.09 percent during 2013.
Indus Motor Company (IMC) raised its vehicles prices by 1.73 percent to 23.52 percent and Honda increased its prices from 3.34 percent to 41.33 percent in the year under review.
