If automakers don't justify price hikes, the government may consider fixing car prices.

The Ministry of Industries and Production has instructed automakers to explain the increased pricing of their vehicles, failing which the government would apply the legislation against profiteering, against them. The order was issued in a letter by the Engineering Development Board (EDB), which is part of the Ministry of Sectors and Production and oversees the automobile and cell phone industries.

Asim Ayaz, the EDB's General Manager (Policy), stated that "the Ministry of Industries and Production has asked the car companies to share their costing structure and justify any price hike."

The government has very recently given significant tax concessions to automobile manufacturers in order to make cars affordable for the public. While the car manufacturers reduced their prices following the grant of these concessions, it now appears that they intend to increase prices even though it has been only a few weeks since the concessions were granted, and despite the fact that there has been no increase in costs of production. This situation is clearly unacceptable, and the government may have no recourse but to initiate regulatory measures, which may include fixation of prices under the Price Control and Prevention of Profiteering and Hoarding Act, 1977. You are, therefore, directed to instruct automobile manufacturers to provide their costing structures failing which, price fixation proceedings would need to be carried out unilaterally.

He went on to say that EDB officials met with automobile makers and urged the government to establish a uniform format for supplying data since it would be simpler this way.

To make vehicles more cheap and boost sales volume, the government recently announced its Auto Policy 2021-2026, under which automotive makers were granted tax breaks on Additional Customs Duty (ACD) and Federal Excise Duty (FED) (FED). This has lowered car costs, but manufacturers have been attempting to increase prices again in recent weeks, earning the government's displeasure.