The locally assembled cars become more costly
October 14, 2011
The auto assemblers in the country have yet again increased the prices of different brands of vehicles, taking full advantage of monopolistic position created for to them by the government.
Instead of rationalization the auto assemblers have raised prices of different model by 4 to 5 times during the current year, 2011, so far. The Toyota has made fifth increase this year in July while other assemblers Suzuki and Honda each have registered 4th price hike on different models. Most recent price surge came from the Suzuki Motors which pushed the price by Rs 14,000 to Rs 30,000.
After the recent price hike the Mehran VX petrol and VXR CNG will now cost Rs 14,000 and Rs 19,000 respectively more while Cultus CNG will cost Rs 27,000 more. The price of this model has increased by Rs 365,000 up from Rs 600,000, in year 2008, to Rs 965,000.
The cost of Alto CNG has surged by Rs 22,000 to Rs 771,000. The price has moved up by Rs 312,000 during last three years from 459,000. The price of Liana RXI CNG has been increased by Rs 30,000 to Rs 1301000.
Price of Honda Motors different models have also been increased by four times this year. The prices of Honda city manual has moved to Rs 1399,000 from Rs 1259,000 of year 2008. As usual the depreciation of Pak rupee against other currencies including dollar has bee held responsible for the price hike by the assemblers.
The government removed the special excise duty of 2.5 percent in the budget for the current fiscal year, which was applicable from July 2011, besides cutting general sales tax by one per cent. But consumers are still await to benefit from the government’s move as assemblers have not passed on the full impact of tax benefits to them. So far the government has not taken any action against the assemblers who have not passed on the tax benefit to the public.
The consumers are still awaiting government decision to allow import of 10 years old cars import in order to stabilize the market and promote healthy competition in the country. The move according to experts will be seen as the end of monopolistic attitude in the country but due to the pressure from the assemblers decision the authorities are reluctant to announce its decision.
The auto assemblers have formed cartel due to which the environment of competition in the country has not been materialized so far. The ban or restrictions on the import of used cars has served their purpose. They have become so powerful that they do not even pay any attention to the warnings issued by the government but no body dares to question. Besides, the black marketing is also flourishing in the sector.
There is no reason for the government to not intervene in the market to bring the products’ prices at rational level. The dream of localization of parts has not been translated into reality despite their operations in Pakistan for many years. What happened to the deletion program? Where are the high-tech productions? are the questions which still need to answered.
The auto manufacturers in other country are adopting other ways and means to sell their production rather than frequently raising prices as is the practice in Pakistan for last many years. To deal with currency fluctuations has now become part of marketing strategies but in Pakistan the prices hike seems the only way out.
H. M Shahzad, Chairman, All Pakistan Motor Dealers Association has demanded the government to check whether the impact of currency is really making imported parts costlier or the assemblers had been raising the prices to cash in on rising demand.
He claimed that auto assemblers have started charging high rates from buyers despite the fact the CKD kits which are expected to reach Karachi after a month.