KARACHI: The Finance Supplementary Act, 2022 imposes several taxation measures on the automobile sector, which prompted the local car assemblers and importers to significantly increase the prices.
Dealers of old and used cars said surge in new car prices directly impacted the secondary market. Though there are no authentic numbers, dealers estimate at least Rs25,000 to Rs150,000 increase in the prices of used cars, depending on the condition of the vehicle.
“We believe the local assemblers may further increase car prices based on the input costs, amid higher steel prices and rupee depreciation,” a report issued by Sherman Securities noted.
Local companies assembling Japanese and Korean brands have cited the government decision to hike taxes as the reason behind the price rise. It has passed the burden of increased taxes on to the customers.
However, experts believe another price hike is imminent but a lot depends on the economic growth and the buying power of the consumers.
The dealers said the government in the past has shown its intent of giving priority to local manufacturing and making imported vehicles more expensive.
But the most recent move to hike taxes almost across all segments and categories could slam the brakes.
Despite the rupee depreciation against the dollar, the gross margins of assemblers are expected to increase due to a surge in car prices, which should wipe off the impact of adverse currency and commodity movement.
Last month, Pak Suzuki Motor Company (PSMC) increased the prices across its passenger car lineup, attributing the hike to the recent ‘mini-budget’.
“Due to the recent mini-budget, the government increased different taxes on almost all variants, so Pak Suzuki has increased only those taxes,” a company statement said.
Suzuki’s Cultus AGS variant saw the biggest hike of Rs150,000. It is now being sold at Rs2,422,000.
Similarly, the new price of Cultus VXL is Rs2,244,000, against the old rate of Rs2,105,000, a surge of Rs139,000.
Alto VX saw a price increase of Rs32,000. The new price is Rs1,306,000. The price of Alto VXR increased Rs38,000 to Rs1,546,000. With a Rs43,000-hike, the price of Alto VXL/AGS is now Rs1,747,000.
The Wagon R AGS has seen a surge of Rs134,000, taking its price to Rs2,158,000. The price of the Wagon R VXR has gone up Rs117,000. It now costs Rs1,877,000. Wagon R VXL has seen an increase of Rs123,000 to Rs1,975,000. Bolan VX saw an increase of Rs29,000 to Rs1,178,000 from the old rate of Rs1,149,000.
Wasil Zaman at JS Global Capital said that with higher sensitivity to price hikes, the tax measures could potentially hamper the investment stance on PSMC, “Where a dent of 10 per cent demand from our base case is likely to result in an earnings estimates cut of 11 per cent.”
Lucky Motors Corporation (LMC) passed on the impact of increased federal excise duty (FED) and sales tax and announced a hike in KIA car prices.
KIA Picanto M/T price surged Rs136,000 to Rs2,186,000. With a jump of Rs142,000, KIA Picanto A/T is now priced at Rs2,292,000.
The price of Sportage Alpha is Rs4,764,000, up Rs114,000. The price of Sportage FWS is Rs5,276,000, up Rs126,000.
The price of Sportage AWD is Rs5,788,000, up Rs138,000.
With an increase of Rs90,000, new price of KIA Stonic Ex is Rs3,750,000; while KIA Stonic EX+ witnessed an increase of Rs95,000 to Rs3,975,000.
Indus Motor Company (IMC) has also revised prices on its entire Toyota lineup, saying the new prices would
be applicable on all pending orders in the system as of January 15, and all the new orders received on or after January 16.
The prices of Corolla Altis Grande X CVT 1.8 and Corolla Altis Grande X CVT 1.8 B have gone up Rs100,000. These variants will now be sold for Rs4,170,000 and Rs4,200,000, respectively.
The price of Corolla Altis X Automatic 1.6 rose Rs85,000 to Rs3,530,000. The price of Corolla Altis X CVT-i 1.8 has gone up Rs93,000. The new price of this variant is Rs3,870,000.
The manual version of Corolla Altis X 1.6 has seen a price hike of Rs81,000. Its new price is Rs3,380,000. The price of Toyota Fortuner 2.7 G has increased by Rs390,000. The SUV is now available at Rs8,560,000. Fortuner 2.7 V has witnessed a price hike of Rs452,000 and will cost Rs9,940,000. Another Rs473,000 was added to the price tag of Fortuner 2.8 Sigma 4. The variant is now being sold at Rs10,390,000. The price of Fortuner Legender diesel saw the highest increase of Rs493,000. This variant will now cost Rs10,840,000.
Toyota Yaris ATIV CVT (Hi) and Yaris GLi CVT (Lo) will now be sold for Rs2,910,000 and Rs2,810,000, respectively. The new price tag of Yaris ATIV X CVT (Hi) and Yaris ATIV MT (Hi) are Rs3,170,000 and Rs2,970,000 with an increase of Rs76,000 and Rs71,000, respectively.
The price of Yaris GLi M/T (Lo) has increased Rs63,000 and will now be available at Rs2,610,000.
Honda car prices have also been increased and the new prices will be implemented from January 21, 2022.
The prices of Honda City 1.2L Manual and 1.2L CVT remained unchanged at Rs2,729,000 and Rs2,949,000, respectively.
The new price of Honda City 1.5L CVT is Rs3,146,000, compared with the previous rate of Rs3,069,000, registering an increase of Rs77,000. Honda City 1.5L Aspire Manual saw an increase of Rs80,000 and now it will cost Rs3,279,000 against Rs3,199,000.
Honda City 1.5L Aspire CVT observed an increase of Rs85,000 and its new price is Rs3,354,000, compared with the old price of Rs3,369,000.
Honda Civic 1.8L VTI CVT has seen a jump of Rs100,000, taking the price to Rs4,079,000 against the previous rate of Rs3,979,000.
Honda Civic VTI CVT SR will now cost Rs4,366,000, compared with the old rate of Rs4,259,000, posting an increase of Rs107,000.
Honda Civic 1.5L Turbo RS witnessed an increase of Rs126,000, taking the rate to Rs5,175,000 against the previous price of Rs5,049,000.
Honda BR-V CVT S will now cost Rs3,689,000 against the previous price of Rs3,599,000, showing a rise of Rs90,000.
The increase in the prices of expensive cars is much higher but the sales of small cars would also be hit hard, as the new prices would even put them further out of the reach of a common man.
