ISLAMABAD: Pakistanis who bought cars in the last five years have paid a colossal amount of around 170 billion rupees as premium.
In other words, the people paid higher than the market price of cars in the past five years due to exploitation by car dealers.
Pakistan Institute of Development Economics (PIDE) has made this startling disclosure in its study. Dr Usman Qadir and Mohammad Shaaf Najib of PIDE led this research study. Dr Qadir is a senior research economist and Najib is staff economic with PIDE.
According to study, in the last five years, car purchasers have paid more or less 30-34 billion rupees a year as premium/own.
According to report, every year up to 90 percent of the car buyers pay premium. In monetary terms, this premium ranges between 150 to 170 billion rupees in five years. Another stunning disclosure of the study is that the amount paid as premium or own remained undocumented.
In Pakistan, automobile sector is expanding rapidly because of robust demand in the country having around 220 million population. Honda, Indus Motors, and Pak Suzuki Motors are the key market players while others are far away from these companies in terms of sales of cars.
In fact, according to PIDE report, the controlled demand and supply of vehicles in Pakistan has encouraged premium phenomenon in the country. And this issue is going for for years without adequate check and balance from the regulators.
PIDE report said that in the early 2000s, when car sales in Pakistan surged significantly amid growing car financing services, the demand and supply gap further increased in the country.
The PIDE study also disclosed that, a number of automobile companies are marketing their vehicles in Pakistan although some of them still not producing cars locally.
PIDE report said the regulations need to focus on creating a market structure that creates a level playing field for all market players.
