Thursday July 18, 2024

Carmakers set to jump on price hike bandwagon

Analysts expect car prices to increase by up to 15 percent

By Bilal Hussain
March 24, 2022
Indus Motor Company and Lucky Motor Company have already increased car prices. The News/Files
Indus Motor Company and Lucky Motor Company have already increased car prices. The News/Files

KARACHI: More carmakers are seen jumping on the bandwagon after two major sector players ratcheted up prices, citing cost pressures and adverse rupee-dollar parity, which may have ushered in a new spell of hikes from the industry, sources said on Wednesday.

Analysts expect the car prices to increase by up to 15 percent.

Indus Motor Company and Lucky Motor Company have increased car prices and more Original Equipment Manufacturers (OEMs) and assemblers are seen climbing the band wagon.

Given the trend, car prices of Suzuki, Honda, and Hyundai are also expected to increase within the next two weeks.

Muqeet Naeem, a research analyst at Ismail Iqbal Securities said Honda could raise the price of City and BR-V.

“Suzuki may also increase car prices slightly because in November, the company increased prices significantly.”

Naeem added that Hyundai was also facing cost pressures and may also jack up prices again this year.

Mashood Khan, an auto sector expert and former Chairman Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), said Pakistan’s auto sector would see a dominos effect “as when one OEM increases car prices, others follow too”.

“It is because all of the companies are facing similar cost pressures such as rupee depreciation against dollar, increase in the prices of imported raw materials such as steel,” he explained.

Khan added that the auto sector around the world was facing a shortage of raw material.

He expects rising car prices and State Bank of Pakistan’s curbs on auto financing may bring sales down in the third quarter of the this calendar year from July onwards.

However, HM Shahzad, Chairman All Pakistan Motor Dealers Association, said increasing car prices would not bring the delivery period down because the demand was too high and price factor would hardly dent the sales.

An industry official said car demand was unlikely to go down because of the prevailing political situation in the country.

“Buyers will buy cars whether this government stays or goes. We have always seen car sales increase in election years,” the source said.

He added that car prices would be going up between 10 percent and 15 percent during this round of price hike because cost pressures were roughly the same for all OEMs.

On Tuesday, Toyota jacked up car prices between Rs287,000 and Rs1,260,000.

The Japanese carmaker in its recent acorporate briefing apprised investors about the current challenges and future outlook of the company and hinted at potential price hike by 12-13 percent.

Indus Motor Company, the assemblers of Toyota in Pakistan also said they were expecting volumes to shrink by 15-20 percent during the next fiscal year.