Carmakers to launch new models

Hike in policy rate unlikely to dent vehicles’ demand

KARACHI:

Despite the deterioration in Pakistan’s economic indicators, automobile companies are gearing up to launch 10-15 new vehicle models in the near future as they are optimistic about the bright future and robust growth of the country.

The locally assembled Peugeot 2008 will be introduced to the Pakistani market over the next couple of days by KIA Lucky Motors.

According to Arif Habib Limited (AHL), the tentative date for launch of the variant is January 20-25 and the car would be priced between Rs4.5-Rs5.2 million.

“The other new variants, planned to be launched in Pakistan, include Toyota Corolla 12th generation (hybrid), Suzuki Swift fourth generation, Peugeot 3008, Peugeot 5008, Changan UNI-T, KIA Cerato and Suzuki Bolan third generation,” Arif Habib Limited Analyst Arsalan Hanif told The Express Tribune.

He projected a slowdown in auto financing numbers on the back of steep hike in the policy rate.

However, the demand is expected to remain intact with major assembly plants expected to operate at full capacities to shrink the average delivery time for cars that is currently hovering between 90-120 days, the analyst highlighted.

Recalling earlier projections, he said that the recent hike in the policy rate was supposed to result in slowdown in demand however that might not happen.

He stated that regulatory duty on completely built up (CBU) unit of hybrid cars having an engine capacity of 1,500-1,800cc had been raised to 50% from 15%. Moreover, the levy on CBUs of 2,000cc has doubled from 50% to 100%.

“Furthermore, 50% tax has been imposed on imported cars or conventional engine cars (CBUs) having an engine capacity of over 850cc but not more than 1,800cc,” he said. “The previous duty was only 15%.”

Moreover, 10% regulatory duty has also been slapped on battery packs of electric vehicles (over 50kwh) however commercial trucks and buses remain exempted.

According to Hanif, surge in levies on imported vehicles was expected to turn odds in the favour of local players because consumers were likely to shift their focus from expensive CBUs to locally assembled alternatives.

“We expect tough competition to prevail in the automotive sector with new and competitive players like KIA, Hyundai, Changan, Sazgar striving to strengthen their market presence,” he said.

He held firm view that the approval of the new Auto Development Policy 2022-2026 could prove to be a potential trigger for the auto industry, he said.

Al Habib Capital Markets analyst Sunny Kumar pointed out that Chery Automobile has formed joint venture with Ghandhara Nissan to launch two models of Chery Tiggo.

According to him, one variant would be five-seater crossover SUV which the second model will have seating capacity of seven people.

“Honda Atlas Cars is bracing up to add 11th generation of Civic variant to its line up with an expected price tag of Rs5.4-5.5 million” he said. “Pak Suzuki Motors is also mulling to offer fourth-generation Swift to its consumers at Rs2.6-2.8 million.”

Car sales will maintain their uptrend in fiscal year 2021-22 despite strict auto financing policy and increase in interest rate as evident from the delivery period of around three to eight months on different cars, said Kumar.

This means that sales of automobile companies will remain intact for the rest of the year,” the analyst added.

 

Published in The Express Tribune, January 11^th, 2022.

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