In the wake of a substantial decrease in dollar value, many customers have asked whether automobile companies will withdraw the recent price hike of July.
On various social media platforms, customers have demanded that automobile companies must decrease the prices of their vehicles as the rupee has strengthened at a substantial level against the dollar.
The dollar has dropped from Rs248 to Rs213 in the inter-bank market and in the open market it is floating around the Rs210 mark, said Pakistan Businesses Forum (PBF) President Mian Usman Zulfiqar.
Accordingly, Indus Motor Company has passed on the benefit of appreciated rupee to its customers on Toyota Yaris variants, with a price reduction ranging from Rs260,000 to Rs310,000.
In addition, the company has decreased prices by Rs330,000 to Rs440,000 on different variants of Toyota Corolla.
On various Toyota Hilux Revo models, the company reduced the price in the range of Rs650,000 to Rs820,000. The Japanese auto company deflated the prices of Toyota Fortuner variants from Rs910,000 to Rs1.14 million.
“Toyota takes the lead by announcing a reduction in car prices post-rupee appreciation and now all OEMs have to follow suit. This was the necessary step as consumers were continuously demanding automobile companies to reduce car prices,” said auto analyst Arsalan Hanif.
Due to the inflated prices, Pakistani car sales (including sales of non-PAMA members) witnessed a downward slide of 59% to 14,000 units in July 2022 as compared to the figure in June 2022. The sales were also down by 52% when compared to the same period last year.
Usman Zulfiqar said the profits of automobile companies have declined because customers cannot afford these high prices after the hike in July.
He also expressed astonishment as to why big players have failed to convert their plants to 100% local production. He also questioned why these companies still import CKD kits for their vehicles, when the government has given them the licence to manufacture these kits.
“Since the last price increase in April was at dollar parity of 185, it is unlikely that we will see a cut in automotive prices anytime soon as the value of the Pakistani rupee against the dollar is still above the company’s last dollar parity,” said Aba Ali Habib Securities Auto Analyst Ali Asif.
“However, if the dollar stabilises, a miracle might occur where car prices will be revised (at a price parity where dollar stabilises),” he added.
Usman Zulfiqar said the quality standards of automobiles are not up to the mark when compared with the exorbitant prices being charged from customers.
“If we look at Thailand, the same manufacturers have produced better quality cars with additional features. In this regard, SOPs must be issued by the regulator after studying the standards of India, Thailand and Malaysia,” he added.
Car companies have set the prices at a rupee-dollar parity of Rs235, and since then, the rupee has appreciated by 10% against the dollar, said Al Habib Capital Markets Auto Analyst Asad Ali.
“It is too early to say car prices should decrease as the rupee-dollar parity has not stabilised yet. On the other hand, car companies increased the prices to offset the impact of steep rupee devaluation and did not pass on the whole inflationary pressure to the consumers. Henceforth, auto manufacturers will move to regain their margins, which have shrunk considerably,” he added.
Usman Zulfiqar, with a tone of optimism, reflected on the promise and potential of the automobile industry in Pakistan. He underscored “we are producing brilliant engineers in the field and once there is greater synergy with industry, the results will be impressive”.
Published in The Express Tribune, August 16th, 2022.
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