Booking of vehicles

This is in response to the letter from Mumtaz A. Piracha, appearing in Business Recorder on February 10, 2005. Whereas the writer demands reduction in delivery periods and simultaneously a reduction in the amount paid at the time of booking, I would like to know how practical is this solution if implemented? Wouldn't reduction in booking amount further invite investors to book vehicles and hoard so as to earn more premiums on resale?
Secondly, where the premium is attributed to the automakers, the question that comes to my mind is: Why would a company with international repute, offering almost 35% of every vehicle price as duty and tax to the government revenue, investing billions of rupees in the country and producing a new vehicle every 7 to 10 minutes; risk its name, image and clientele for a premium of a few thousand?
In whose interest is it to charge premium - a multinational automobile manufacturer or a small unauthorised roadside showroom dealer and investor?
When we talk about increasing production, it must be understood that this entails investment for plant expansion, paying overtime for extended shifts and recruiting, training and paying an entire workforce that works on a second shift. Besides, a car has over 9,000 parts and with the 60% localisation programme enforced by government, not only car manufacturers but local car parts vendors also have had to increase capacity by 2.5 times in the last two years.
This capacity expansion takes time and is still continuing, as mentioned by Kunwar Idris, Chairman PAMA in a news report of February 11.
Leaving aside these capital costs required for expansion, who is to compensate for the skyrocketing steel prices, which in the past 7 months have increased around the world, to the extent that in Pakistan alone, the current price is three times the original?
Who is to compensate for the 10% increase in duty on vendor components? Is a 15% appreciation of dollar value and a 26% increase in the yen value so insignificant that it should not translate into the price of a commodity that requires foreign experts, quality controllers, engineers and imported components and sub-components?
Due to these factors, local parts manufacturing has been uneconomical, and vendors have been approaching car manufacturers to increase the prices of the parts. It has only been due to cost increases beyond the car manufacturers' control, coupled with soaring exchange rates that it became impossible for them to maintain their vehicle prices, and the industry had to surrender to the compelling circumstances.
Yet in pursuance of a customer friendly policy, some manufacturers have minimised the cost impact, and passed on only a small part of the cost increase by way of a nominal price revision to the customers.
It must be noted that if the assemblers stop booking, they are "asked" by the government to continue supplying vehicles and not refuse buyers. Is it not then for the government to address the issue by devising and implementing rules whereby a control on investors and middlemen is put in place, or would we continue to criticise an industry which is the biggest contributor to the country's GDP, without any long-term policy?