Pak Suzuki raised prices by 1.5% (or Rs10, 000 to Rs25,000) on different car variants despite 12.23% year on year depreciation in yen against Pak rupee during 2013. PHOTO: FILE
This was the first car price hike from any of the three leading car makers in the country. All these car producers raised their prices at different occasions in the previous year.
Pak Suzuki spokesperson said that the company took the step to offset the pressure of rupee depreciation against the dollar and other inflationary effects in recent months.
Meanwhile, InvestCap Research report said that the timing of the price increase was ‘surprising’. “The price increase at this time appears surprising and is expected to improve profitability in the coming year,” read the report. “However, considering the already peaked prices of different variants of the company, the recent price hike may limit gains as volumetric sale of the company may somewhat decline.”
Pak Suzuki raised prices by 1.5% (or Rs10, 000 to Rs25,000) on different car variants despite 12.23% year on year depreciation in yen against Pak rupee during 2013.
“Pak Suzuki must benefit from this price hike, this may have come to offset the effects of electricity prices that the government raised in August 2013,” JS Global Capital analyst Atif Zafar told The Express Tribune.
Analysts say local automobile companies benefitted from the depreciation of yen against rupee in the last three months, which has gained 9% against Yen.
However, dollar appreciation against the rupee during this same period did affect margins of auto companies. For instance, dollar appreciated by 4.7% against rupee and 1.7% yen from October to December 2013.
“The depreciation of rupee and yen against dollar in the fourth quarter of 2013 (October to December) is supposed to be the major factor behind the current rise in cars sale prices,” InvestCap Research report added.
Local car producers received positive news last year when the government reduced the age limit of used car imports from 5 years to 3 years. Due to this decision the imports of used cars gradually dropped in the last 12 months and the sales of locally produced cars increased.
Car importers have demanded the government to reverse this age limit and allow the import of cars at least 5years old in order to increase the competition for local carmakers. However, the local industry maintains that any increase in used car imports will hurt the sales of new cars in the country and hence it is damaging for the industry.
Published in The Express Tribune, January 4th, 2014.
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All companies are exploiting consumers
Auto Mafia at its best
Feeble minded auto corporations of Pakistan. We are still getting an 80's technology Mehran and that too of 0.6million. For-God sake Government do something! Let go your hefty kickbacks please!
du to announcment of new AUTO INDUSTRY POLICY they are maybe dealing with Govt as in past practice . and increase in prices proves that they are going to pay somthing unofficial for favourable AIP.
Local car industry is run by crooks who know nothing but profit!