In response to changing market conditions, leading car manufacturers in the country are slashing prices to unprecedented levels, prompting both celebration and concern among consumers and stakeholders.

The massive cuts in prices observed in recent announcements highlight the extent to which automobile prices have become inflated in Pakistan. In response to the revised GST regulations by the government, household sedans like Toyota Yaris and Honda City are seeing fractional drops in prices, while cars like Stonic seeing a drop of 24% – a strategic way to avoid paying 25% GST on their cars. Our prices were inflated to begin with, but the automobile industry is riddled with illegal practices that further drive up the price of economy vehicles. Dealerships often take advantage of impatient buyers by making them pay “On-Money”, a premium price to acquire a car early. This culture has destroyed our auto-market for years now, and it must be put to an end.

Moreover, the entities involved in this price war are merely assemblers importing parts and transferring all price variations onto their customers. Despite mandates for localization of production, the auto industry has become far too powerful and still relies heavily on imports. Income inequality has reached the point in the nation that expensive luxury vehicles are the status-quo, draining our foreign exchange reserves, and stifling any innovation in our own industry. Enforcing policies that incentivize local production will reduce dependence on imports, and also introduce some much-needed competition in the market to provide our consumers with cheaper alternatives to imported vehicles. While this is put in place, regulatory oversight is crucial to ensure that vehicle prices are not being inflated without reason.

EVs are still an unexplored avenue that demands attention and will benefit the most from local production. This is a non-negotiable; only including foreign brands will not only increase import dependence but also close off the accessibility of EVs to most of our population through exorbitant pricing.

Many turn a blind eye to the fact that a great chunk of our populace is still reliant on motorbikes, and yet almost no innovation has been seen in our bikes for the past 15 years. Introducing locally manufactured electric bikes are an affordable, eco-friendly, and economical vehicle to drive that the industry will greatly benefit from. This is the path forward for a sustainable automotive industry – one that employs new technology but depends on local production.