Dollar phenomenon to impact cars prices in 3-4 months

March 12, 2014 Off By Web Desk

KARACHI: Vehicle prices in Pakistan are lower than many regional countries due to heavy localisation but the inflation in local currency, depreciation against foreign currencies and other factors do pressurize the car makers to increase prices, unwillingly, this was stated by President Pakistan Automobile Manufacturers Assemblers Dealers Association (PAMADA) Iqbal Shah.

Car manufacturing is a complex business and car prices are neither increased or lowered due to immediate impact of increasing or decreasing foreign exchange, the impact of lowered foreign exchange today will have contribution to vehicle made after 3-4 months, as most of the inventory for production has been purchased already while some purchases are still in high seas.

However it is also a fact that one of the OEM has reduced its standard model price by Rs 90,000, recently, offering its customers a low priced variant. This particular standard model has received huge response from the consumers.

Pamada chief said that the local auto industry is being grilled for not lowering prices of new vehicles when Pakistani rupee has appreciated against dollar during last few days only. ‘This is highly uncalled for because exchange rate is not the only factor in vehicle prices. The local auto industry has maintained prices during last 12 months despite heavy increases in their input costs, the impact of budgetary measures on vehicles prices is not car manufacturers’ decision,’ he added.

‘Minimal forex impact was passed on to consumers during the year, whereas remaining was absorbed and efforts were made by the local industry to reduce costs,’ he said, adding that on the other hand, the prices of used imported vehicles have gone north during the same period and unscrupulous trader mafia will surely not reduce their prices whereas they had not added any value locally and the cars imported had only one input and that is precious foreign exchange.

Whereas the used cars imported last year with foreign exchange even lower than today are being sold at exorbitant prices without any contribution to the economy.

While mentioning increase in the input costs of local car makers, he said that as per marketing principles every OEM strives to keep the prices on lowest possible edge but the fact remains that during last one year minimum wage has gone up by 25% (from Rs 8,000 to Rs 10,000); electricity per unit cost raised up by 30%; gas per unit cost is up by 16%; fuel prices are up by 8%; and security related costs are up as well due to uncertain law and order situation.

Irony is, the industry which contributes almost 2% to GDP is grilled over false argument and by those who have no respect of law and are bent upon promoting illegal activities, conniving for corruption and inflicting huge blow to local documented industry and hoodwinking the customers.

The price of the smallest used imported vehicle in local market now starts from minimum 9 to 10 lac rupees whereas local industry provides brand new vehicle at much more competitive price, reasoned president Pamada. ‘The government should take action against these law breakers who are hurting the national economy and local industry as during last 12 months they have sent close to 300 millions of dollars through illegal channels to import over 26,000 used vehicles – a huge burden on our economy and currency,’ he added.

President Pamada further added that the concerned should raise voice against this trader mafia instead of grilling local auto industry that is contributing heavily towards national economy and providing employment to millions of people.