Increased prices make automobiles less affordable for Pakistani consumers

June 05, 2023

Mansoor Sadiq

As the rupee devaluation has hit hard the country’s middle- and lower-income segments with skyrocketed inflation, the ever-increasing prices of automobiles have also dented the purchasing power of buyers. Rupee devaluation and import restrictions on automobile parts had a cumulative effect on prices of almost all variants of automotive brands, which surged 30% to 40% in the local market.

According to Pakistan Automotive Manufacturers Association (PAMA), sales of new cars declined by 85% on a year-on-year (YoY) basis amidst non-production days on part of all leading automotive manufacturers in the country. Car sales fell to 2,844 units in April 2023 against 18,626 units in April 2022. During the first 10 months (July-April) of FY23, a total of 88,620 units were sold, down by 54% from 191,238 units sold during the same period of FY22.

Sohail Bashir Rana, a senior representative of PAMA, said while talking WealthPK that massive rupee devaluation was the major cause behind the skyrocketing prices of cars. Rana said almost all leading automobile assemblers have shut down production on account of low demand and raised production costs following import restrictions. Jahanzaib Khan, an automotive expert from Rawalpindi, told WealthPK that price adjustment of all vehicles is associated with dollar rate. He explained that the people in Pakistan earn in rupees, but had to pay in parity with dollars while buying cars, which makes the transaction unaffordable for them.

He also noted that the prices of automobiles of different variants increased by 50% to 70% during the last one year. According PAMA, the escalating economic and political unrest had a negative impact on vehicle demand, as sales of automobiles, light commercial vehicles, jeeps, and vans witnessed a massive decline. Raja Aryan, an auto dealer from Rawalpindi, said the prevailing decline in auto sales is also because of delayed delivery of vehicles to buyers owing to shortage of imported raw material and import restrictions. Aryan said all leading automobile assemblers including Honda, Suzuki and Indus Motor have shut down operations on account of the unavailability of imported automotive parts, which also caused a halt in the manufacturing of automobiles and subsequently raised the prices for consumers.

Credit: Independent News Pakistan-WealthPk