KIA car prices increased significantly

Shortage of CKD parts, rise in sales tax drive price increase

KARACHI:

Lucky Motor Corporation (LMC) has jacked up KIA car prices following a recent increase in sales tax rate from 17% to 18%.

New prices will be effective from February 14, 2023, according to a notification issued by the company on February 21. KIA cars, except for KIA Carnival, will now be available for booking at full payment only.

LMC’s announcement indicates that the auto industry has been impacted by the restrictions on letters of credit (LCs) that caused a shortage of completely knocked down (CKD) parts and the rise in sales tax rate.

According to the revised prices, customers will have to pay significantly higher prices for various models.

The company increased the price of KIA Picanto MT from Rs3,200,000 to Rs3,228,000, after an increase of Rs28,000, while the price of KIA Picanto was jacked up by Rs30,000 to Rs3,430,000.

With a rise of Rs42,000, KIA Stonic EX will be sold for Rs4,842,000 compared to the earlier value of Rs4,800,000.

Similarly, the price of KIA Stonic EX+ has jumped to Rs5,295,000 from Rs5,250,000, a hike of Rs45,000. KIA Sportage Alpha, which the company was selling for Rs6,500,000, will now cost Rs6,556,000, after an increase of Rs56,000.

The new price of Sportage FWD is Rs7,111,000, up by Rs61,000 while for KIA Sportage AWD the price is Rs7,716,000, higher by Rs66,000, compared to the earlier price of Rs7,650,000.

The new cost of KIA Sorento 2.4L FWD is Rs8,472,000, up by Rs72,000 while KIA Sorento 2.4L AWD, previously priced at Rs9,100,000, will cost Rs9,178,000, higher by Rs78,000.

KIA Sorento 3.5L FWD, which was priced at Rs9,100,000, will now have a price tag of Rs9,178,000, a hike of Rs78,000.

The company has also raised the price of KIA Grand Carnival, which was being sold for Rs15,000,000, and it will now cost Rs15,129,000, an increase of Rs129,000.

According to Sabir Shaikh, an auto trader based in Karachi, the auto industry is currently facing significant pressure. One of the major issues is the inability to open LCs, which has resulted in a shortage of CKD units.

In this situation, automakers are forced to continue paying salaries to idle workers, which is adding to their financial burden.

Furthermore, the impact of sales tax on the industry is significant, exacerbating an already challenging situation. Apart from that, there are other duties on CKDs, making it more difficult for companies to maintain production levels, he said.

Consequently, many companies have slashed production and their sales in the auto market are expected to decline further.

“The current state of auto industry is a cause for concern, with both automakers and traders struggling to keep up with demand,” Shaikh said.

“Shortage of CKDs and the inability to open LCs are some of the challenges, and the added impact of sales tax and other duties have exacerbated the situation.”

In this backdrop, he added, the industry’s future remained uncertain, and it would likely take some more time before being able to recover.

Published in The Express Tribune, February 22^nd, 2023.

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