KARACHI: In a fresh round of car prices increase, the automobile assemblers in Pakistan, across the board have hiked the prices by an average 9.4% in March 2022 to pass-on the cost pressures emanating from the continuous PKR devaluation against USD.
To note, this is the third time prices have increased post annual budget. The first round of price hike came in November 2021, which was on account of rising cost pressures, the second one came in January 2022 when the government reversed the tax benefits given in FY22 budget, an analyst at Ismail Iqbal Securities said.
Looking at the currency devaluation, further price hikes cannot be ruled out. Continuous price hikes coupled with higher interest rates and limitations on auto financing would likely hurt auto demand in next fiscal year.
The price hike of City 1.2M/T by 14.7% touched the upper end of the spectrum, while the price increased by Sportage AWD of 3.7% settled at the other end of the spectrum.
The new Civic that was recently launched in March 2022 also witnessed a price hike in a range of 4.5-6.0%, while the Suzuki Swift that was launched in the same period saw price increase by around 7.8%-9.3%.
Comparison with Post Annual budget FY22 Prices
Comparing current prices with post annual budget prices (prices were reduced due to reduction in sales tax and FED) shows the magnitude of price hikes in ongoing year.
The highest price jump was witnessed in 1000cc cars, where prices of Cultus, Wagon-R and Picanto have surged in a range of 30-36%. While the lowest price increased spot in Crossover SUVs such as Sportage and Tucson, where the prices increased in a range of 14-17%.
There have been addition of 12 new entrants as car manufacturers bringing in about 15 brands and 25 new vehicles in the country. As far as consumers are concerned, there are simply no good quality new cars available at lower price points, forcing them to buy used imported or older locally manufactured models from the secondary market. The variants being introduced in the country by new entrants have so far failed to fill in those gaps.