Getting expensive: Pak Suzuki to raise car prices for third time this year

Prices will go up in a range of Rs20,000 to Rs30,000 from Friday

KARACHI: Notwithstanding a bumpy road ahead due to frequent change in government’s policies and expected rise in competition with the entry of new players, Pak Suzuki Motor Company is all set to raise car prices in the range of Rs20,000 to Rs30,000.

According to Suzuki dealers, the company will increase car prices from Friday, which was also confirmed by a company official.

The reason given by the Suzuki official for the third price increase in 2018 was the same - the weakening Pakistani rupee. Previously, Suzuki had increased prices in January and March this year following rupee’s depreciation.

Although the company official did not disclose prices of which cars will be increased, a Suzuki dealer said the market was expecting hike in almost all variants.

Meanwhile, there were apprehensions in the auto industry that demand would fall after the government put restrictions on new vehicle purchase by non-filers of income tax returns. Reports suggest roughly half of the car buyers are non-filers.

Existing auto industry players - Suzuki, Honda and Toyota that have dominated Pakistan’s market for decades - will face tough competition from new carmakers that will enter Pakistan’s market soon.

Nissan, Kia, Hyundai, Renault and United Motors are expected to roll out their cars in the next couple of years.

Moreover, according to an estimate of a research analyst, 40% of car sales take place through auto financing in Pakistan and a recent increase of 50 basis points in interest rate by the State Bank may have a slight impact on car sales.

The analyst, who asked not to be named, said existing carmakers had room to increase car prices for the next one year as production by the new entrants was expected to begin from June next year. “I don’t think price increase will affect sales of current players for the next one year. They are selling 100% of what they produce,” the analyst commented.

He added that after the government put restrictions on the import of used cars in December 2017, sales of Suzuki cars, especially WagonR, surged immediately. As a consequence, Suzuki was forced to ask dealers to stop taking orders for some time in order to avoid late deliveries.

The analyst was of the view that the new entrants would affect sales of imported used cars more than domestically manufactured cars, adding Pakistan’s auto industry would be price sensitive after new players begin selling cars next year.



Published in The Express Tribune, June 1^st, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.