ISLAMABAD: Local car prices have increased manifolds in the last two years due to depreciation of the rupee, inflation, and government taxes/duties. As per the available data, the minimum price of Suzuki's Cultus in 2018 was Rs1.3 million, which has now reached Rs1.9 million. The Wagon VXR was available at Rs1.2 million in 2018 and now it is available at Rs1.6 million. Similarly, Swift (RS M/T and RS A/T) was available at around Rs1.4 million, which has now reached Rs2.1 million. Honda Civic 1.8L (I-VTEC and Oriel) witnessed an increase of around 1.2 million in two years, and reached from Rs2.5 million in 2018 to Rs3.7 million at present.
The old prices of City 1.3L (MT and AT) were around Rs1.7 million and Rs1.9 million respectively, which has now touched Rs2.5 million. Toyota Corolla XLI (including A/T) had old prices of Rs1.9 million and now they are available at around Rs2.6 million.
GLI (M/T and A/T) were available at Rs2.1 million and are now costing Rs2.8 million. Toyota Altis (1.6, 1.8 MT, and 1.8 CVT) had a minimum price of Rs2.3 million two years ago but now they are available at Rs3.6 million. Prices of heavy engine capacity vehicles have witnessed the highest hike owing to the Federal Excise Duty (FED). The Toyota Fortuner (4X4) was available at Rs6.4 million, which is now available at Rs9.1 million. Manufacturers have termed the depreciation of the rupee and hike in duties as major reasons for this increase.
He said that over the period the dollar price against Pakistani rupee had jumped from Rs129 per US dollar to Rs166 per dollar. The Pakistani rupee depreciation has also played a critical role in hiking the car prices. He said that during the past two years, car sales have significantly dropped, therefore the production has reduced, which has forced the car manufacturers to layoff thousands of workers.
"Similarly, the FED of 2.5 percent to 7.5 percent was imposed, which hits the industry hard because a car has up to 35 percent share of taxes in its price," he added. Moreover, additional custom duty of seven percent has been imposed recently. These are the main factors behind the surge in car prices. In the first 11 months July-May 2019-2020 of the current fiscal year, car sales registered a decline of 54 percent to 102,137 units compared to 222,167 units sold in the corresponding period of the previous fiscal year.
Honda Atlas registered a 65 percent decrease in sales in 11 months. The company sold 14,387 cars during the period as opposed to 41,676 units in the same 11 months of previous fiscal year. Sales of Indus Motor Company stood at 25,847 units in July-May FY20 against 60,053 cars sold in the corresponding period of previous fiscal year, a fall of 57 percent. Pak Suzuki Motor saw sales contract by 49 percent as they dropped from 120,438 units in July-May FY19 to 61,903 units in the period under review.
Copyright Business Recorder, 2020
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