Sales of motorcycles have slumped 80% because of high inflation, prompting dealers to appeal to bike assemblers and auto parts’ vendors to slash prices while keeping in view the declining purchasing power of customers.
“We are looking for motorcycle buyers as sales of all bikes have slid. Recently, the US dollar has fallen significantly against Pakistani rupee and petrol prices have also been reduced, but customers have not yet received any relief,” Karachi Motorcycle Dealers Association Chairman Mohammad Ahsan Gujjar said while talking to The Express Tribune.
“Around 30,000 motorbikes were being sold in a month in Karachi and now we are hardly selling 6,000 motorcycles,” he revealed and urged Chinese and Japanese assemblers to scale down prices of 70cc motorbikes by Rs20,000 and Rs40,000 respectively.
Over the past one and a half year, Japanese companies had raised rates of motorcycles having engine capacities of 100cc, 125cc and 150cc in the range of Rs125,000 to Rs175,000 which, Gujjar said, must be withdrawn forthwith.
The prices had been raised when the US dollar stood at Rs334, but now it has come down to around Rs284. With that, the raw material has also become cheaper. “So, bike prices must be reduced,” he stressed. Dealers deal in both Chinese and Japanese brands including Atlas Honda, Suzuki, Super Power, Super Star, Unique, Hi-Speed and others in markets of Karachi.
“People mostly purchase regular motorbikes of 70cc as this is a vehicle for the middle-class and lower middle-class people which they use more than other bikes,” he said.
The association chairman cautioned that the dealers were finding it increasingly difficult to bear the running cost of business including wages of workers, utility bills and other expenses in the current poor economic conditions. “If the market position remains static and prices are not slashed, they would have no option but to close shops,” he added.
Association of Pakistan Motorcycle Assemblers’ former chairman Muhammad Sabir Shaikh revealed that actually motorbike assemblers had imported auto parts when the US dollar was trading at Rs290 and they stopped all imports when the dollar shot up and crossed Rs300.
He pointed out that for around one and a half month the dollar kept rising and for another one and a half month it was going down, adding that uncertainty still prevailed in the market in terms of dollar appreciation and depreciation. “It is quite difficult for the assemblers to take a decision about reducing prices before January 2024 as they are not in a position to announce any price cut because of continuous volatility of the currency,” he said.
“When the US dollar rises, bike prices go up, this is right. But there are also a host of other reasons that drive up prices which include high electricity and gas tariffs, increasing rates of raw material, etc.” Shaikh claimed that the assemblers had started asking dealers to reduce prices ranging from Rs2,000 to Rs5,000 on all motorbikes to provide some relief for the buyers, but no price list was officially issued in the market.
Auto analyst Zain Shariq said there were two major facets to understand the market phenomenon. First, there is a three- to four-month cycle since auto parts are imported and if the US dollar goes up or down, it will take ample time to impact the market. Second, there are inflated utility bills, labour costs and high inflation rates that compel businesspeople to push up prices.
He stressed the need for giving maximum relief to customers with a view to keeping businesses running.
Published in The Express Tribune, November 5th, 2023.
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