Automakers Increasing Prices Even When Rupee Stands Stable

Automobile market in Pakistan acts quite weirdly as compared to other markets. When carmakers in regional countries are giving heavy discounts and benefits due to slowdown in sales, automakers in Pakistan are increasing prices even when the sales are nose-diving.

Related: Renault Kwid Facelift Launched in India at INR 2.83 Lac

In recent times prices of cars kept on constantly increasing primarily due to fluctuating Rupee value against the US Dollar & added duties and taxes by the government. Since December 2017, car prices were revised for nearly 12 times with an increase of up to 48% in vehicle prices. Auto assemblers never missed a chance of revising the prices even in the slightest of variation in Rupee-Dollar parity.

However since August 2019, Rupee has regained some strength and has recovered back from Rs 160 to Rs 155 against the Dollar. Now instead of reducing prices, the automakers are busy giving another push to car prices even when the industry is suffering from a -42% decline in sales.

Related: Car Price Comparison: December 2017 vs July 2019

Pak Suzuki jacked up the prices of its hot selling Alto 660cc by up to Rs 85,000, followed by United which according to them added a few improvements worth less than 10,000 but increased the price of Bravo hatchback by Rs 60,000. Pak Suzuki also increased the price of Vitara GLX soon after the Kia Sportage was introduced. Honda introduced the BR-V facelift and increased the prices by up to Rs 100,000 and has further indicated to revise rates since the recent increase was labeled as ‘introductory’.

Al-Haj FAW has also revised prices of its vehicle lineup by up to Rs 95,000 while there is literally no improvement offered with the vehicles. It is quite astonishing that since the last 3 months, there has been no additional duty or tax implemented by the government while the Rupee has been stable too, but the automakers are constantly giving substantial push in prices.

Related: Local Automakers Want Tax Relief from the Government

Instead of offering discounts to boost sales, it looks as if local auto assemblers are trying to cover up their losses by substantially increasing prices, perhaps aiming to generate 100% profit from a single unit instead of 20% each from 5 different units.

Unsold Honda and Toyota units

Honda and Toyota are already observing non-production days since last 3 months whereas Pak Suzuki is kept alive and kicking due to high demand of Alto 660cc, sparing which the company is also experiencing a terrible -68% decline in sales.

Related: Success of Pak Suzuki Alto and Failure of Newcomers to Cash In

Whether the practice of increasing prices beyond limits will help recover the dwindling sales looks like a fantasy, but only time will tell whether this move is going to help these companies patch up their declining profits. What according to you could be the reason behind the latest trend of increasing car prices in Pakistan, let us know with your comments.

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