The government recently hiked the General Sales Tax (GST) on locally assembled automobiles that are either 1400cc & above, their prices exceeding Rs 40.0 lac (without tax), and double cabin 4x4s.
Responding to this, Pak Suzuki announced a massive increase of Rs 304,000 to the price of the Swift GLX CVT variant after which the top-spec variant of the hatchback retails at a whopping Rs 54.29 lac. A similar move was anticipated from Toyota and Honda, however, to our surprise, Indus Motor Company (IMC), followed by Honda Atlas announced a major reduction in prices of 1.3L Toyota Yaris and 1.2L Honda City respectively.
Related: Suzuki Swift GLX CVT Now Cost Rs 5.4 Million
The price of the most expensive 1.3L Yaris variant, the Ativ CVT is Rs 47.66 lac whereas the corresponding City variant, the 1.2L CVT is PKR 46.89 lac. This means that the most expensive 1.3L Yaris variant is Rs 6.63 lac less expensive than the Swift, whereas the most expensive 1.2L City variant is Rs 7.4 lac cheaper than the Suzuki hatchback.
This is sort of a master stroke by the two automakers. By reducing their profit margins they have managed to keep the price (without tax) below the Rs 40.0 lac threshold, thus cleverly avoiding the 25% GST, which in usual cases is 18%. With this, the Swift has now become more expensive than both the Yaris 1.3L and City 1.2L and is expected to face a negative impact on its sales. Bear in mind the Swift is currently the second bestselling model in Pak Suzuki’s portfolio, only behind the Alto 660cc.
Related: Alto and Swift Propel Pak Suzuki’s Decent Start to 2024
Although the Swift has a fuel-efficient 1.2L engine, it is newer than both the Yaris and the City, and it is well equipped, but its high price in comparison to its sedan rivals in the same price range will undoubtedly dent its sales, given that the Toyota Yaris and Honda City have become more appealing to buyers following price reductions.
How will Suzuki respond to this move is yet unknown but is likely expected to alter its course of action in forthcoming days. Though the reduction in prices of Toyota Yaris and Honda City may not look too substantial to many, it sure has set a trend. It also shows us that if assemblers want, they can always cut their margins to improve better results in terms of sales. What is your opinion regarding this interesting market situation, do share your thoughts in the comment section below.
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
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