Automakers Promote Own-Money Culture: Report

Due to the weakening state economy and many operational difficulties, automakers find themselves in limbo. Recent research, however, seems to have made matters worse by criticizing the sector for encouraging the "own money" mentality.

A new report from the Pakistan Institute of Development Economics (PIDE) claims automakers are consciously slowing production. The document asserts:

According to economic theory, monopolists will offer less than market demand to keep excess capacity in reserve. To maintain this trend, automakers can build 400,000 vehicles annually but only produce 200,000, creating a severe scarcity in the market.

Researchers did not identify any specific automakers. Low availability of cars and pre-bookings were cited as primary reasons for the "own money culture."

The study concludes that consumers' opinions have been drowned out due to the car industry's persistent oligopoly. It also states that the industry has been in the same dreadful shape for the past half a century.

In addition, the investigation highlighted the PAC's involvement in the subject and noted that their efforts had been unsuccessful.

Disagreement Areas

Despite the study's criticism of businesses for aiding the "own money culture" by slowing production, automakers have struggled with a vehicle shortage for months.

Yesterday, Honda Atlas Cars Limited (HACL) announced that production would be on hold from October 4, 2022, to October 11, 2022. Hyundai Nishat Motors Private Limited (HNMPL), Toyota Indus Motor Company (IMC), and Pak Suzuki Motor Company (PSMC) are all taking regular non-production days (NPDs) to deal with the current situation.

Honda Atlas and other automakers notified the Pakistan Stock Exchange (PSX), citing supply chain concerns caused by government prohibitions on imports and the country's worsening economy.

Likewise, the auto industry has suggested that the government should create laws that encourage the complete localization of the automobile industry. Experts agree that the government and the auto sector should cooperate rather than fight each other under these conditions.