Pak Suzuki increases prices of its Mehran, Wagon R variants

Rates of Bolan and Ravi also revised upwards

KARACHI: In an anticipated move, Pak Suzuki Motor Company (PSMC) has increased prices of different variants in the range of Rs10,000-Rs20,000, effective from January 1, 2018.

The prices of Suzuki Bolan and Ravi have been increased by Rs10,000, Mehran's VX and VXR variants also get costlier by Rs10,000 (price of CNG variants remains unchanged), while Wagon-R VXR and VXL will now be expensive by Rs20,000.

The new price of Wagon-R's VXR variant would be Rs1.074 million, while its VXL one would be available for Rs1.114 million. The rates on Pak Suzuki's website are yet to be updated.

Similarly, Mehran's VX model is now priced at Rs689,000 and its VXR variant costs Rs742,000.

"The move was widely anticipated due to the recent rupee devaluation against the dollar," commented a JS Research report on Monday.

Perturbed with the widening current account deficit, the government finally allowed the rupee to lose its value by around 5% against the dollar last month.

The auto industry is particularly sensitive to rupee depreciation because of its high dependence on imported raw-material and parts that become expensive with the fall in the rupee's value against major international currencies.



However, the same industry is also well-positioned, compared to other industries, to easily pass on the impact due to high demand of automobiles in the country.

"We believe the price increase will enable Pak Suzuki to pass on the impact of rising costs on to end consumers without any significant dent to volumes, given current high demand," the report added.

The country is all set to touch the highest-ever yearly sales in calendar year 2017 (final sales figures are expected to be released around January 10, 2018). In the first 11 months (January to November) 2017, car sales (including light commercial vehicles and jeeps) touched 221,209 units, up 18% compared with 187,495 units in the same period of 2016.

Last week, Indus Motor Company - the makers of Toyota Corolla in Pakistan - increased prices of some of its variants by Rs50,000-60,000. After Pak Suzuki and Indus Motor, analysts say Honda Atlas Cars is also expected to raise the prices of its cars soon.

Auto sector has remained one of the best-performing sectors at the Pakistan Stock Exchange (PSX) in recent years. However, similar to the overall poor performance of the stock market in 2017, the auto industry's returns were also not impressive.

According to the PSX data, the market capitalisation of Pak Suzuki, Indus Motor and Atlas Honda Cars shrunk to Rs246.1 billion, down 9.73% from Rs272.7 billion in 2016.

When the PML-N government launched the long-awaited five-year auto policy 2016-21 in March 2016, its core target was to attract auto giants from South Korea, Germany and France.

The government succeeded in its endeavour as Kia and Hyundai have already started working on their assembly plants while Volkswagen and Renault have also announced their plans to set up a plant in the country.

Analysts say the industry would finally see tough competition when companies like Hyundai, Volkswagen, Kia and Renault would start their production from 2019.