Competition Commission of Pakistan's (CCP's) report on auto sector has been termed as "anti-investment, baseless and devastating for future plans and visions of investors and businessmen in the automobile industry," said Pakistan Auto Manufacturers Authorised Dealers Association (Pamada).
Vice-Chairman, Pamada, Iqbal Hussain Shah in a statement said: "local industry is encouraged by its government everywhere in the world for attracting investment, enhancing engineering activities, generating employment and revenues but unfortunately the case is reversed in Pakistan as government departments, such as CCP, come up with biased reports to push investors and businessmen away from the homeland totally on flimsy allegations and baseless arguments."
He lamented CCP for releasing a flawed report that contains factual errors and biased analysis, questioning the performance and credibility of the Commission which projects itself as a watchdog of competition of local industry for curbing illegal practices.
He said that the flawed report wrongly portrays that dealerships are merely "agents" of Original Equipment Manufacturers (OEMs), conveniently negating the investments, technical advancement and services to consumers even after sales and continuous training programs for technical staff while it provides assistance to consumers from registration to insurance and leasing.
The sales and after sales which use to be a routine run for consumers from one corner of the city to another has been brought under one roof and high quality service and repair facilities have been provided while bringing the business under documentation and tax regime, which is the reason why the whole chain is contributing to national economy unlike road side sales and service which is neither documented nor guaranteed.
By ignoring these facts and promoting used cars instead, the CCP report has exposed the dealer mafias' support in the government quarters, which inflicted huge damage to forex reserves, revenue collection while ripping off the consumers and providing them junk which will not survive and disappear from the roads in a year's time like those imported in 2007.
"If the content of the CCP report is not credible enough then how can one ethically support its actions to reduce malpractices in different local industries?" Iqbal raised a query mentioning that the CCP cannot create an escape route by putting a disclaimer.
He said that the local industry producing brand new quality cars cannot be compared with imported cars because OEMs have invested huge money to develop an industry whereas the used cars are imported as a result of misuse of cars' transfer policy which was formed to facilitate overseas Pakistanis.
Vice-Chairman, Pamada said: CCP report did not mention the protection provided to use cars by the government in terms of 36 per cent depreciation allowance. On the other hand, the duties levied on the cars are based on the old Import Trade Price (ITP) set in 2005. Such incentives ease down prices of imported cars significantly though the prices of these cars are higher at local level despite all these protections and benefits. On the contrary, the local industry is not given any relief, neither in CKD imports nor in the form of tax waivers of any kind at any level.
He said that used car business is providing employment to only a few out of 4,000 dealers nation-wide who have non-technical labour and cannot be compared with the highly trained and technical staff of local industry contributing to Pakistan's GDP through taxes.
In fact, he said, it is local auto industry that has provided employment to over 2.2 million people including nearly 35,000 in dealership segment while used car industry have minuscule employment.
Iqbal Shah said it is quite obvious that only local auto industry creates real economic activity as auto parts worth over Rs 60 billion are manufactured locally every year while in the used car import segment, there is no local manufacturing. He said the local auto industry pays more taxes to the government as over Rs 65 billion tax contributions is made by the entire local auto industry annually, while imported used car segment pays less than Rs 20 billion in this regard.
"Who invests in Pakistan? Of course, its local auto industry and this could be gauged by the fact that over Rs 40 billion investments was made by just three OEMs. On the other hand, zero investment is made by used car industry," he said. "Also, it is the local auto industry that protects consumer's rights because OEMs offer two years comprehensive warranty, after sales service, regulated prices and ensures auto parts availability. On the other hand, there is no warranty, no after sales service, no parts availability and no price regulation (vary from showroom to showroom) in the used car industry."
Comparing local assemblers with trader mafia is injustice and inadequate at any level, Iqbal Shah said and demanded CCP to prepare another assessment report in consultation with all stakeholders of auto industry for balanced and critical analysis.
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