Auto parts Manufacturers This is the most fragmented part of the automotive sector with a very large number of units, although there are specialised niches and some manufacturers are licensed with OEM while others primarily sell in the replacement market. In the absence of data, it is not possible to quantify the HHIs indifferent segments of the auto parts market. Auto parts manufacturers enjoy relatively high rates of protection, but it is unlikely that they are able to hike up their prices to levels corresponding to world prices plus tariffs fora number of reasons as follows (a) technical specifications, quantities and delivery times are typically solely determined by the assembler (b) the assembler often provides the production technology including the equipment needed to produce the parts (c) the assembler is the main buyer of the parts (d) the assembler frequently has the capacity to produce the parts in-house if not satisfied with the general performance including the quality and prices of the parts supplier every few parts suppliers have alternative markets for their products and rely almost entirely on one or at most three of the major local Japanese assembly operations for sales (f) the production/sales of most parts suppliers are far below the levels required to make exports profitable, and in any case exports would generally have to start with supplies to the multinational operations of the same companies being supplied in Pakistan (g) given the lack of enforcement of proper quality standards, there is intense competition in the replacement market for repairs and maintenance of existing vehicles. Overall, there appears to wide variation in the extent of competition among different segments of the automotive sector. Competition is limited in the market for cars and is most intensive in motorcycles, with other sectors falling in between. The CCP needs to be proactive in ensuring greater competition among car and tractor manufacturers. In addition, there is need to review other policies, laws and regulations.
