Since December 2017, Pak rupee lost nearly 49% of its value while local auto assemblers kept on revising car prices subsequently. Between December 2017 and October 2019, a massive 48% increase (on average) in car prices was witnessed with automakers increasing prices up to 12 times during this period. Interestingly however, even when the Rupee has recovered by nearly 3% since the last couple of months, car prices are again being pushed up instead of being reduced.
This substantial increase has taken the prices of new cars beyond the reach of majority. While the ongoing slowdown in the economy, rising inflation and declining purchasing power of consumers have badly dented profit margins of all the three players (Suzuki, Toyota & Honda) which has been reflected in their latest financial results as well. Honda and Toyota are already observing plant shutdowns for several days in a month since July 2019.
According to statistics released by Pakistan Automotive Manufacturers Association (PAMA), car sales in Pakistan fell by 39% with just 11,724 units were sold in September 2019 compared to the same period a year earlier when 19,345 units were sold.
In this situation when sales of new cars have drastically slowed down, and the used JDM import business has almost come to a halt, the consumers have turned their attention to second-hand cars in the market. According to a car dealer:
“We have noticed a drastic drop in sales of locally assembled new cars and freshly imported cars due to multiple rounds of devaluation; however consumers are consistently demanding older and cheaper cars.”
Demand and supply forces had said to have pushed used car prices upwards as well because sellers always priced their used cars in line with changes in rates for new vehicles. However, due to decline in purchasing power, sales of all types of cars, whether new or used, had decreased because of consumer skepticism and a lower disposable income. Consumers who earlier preferred two to three-year-old cars, are now demanding five to eight-year-old vehicles due to fall in their disposable income, according to a dealer.
While auto consumers of Pakistan were anxiously waiting for competition to arrive in auto sector, which does seems to be happening after all, as newcomers are targeting super-elites with ludicrous pricing strategies, one can’t really expect cheap & affordable cars to be available here as the prices of these upcoming (new) cars will likely remain on the higher side.
It seems as if in near future if you have to buy a good quality brand new 1000cc hatchback in Pakistan, you will need to spend PKR 2.0 million (at least) and if you wish to have a brand new sedan then you will need to throw away PKR 2.5 million or more. Otherwise even a million & a half in your pocket will get you a used car only.
If you don’t have 2 million to throw away on an automobile but are willing to replace your existing car, you will need to try your luck hunting for a well-kept used car or just be thankful for what you have and keep driving your current car by spending some money on it to keep it up & running!