KARACHI: The decrease in auto prices announced with much fanfare in the second week of July following a cut in duties and taxes in the federal budget barely lasted four months, with assemblers hiking up prices sharply in recent days.
Back in July, auto assemblers had slashed prices by Rs62,000-400,000 on various locally-assembled cars and SUVs.
However, since the beginning of November, auto prices have seen a sharp increase as assemblers blame rising freight rates, container shortages, expensive raw materials and falling rupee against the dollar for the latest increase.
On November 9, Lucky Motor Corporation Limited (LMCL) increased prices ranging from Rs228,000-500,000 on locally-assembled and imported vehicles. The same day, prices of Toyota vehicles were increased by Rs140,000-580,000. Other assemblers are also flexing their muscles to pass on the impact to consumers.
Market sources said that Honda Atlas Cars Limited (HACL) on Wednesday announced price hike of Rs130,000-485,000 on different models of City, Civic and BR-V. The newly-launched Honda City price had also been increased by Rs130,000-195,000.
Sources said Regal Automobile Industries Limited (RAIL) has planned to jack up prices by Rs200,000-400,000 on different models this week.
It may be recalled here that Changan Pakistan, a Master Group company, which had slashed prices in line with other assemblers after duty and tax cuts in Budget FY22, was the first company to increase prices in mid-August. However, the assembler had to suspend the price hike after the government intervened.
It is not clear whether the big assemblers have now received a green signal from the government or they are passing on the impact of soaring cost of production on account of rising freight, vulnerable exchange rate and raw material prices on their own.
Market sources said that the government had never taken any notice when the assemblers had not passed on the impact of gaining rupee against the dollar from August 2020 to May 2021 to the consumers.
In August 2020, one dollar was available at Rs167.80 as compared to Rs152-153 in May 2021.
Top Line Securities — while quoting takeaways from the corporate briefing of Indus Motor Company (IMC)— said the company was least affected in the auto space from semi-conductor chip shortages which is also evident from its shorter car delivery time compared to its peers.
According to Insight Securities, the assembler of Toyota vehicles has enough chip stocks till April 2022. The supply/production of chip shortage would be normalized by April, it added.
IMC management believes that with tightening in auto-financing regulation may impact Fortuner sales in near terms. However, Hilux may not have the same impact on sales as Fortuner.