Car prices raised by 11%

Manufacturers blame economic uncertainty, import curbs for price increase

KARACHI:

Auto manufacturers have increased prices yet again on the grounds of economic uncertainties, exchange rate issues and an increase in sales tax.

Lucky Motor Corporation Limited (LMCL) increased the price of its Stonic EX and EX plus to Rs5.2 million and Rs5.73 million respectively, from Rs4.9 million and Rs5.4 million. Similarly, the Sportage Alpha, FWD and AWD prices have also been raised to Rs7.05 million, Rs7.79 million and Rs8.37 million respectively, compared to the earlier prices of Rs6.65 million, Rs7.35 million and Rs7.9 million. 

Speaking to the Express Tribune, Auto Analyst at JS Global, Wasil Zaman said, “The automakers have increased prices by 11% this time, of which 7% is due to higher GST on 1400cc+ vehicles and 4% for all vehicles due to the rupee’s devaluation against the dollar.”

The price of the Sorento 2.4L FWD, 2.4L AWD, and 3.5L FWD have also been increased to Rs9.54 million, Rs10.39 million, and Rs10.39 million respectively, from the earlier prices of Rs9 million and Rs9.8 million each. 

Peugeot 2008 Active and Allure prices were also hiked to Rs6.84 million and Rs7.58 million respectively, from Rs6.45 million and Rs7.15 million. 

While many assemblers are expected to pass on new prices, the new 25% GST rate became applicable on all 1,400cc and above vehicles with effect from March 8, 2023.

The assembler and seller of Toyota cars in Pakistan, Indus Motor Company (IMC), also raised the price of its vehicles. The increase, which ranges up to Rs2.017 million, took effect on March 10. 

The auto giant attributed the hike to economic uncertainties, exchange rate issues, and an increase in sales tax.

In a letter to its dealers, the company explained that the unstable economic situation and volatile rupee to dollar exchange rate made it difficult to maintain the current retail prices. 

The recent increase in sales tax on CKD vehicles with engine capacity of 1400cc and above has also contributed to the price hike.

As a result, consumer will have to pay Rs4.499 million for a Yaris 1.3MT, over Rs20 million for a Fortuner Legender and Rs6.169 million for the Corolla 1.6 MT after the new increases ranging from Rs183,000 to Rs593,000 were implemented. IMC had already raised its prices in February by up to Rs890,000.

IMC informed analysts that its sales had dropped by 52% year-on-year in first half of 2023 (IHFY23), while its market share fell to 18% from 20.4% in IHFY22. Top Line Securities noted that the sales dropped due to import restrictions on parts, with the State Bank of Pakistan (SBP) allowing only 50% of the import quota until November 2022. 

Later, the issuance of a Letter of Credit (LC) was left at the discretion of banks, leading to a further drop to the import quota to about 25-30% for different auto assemblers.