Indus Motor Company hikes car prices by 18-21%

Rise comes due to spike in freight cost

KARACHI:

Indus Motor Company (Toyota) has increased prices of several models of its completely built-up (CBU) units by Rs1.16-2.28 million following a jump in freight cost and international commodity prices.

Speaking to The Express Tribune, Topline Securities analyst Sunny Kumar said that the company hiked prices of cars in the range of 18-21%.

The company increased the prices of Corolla Cross 1.8L from Rs9.249 million to Rs11.179 million, a jump of Rs1.93 million.

Similarly, the price of Corolla Cross Smart 1.8L variant jumped Rs2.09 million and it is now available at Rs11.959 million.

The cost of Corolla Cross Premium 1.8L has risen by Rs2.140 million to Rs12.249 million.

Prius 1.8L is now priced at Rs13.389 million following a hike of Rs2.28 million. Earlier, the vehicle was available at Rs11.1 million.

Prices of Rush GMT 1.5L and GAT 1.5L models have risen to Rs7.33 million and Rs7.62 million respectively from Rs6.22 million and Rs6.44 million.

“The firm jacked up prices to pass on the cost pressure to the consumers,” he said. “The cost pressure is driven by rising freight charges and soaring commodity prices.”

Other industry players such as MG also increased car prices.

Insight Securities analyst Ali Asif said that since the end of fiscal year 2020-21, KIA has raised prices of its vehicles three times, while other automakers have increased rates at least twice.

The first increase occurred in November owing to the spike in rates of cold-rolled coils, devaluation of Pakistani rupee and a rise in freight cost.

The second increase was made in January 2022 on the back of imposition of federal excise duty (FED) and sales tax.

The ongoing third wave of price hikes is mainly attributable to the increase in freight costs.

He forecast that after KIA and Indus Motor, other players in the automobile sector are also expected to follow the trend and increase prices.

Since the end of fiscal year 2020-21, the prices of completely knocked down (CKD) units have surged by 14-22%.

On the flip side, CBU units witnessed a price increase of 40-48%.

Major factors contributing to the increase in prices of automobiles in Pakistan include increase in shipping time and availability of essential raw material, said automobile expert Mashood Ali Khan.

In addition, the international petrol price was at its highest since 2018, he noted.

All these factors have a direct or indirect effect on prices of manufactured goods all around the world, he said.

Arif Habib Limited Head of Research Tahir Abbas said that Indus Motor Company increased prices of its CBUs including Corolla Cross, Prius and Rush amid a surge in import duties in the mini-budget tagged with the higher global freight charges.

Khan said cars in Pakistan were manufactured with a combination of localised parts and imported CKDs.

“Forecasting is becoming more and more difficult for any business that is operating with international supply chains,” said Khan. “New bottlenecks are appearing day by day which increase the cost of operation.”

In the end, the cost increase will be shifted to the end-consumer, he said.

Prices of automobiles in Pakistan have increased by an average of 10% for all models, but this is not the end, he cautioned.

He expected a price increase of 10-15% in the next few months if the present situation persisted.

Published in The Express Tribune, March 5^th, 2022.

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