Home Global Village Toyota increases car prices as Pakistani carmakers continue to rip off buyers

Toyota increases car prices as Pakistani carmakers continue to rip off buyers

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News Analysis |

 Toyota’s Pakistan chapter Indus Motor Company (IMC) has hiked the prices of 1,300-1,600cc cars by Rs. 50,000-60,000 ahead of the new year. The other two of the only three assemblers in Pakistan, Suzuki and Honda, are likely to follow suit.

The new price of Toyota Corolla XLi, GLi and GLi automatic transmission is Rs. 1.81 million, Rs. 1.94m and Rs2.02m compared to Rs. 1.75m, Rs. 1.88m and Rs. 1.96m, respectively. The new price of the 1.6 Altis has been jacked up to Rs. 2.19m from Rs. 2.14m. The company’s CEO, Ali Asghar Jamali, attributed the price hike to seven to eight percent rupee devaluation against the dollar, which has pushed up prices of imported components. He said that due to the devaluation of the rupee, the cost of locally produced components, which have impo­rted raw material, has also gone up owing to losing the strength of the rupee.

Muhammad Naveed Senior Vice President and Nisar Mirza Vice President ICCI also spoke at the occasion and assured that ICCI would facilitate the Chinese investors in connecting with the right partners in Pakistan.

According to the Pakistan Bureau of Statistics, the import bill of completely-knocked down and semi-knocked down kits for locally assembled cars soared to $329m in July-November from $262m in the same period last year.

According to Pakistan Market Outlook 2018 prepared by Topline Securities, the auto sector is likely to benefit from the change in import duties and procedure of imported vehicles, which could reduce car imports by 20-25pc.

A reduction in imported, used vehicles would allow existing players to pass on the cost pressure of devaluation in 2017-18 before new auto players make an entry in 2019. Sales would be supported by the introduction of new models in 2018-21.

Read more: Toyota and Suzuki join hands to launch electric vehicles in India…

Out of the three, Toyota is the only one gearing up to face the expected competition heads on, considering the sudden influx of new entrants in the big-three-dominated industry.  Toyota is expanding its existing plants by investing almost $40 million. The money will be used to increase car production. 10,000 units per annum will be increased by Toyota.

Hiroyuki Fukui, Toyota Motor Corporation’s chief executive officer for Asia, Middle East, and the North African region said, “We expect strong competition from the new (Korean) carmakers setting up their assembly plants. We are preparing our strategy for Pakistan because it is a very important and growing market for us. We plan to launch smaller cars on the market as well but we cannot disclose our plans yet.”

He said many industrial zones would be established in Pakistan under CPEC due to which the demand for heavy-duty trucks and loading vehicles would gain new momentum.

South Korean auto companies Hyundai & Kia have partnered with local Pakistan firms to set up a manufacturing plant in Pakistan. Apart from these two, Volkswagen also has plans of entering the Pakistani market. Renault, on the other hand, has partnered up with UAE’s Al-Futtaim to start a manufacturing plant.

Also facing Toyota in the face, is a delegation of Chinese manufacturers and assemblers of automobiles including heavy duty trucks, engines, auto parts and tyres that visited Islamabad Chamber of Commerce and Industry and showed interest to set up auto manufacturing plants in Pakistan.

The delegation was representing about 500 auto companies of China including Jinan Zhongzhan International Trade Col. Ltd, Jinan Bonaite Trading Co. Ltd, Hebei Xinjiu Heavy Duty Machinery Makes Co. Ltd., Sinotruk, Shanghai Cheezmail E-Commerce Co Ltd., and others.

Read more: Volkswagen to spend $40 billion on electric cars

The delegation members said that they were representing 500 automobile companies of China that were producing EU standard vehicles and were interested to explore business opportunities for vehicles, engines and auto parts in Pakistan as it was a potential market for the automobile sector.

Islamabad Chamber of Commerce and Industry informed the Chinese entrepreneurs that heavy-duty trucks and vehicles have huge scope in Pakistan as road freight transportation contributed over 90% of the goods transported by land.

They said that initially they were interested in finding local partners for the supply of automobiles and auto parts in Pakistan and on the successful operation of business, they would try to set up auto manufacturing plants and bonded warehouses through joint ventures and investment in Pakistan. The delegation members said they also wanted to share their technical know-how and expertise with Pakistani manpower in this field.

They also agreed to organize a seminar at ICCI to create awareness in the local business community about their auto products and prospects of business collaborations with them.

Speaking at the occasion, Sheikh Amir Waheed, President, Islamabad Chamber of Commerce and Industry informed the Chinese entrepreneurs that heavy-duty trucks and vehicles have huge scope in Pakistan as road freight transportation contributed over 90% of the goods transported by land. He said many industrial zones would be established in Pakistan under CPEC due to which the demand for heavy-duty trucks and loading vehicles would gain new momentum. He said it was the right time for Chinese automobile sector investors to set up vehicle and auto parts manufacturing plants in Pakistan through joint ventures.

Read more: Electric Cars in Pakistan! The Perks of CPEC

He said a strong middle class was rising in Pakistan and Chinese investors should also focus on meeting its needs by producing cars under 1000cc in Pakistan. He stressed the need of developing strong business linkages between the auto sector SMEs of Pakistan and China as they have great potential for growth in Pakistan.

Muhammad Naveed Senior Vice President and Nisar Mirza Vice President ICCI also spoke at the occasion and assured that ICCI would facilitate the Chinese investors in connecting with the right partners in Pakistan.


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