Jun 012008

KARACHI, May 31: The Pak Suzuki Motor Company Limited has increased the car prices by Rs15,000-30,000 in cars and LCVs and Rs40,000-50,000 in Liana petrol and CNG version.

Indus Motor Company has also jacked up the price of Toyota Corolla and Daihatsu Cuore by Rs15,000-20,000. This is the second increase in car prices since February 2008.

Vehicles imported by Pak Suzuki like Jimny Jeep have also become costlier by Rs100,000, company spokesman Shafiq Ahmed Shaikh said on Saturday.

He said that the company had passed on a little impact of the falling rupee against various currencies, rising steel sheet prices in global markets and increase in rate of petrochemical items. He claimed that the company was still absorbing the major portion of the rising cost of production. The new prices are effective from June 1, 2008.

Director Corporate Planning, Indus Motor Company Shad Saad M. Hussain said the local industry had been under pressure after recent developments like imposition of 35 per cent LC margin coupled with increase in interest rates.

He said the 35 per cent LC margin would directly affect the cash flows of manufacturers and vendor besides resulting in increase in cost and prices. He said many members of supply chain (suppliers/vendors) would not be able to afford LC. He was of the view that LC margin restriction would result in blockage of auto industry’s funds for LC of about Rs3 billion at any given time.

Mr Saad said that auto financing rates would increase after rise in interest rates and it will reduce auto sales. Financing contributes about 60 per cent of auto sales. The cost of borrowing would increase and would dampen any expansion plans, he added.

He said that yen has increased by 12.33 per cent against the rupee in the last three months while the dollar has risen by 8.9 per cent in the last three months, thus resulting in rising cost of imported CKD, CBU, raw materials, etc.

The Indus Motors executive said that rising international prices of metals were resulting in high cost of auto parts and production. The six to eight hours load-shedding per day was hurting the production of car makers and vendors thus causing delay in delivery of vehicles to the customers, he added.

The Pak Suzuki had increased prices first on February 1 from Rs5,000-20,000 and second on April 1 from Rs10,000-20,000.

The Indus Motors had also increased prices on February 23 from Rs10,000-20,000 and on March 10.

All Karachi Motor Dealers Association Chairman H.M. Shahzad expressed surprise over the stance of auto industry that it was doing its best in absorbing the negative impact of rising production cost.

He urged the government to check whether the three-time price increase by the assemblers was really justified with the actual impact of falling rupee, rising metal and steel sheet prices and petrochemical items.

Source: Daily Dawn, 1/6/2008

 Posted by at 5:05 pm

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