Honda raises car prices by up to Rs85,000

Company says it is not possible to maintain current rates considering rupee devaluation

KARACHI: Following the devaluation in the rupee, Honda Atlas Cars has announced to inflate price of its cars by Rs50,000-85,000, according to a notification issued by the company to its dealers.

“Refer to the last rupee devaluation, where Honda Atlas Cars Pakistan Limited did not pass any impact of exchange rate to the customers with the hope of rupee stabilising,” stated the notification.

It said that at present, it is not possible to maintain the current rates, and Honda Atlas is compelled to increase the prices of its cars with effect from April 1, 2019.

The company jacked up Rs65,000 on its Honda City 1.3L MT variant, from previous Rs1.85 million to the current Rs1.92 million. It raised the cost of 1.3L AT variant from Rs1.99 million to Rs2.06 million.

On the other hand, the 1.5L MT variant became costlier by Rs65,000 to Rs1.98 million from the previous Rs1.91 million. The company’s 1.5L AT model also became costlier by Rs65,000 to Rs2.12 million.

Moreover, the automaker raised price of 1.5L Aspire MT from Rs2.06 million to Rs2.13 million, while the new price of 1.5L Aspire AT went up from Rs2.2 million to Rs2.27 million.

The company also increased prices of its variants BR-V CVT from Rs2.38 million to Rs2.43 million and BR-V S CVT from Rs2.48 million to Rs2.57 million, while it kept BR-V MT variant’s price unchanged at Rs2.23 million.

Only City and BR-V backorder cars due till April 2019 and payments clear (parked) till March 30 will be delivered and invoiced on the previous price, according to the notice. Whereas the remaining backorder with full or partial payment will be invoiced on new prices, the company notified.

The price of Civic will be announced later; till further communication, new booking, with a minimum amount of Rs1.2 million, should be continued, wrote Amir Nazir, General Manager Sales and Marketing Division.

The company said it will announce new prices of variants 1.8L VTI CVT and 1.8L VT SR CVT later.

“The auto companies’ profit margins contracted from 5-6% in December 2018 to around 3%,” said JS research analyst Ahmed Lakhani. “Honda’s margin situation is also the same,” he said.

This is the second time in the current year the company increased its car prices. The previous increase was not enough according to the company’s books, said the analyst.

If inflation reaches 10%, the company would not be able to meet the gap by inflating its prices by the same percentage, as a surge in price discourages buyers and subsequently decreases volumes of the company.

This decline further creates ripples, as the less the company makes a product, the more cost it incurs, he said, adding this will probably not be the last time the auto companies increase their prices.

The nation is witnessing this chaotic inflation as the current government is not taking out-of-the-box steps to tackle the current situation due to which dollar is going up, said BMP analyst Ahmed Javed.

Published in The Express Tribune, April 2^nd, 2019.

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