The Engineering Development Board (EDB), an integral department of the Ministry of Industries and Production, has taken the bold step of suspending the manufacturing licenses of three prominent automobile companies in Pakistan, in a significant development. The decision was made in response to alleged violations of key terms of the auto policy.
Affecting Major Industry Names
The three major automobile manufacturers facing license suspension are all Pakistani automotive industry veterans: Pak Suzuki Motor Company, Honda Atlas Cars Pakistan, and Indus Motor Company Limited (Toyota). These companies, well-known for their market presence and influence, have found themselves in hot water due to their failure to meet certain critical obligations outlined in the auto policy.
Localization Unsatisfied Expectations
One of the primary violations attributed to these manufacturers is a failure to meet localization requirements. They have specifically failed to meet the requirements for increased local vehicle production, a critical component of the auto policy framework.
Export Goals in jeopardy
The auto policy establishes clear guidelines for automakers, requiring vehicle production as well as spare parts manufacturing to take place in the country. Furthermore, it establishes specific export targets, beginning with a 2% export requirement in 2023, increasing to 4% in 2024, 7% in 2025, and an ambitious 10% by 2026. Worryingly, these manufacturers have not only failed to meet the 2% export target, but have also failed to produce spare parts locally.
Remediation Possibility
Nonetheless, there may be a ray of hope for these automotive behemoths. According to sources, if the car manufacturers can provide written assurances of their commitment to follow the auto policy, the suspension of their licenses may be reconsidered.
License Suspension for Limited Time
A senior EDB official stated in a confidential statement that the suspension of these licenses is not intended to be a long-term solution.
The affected companies have already begun the license renewal process, which is expected to be completed within the next two to three days, subject to the provision of the necessary written assurances.
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