Pakistan is a very unusual place for cars— new and used. You can buy a new vehicle, drive it for years, and sell it at a much higher price. A depreciating currency, a protectionist market, high inflation– all contribute to the rising value of cars – and a frenzied market for used ones.
But used cars aren’t the ones to be blamed as they sit on the very bottom of the problem chain. Things actually start to go haywire from the sale of new cars. To start off, auto assemblers deliberately produce a lower number of vehicles to maintain a demand-supply gap that favors them. Then, the hoarders often referred to as “investors”, buy new automobiles in bulk and sell them against a premium to genuine buyers. The profit is allegedly shared between the hoarders, dealerships, and the assemblers themselves.
And then due to the fluctuating currency value, car prices are revised every alternate month with each model witnessing up to a 30% increase every year, at least what we have observed during the last few years. Since December 2017, prices of locally assembled cars have doubled and the impact is also transferred to the used cars in tandem.
If you observe, a 5 years old used car in the market is being asked for double its actual invoice price in 2017. For example, the top-spec Honda Civic Oriel 1.8L was priced at PKR 24.99 lac in December 2017 and after 5 years, it is being asked for around PKR 48.0 to even PKR 52.0 lac in the used car market, not to mention the price of the brand new flagship Honda Civic RS has reached PKR 80.99 lac.
Some 5-year-old used cars for sale in Pakistan in double their actual invoice price
A top-spec Honda City Aspire 1.5L was priced at PKR 18.69 lac in December 2017, and now owners are even asking up to Rs 4 million for that car which is insane.
Similarly, Toyota Corolla Altis Grande which was PKR 25.49 lac for a brand new car in 2017 is being asked for around Rs 5.0 million in the used car market after 5 years and several thousand kilometers on the odometer. Toyota Fortuner 2.7L which was available brand new for PKR 53.99 lac in 2017 is being demanded up to Rs 1.25 crore in the used-car market.
Although this sounds insane, we can’t really blame used-car sellers, can we? Of course, one cannot expect them to sell their 5-year-old cars for around Rs 2.0 million if they had bought them for Rs 2.5 million five years ago, since the new one is now priced at Rs 6.0 million already. It is the new car market that drives the rates of used cars and is the one that should be kept in check.
But with problems such as economic uncertainties, insufficient localization, supply-demand disproportion, inefficient production capacity utilization, unchecked presence of hoarders in the market, and no price control mechanism, the new car prices always go berserk in Pakistan. And with current economic challenges with the Pak Rupee falling to a record low against the US Dollar with no signs of improvement in sight, things for the automobile market– both new as well as used, don’t look too good. Where this rolling stone will stop, we can just wait and watch.
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com