Karachi: Despite the government’s intentions to bring the value of the rupee up and reduce the dollar’s value to around 260 or 250 rupees soon, auto assemblers are hesitant to pass on this benefit to consumers.
According to a report by Dawn newspaper, assemblers were approached to get their perspective on the possibility of reducing the prices of locally assembled cars due to the recent increase in the value of the rupee. Their immediate response was “no.”
Consumers have witnessed a significant increase in car prices during the 16-month tenure of the PTI government. This increase, according to assemblers, was due to the rise in the value of the dollar, resulting in higher costs for imported parts and substantial charges for electricity and gas.However, the recent increase in the value of the rupee in the interbank market should have led to either a decrease in the prices of locally assembled products or at least a reduction in the rate of increase. But consumers have yet to see any benefit from this.
On September 5th, the dollar reached 307.10 rupees in the interbank market, whereas it is currently trading at 291.76 rupees. This means that after reaching its highest level, the value of the dollar has decreased by more than 15 rupees against the local currency.
Assemblers had already given consumers a sudden shock due to the rupee’s depreciation, causing prices to rise significantly. Even plants had to shut down due to issues related to LCs (Letters of Credit) and shortages of imported parts.A senior official from Indus Motor Company (IMC) expressed doubts about the possibility of reducing car prices but did not provide any reasons for why prices couldn’t be lowered.
Similarly, a response from a representative of Honda Atlas Cars Limited (HACL) suggested that the company did not raise prices after the increase in the dollar’s value. Local dealers of locally assembled cars also did not hint at any price reductions, despite a decrease in car sales compared to last year.
A dealer from Toyota said that no reduction in prices had occurred so far, and questioned, “What? They increased car prices by up to 300,000 rupees on September 6th.”
A representative from HACL said that if the rupee remains stable below 280 and other costs do not increase, they may consider reducing car prices.
Director General of Prince DFS, Sohail Usman, stated that there was no reduction in prices because electricity, labor, and other expenses had increased significantly.
Akbar Road is known for used and new bikes, and a senior market leader there, Muhammad Sabir Sheikh, said that there was no apparent effect of any reduction in bike prices due to assemblers. He noted that assemblers were importing parts when the dollar exchange rate was at its peak.
With the easing of lockdown measures last month and a decrease in the value of the dollar, assemblers should consider reducing the prices of 70cc motorcycles by 8,000 to 9,000 rupees, 125cc motorcycles by 15,000 rupees, and 150cc motorcycles by 25,000 rupees at the end of October or the beginning of November.
He added that new LCs are being opened at lower rates for the new season, and with the consideration of the dollar rate, taxes should also be collected. Assemblers should reduce prices to attract buyers.
(Thanks to: Dawn News)