Pak Suzuki to hike prices of four-wheelers by Rs10,000 to Rs100,000

KARACHI: Pak Suzuki Motor Company (PSMC) will raise prices across various car models between Rs10,000 and Rs100,000 effective from April 1 to mitigate the impact of high production cost and rupee depreciation, analysts said on Saturday.

It is the second increase in prices during the current year. In January, Pak Suzuki raised prices of four-wheelers and motorcycles.

Pak Suzuki raised price of Mehran VX by 1.26 percent or Rs10,000. Price of its popular brand WagonR VXR was increased by 3.26 percent or Rs40,000. The highest Rs100,000 increase was for the company’s five different models: Ciaz MT, Ciaz AT, Jimny, Vitara and APV. Price of Cultus VXR were increased by Rs30,000.

The new retail prices exclusive of advance income tax after the latest hike will be Mehran VX (Rs799,000), Mehran VXR (Rs880,000), Wagon R VXR (1.264 million), Wagon R VXL (Rs1.344 million), Cultus VXR (Rs1.44 million), Cultus VXL (Rs1.551 million), Bolan (Rs874,000), Cargo Van (Rs840,000), Ravi (Rs796,000), APV (Rs3.14 million), Ciaz MT (Rs2.16 million), Ciaz AT (2.3 million), Vitara GLX AT (Rs4.09 million) and Jimny JLDX MT (Rs2.493 million).

Analysts said Pak Suzuki has been witnessing decline in its profits over the last year, as there has been an increase in the cost of production.

The company’s profit fell 66 percent to Rs1.298 billion with earnings per share of Rs15.77 in 2018. The company posted a loss after tax of Rs94 million during 4QCY18.

Cost of production continues to rise as rupee has lost 33 percent of its value against the US dollar since 2017.

Rupee depreciation, together with ban on non-filers to own cars, dented sales of automakers.

Though the government lifted the blanket ban on non-filers, the damage has already been done, analysts said.

Pak Suzuki witnessed a 11 percent drop in sales to 85,754 units during the first eight months of the current fiscal year of 2018/19. The biggest drop, in terms of percentage, was in the sales of Mehran (27pc) and Bolan (23pc).

Analysts, however, said Suzuki has not been bold enough to increase prices in proportion to the currency depreciation. Rupee depreciation may further increase the cost of production, and sales may further drop in the coming days, they added.

“Suzuki is scared in increasing prices in one go,” Aamir Allawala, former chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) said. “They did it slowly.”

Allawala said the price hike is inconsiderable considering the rupee disparities vis-à-vis dollar and yuan. “They will have to increase the prices further,” he added. “The cost of production has been rapidly increasing since last one year.”

The industry official said Indus Motors kept increasing prices in line with an increase in cost of production. Honda has, however, not been increasing prices on par with the currency depreciation.

Analysts warned that the price hike would affect sales. The economy is in trouble and people’s purchasing power is waning.

The State Bank of Pakistan further increased the interest rate by 50 basis points to 10.75 percent. Banks are offering auto financing at 22 and 23 percent interest rate and people will find it hard to get financial support to buy cars, analysts added.