Analysis: Car Prices Are Going to Rise Again Very Soon

The local auto business is buzzing with rumors of a new round of price increases. The most recent price increase occurred in July of this year after a significant increase in the US currency (USD) exchange rate when it increased to Rs. 240 per USD.  According to analysis Car Prices are Going to Rise

History is expected to repeat itself shortly, given the recent weakening of the Pakistani rupee against the US dollar.

Hyundai and Chery have raised their vehicle prices, and other automakers are expected to do the same. But will they be more significant than before? Let\’s investigate the specifics to find out.

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Why Prices Are Going to Rise

Following the reinstatement of the International Monetary Fund (IMF) accord, the USD exchange rate gradually increased on September 2. It has increased steadily over the past 18 days, approaching Rs. 240.
On July 28, when most automakers raised the price of their autos, the USD rate reached its highest level since that day. Arslaan Asif Soomro, a well-known economic analyst, recently told ProPakistani: \”How Much Are They Rising?

Car manufacturers raise prices by 15% to 20% between late July and early August.

Soon after, the companies cut their prices by 50% of the prior increase due to the USD\’s depreciation versus the Pakistani rupee. Simply said, as the exchange rate improved, the corporations reduced the price of a car by Rs. 250,000 if it had first climbed by Rs. 500,000.

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According to earlier market estimates, automakers raised their pricing in response to predictions that the USD rate could rise as high as Rs. 250. The same dire prognosis is made in more recent publications, which would encourage the automakers to raise prices back to those of July.

With the USD racing past Rs. 240, car prices will likely skyrocket once more. However, global commodity prices may soften further thus giving enough cushion to car makers to maintain margins.

How Much Are They Rising?

The decline of the PKR coincided with Pakistan\’s regime change, severely damaging the country\’s economy. After that, inflation broke all records as the cost of everything, even cars, rose.

The government then issued a blanket ban on imports of anything related to the auto industry, including completely knocked-down (CKD) kits and built-up (CBU) units.

Although the government has now allowed imports into the auto industry, it has raised levies to deter people from buying expensive sedans and SUVs. Additionally, the State Bank of Pakistan (SBP) has tightened restrictions on auto lending, which has significantly hurt the sales of automobiles.

Additionally, automakers are experiencing significant production reductions due to the letters of credit for the clearance of CKD imports not being approved. Due to lengthy delivery delays brought on by the restricted supply, car demand has been lowered.
Due to increasing costs and declining demand, sales have been declining for the past few months. The issue could worsen because of the import restrictions, delivery delays, pricing increases, and production reductions.