Timeinpakistan.com app
Get the free app for easy access
After twice or thrice a year, car assemblers in Pakistan have started giving multiple price shocks even in a month. And surprisingly, after a recent report, rupee depreciation against the dollar comes as the most convenient excuse owing to burgeoning production costs. Wouldn’t it be a startling revelation that these are just ready-made justifications for ongoing price hikes SAGA?
Despite a repeating claim of achieving a high localization rate, the car makers in the country have announced 5 price jumps just in the first three months of this year. Instead of making efforts to localize the hi-tech engine parts, stakeholders focused on remodeling the bumpers and grills in the name of new models.
Pakistan Association of Parts and Accessories Manufacturers (PAPAAM) hired a renowned consultancy firm to look into the recent price hike series. The report has disclosed massive discrepancies narrating the truth of localization and aggravating car price in the local auto industry.
As per the findings, the car prices have inched up by 149% in last 5 years, where the rupee devalued 71% in the meantime. Whereas car parts prices have seen a jump of 33% to 112%.
For instance, the presentation reported by the firm revealed that Toyota Corolla Altis 1.6 price increased by 149% during 2019-2023, whilst forging components price observed a jump of 91% after remaining intact from 2019-23.
Similarly, Atlas Honda claimed that they had achieved 96% localization of their prominent bike Honda CD-70. Meaning 96% of bike’s parts are manufactured locally. If so, the bike price shouldn’t reflect the effect of factors such as dollar appreciation and fluctuation in rupee value – back-to-back price hikes make no sense. And, overall episode of 96% localization is a filthy fake fact. OR maybe, they are just localizing plastic and rubber parts, not engine components.
It bears to mention that the CD-70 kprice escalated by 65% during 2019-23. However, the cost of certain key components of bikes, like forging and rubber parts, posted a rise of 84% and 72 respectively, from 2019-23.
When asked Ali Asghar Jamali regarding the astounding facts, he simply rubbished the PAPAAM report saying, “I am shocked and surprised over the misleading data. Too bad, vendors should have checked the data of the presentation.”
Meanwhile, Pakistan Suzuki Executive also refuted the claim stating that it doesn’t appear to be correct. PSMC has a fair price management mechanism, uniformly transforming things like forex, national and international raw material, and other material costs, utilities, overheads, and labor rates.
“I do not know where and how these isolated studies come out. It is better that if any party has an issue, they can sit jointly and resolve the matter,” he added.
Analyst briefing of Pak Suzuki in May 2022 claimed the localization of Swift had reached 35%, Wagon R 60%, Alto 62%, and Cultus 51%. Whereas, 44 years old the Bolan and Ravi are 72% and 68% localized, respectively.
Adding a twist to this episode, the CEO of Baluchistan Wheels Limited Irfan Ghani claimed different figures:
The report has suggested controlling price hikes; the only way forward is localization, where the auto assemblers should locally produce cheap raw materials, which are now imported, making cars with high price tags. PAAPAM’s consultant presentation asked the vendors to urge the assemblers to increase their prices with the same frequency, timing and percentage that the assemblers do for their own products.
Comments