Assemblers Anticipates up to 30% Decline in Car Sales

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The current economic situation of the country with Rupee rolling down the hill against the US Dollar having already gone past Rs 201 mark, coupled with political instability and uncertainty has left auto assemblers clueless about the future. Companies such as Indus Motors, Lucky Motors and Al-Haj Automotive have already suspended bookings of their vehicles for an indefinite period of time with another major price hike expected to be announced soon. Other assemblers are likely to follow suit.

Related: Ban on CBU Imports- Who Will Suffer?

However with constantly rising prices, in addition to even stringent financing conditions recently announced by the State Bank, is expected to put a major dent on the sales of locally assembled vehicles. Local auto industry representatives already anticipates up to 30% decline in sales in coming months with no recovery in sight considering the ongoing economic & political situation of the country. Moreover the hoarders have probably reached their limit to stockpile enough cars which they are unable to swiftly sell on profits considering the tough economic scenario & rising inflation, which has greatly affected the purchase power of people. Sparing the large number of hoarders, there aren’t literally enough genuine buyers left in the market.

According to local companies, the cost to ‘assemble’ the vehicles locally have gone up by ten folds considering rising shipping & raw material costs, depreciating currency value and high operating costs. Assemblers have always been swift to pass the price impact on to the customers even in the slightest of forex fluctuations, however even they know there is a limit to increasing these prices, which are now being revised after almost every 35 days with 3 major prices revisions announced within the first 4 months of this calendar year.

Related: State Bank Reduces Auto Financing Loan Tenure

The price of basic cars such as Toyota Corolla has touched almost Rs 5.0 million, Honda Civic is already up to Rs 6.65 million, while Hilux Revo and Fortuner now cost up to Rs 9.7 million and Rs 12.6 million respectively. Smaller hatchbacks for the masses such as Alto 660cc now cost up to Rs 1.95 million whereas the price of 1.0L Wagon R and Cultus has reached up to Rs 2.39 million and Rs 2.76 million respectively.

fix

Government has been mulling over a price fixing mechanism under the Price Control and Prevention of Profiteering and Hoarding Act, 1977. But whether the government can do that, and how exactly will the they do that, are key questions that need to be asked and will determine not only the future of industry’s growth but the level of investment that will flow into the sector. Nobody knows for sure how long the current unstable situation will persist, but it will surely dent the sales of locally assembled automobiles.

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