News Analysis |
In a surprisingly odd move, Pak Suzuki Motor Company (PSMC) has jacked up the already raised prices of its variants by up to Rs50,000, effective from March 1st, 2018, which marks the second time the automaker has revised rates in an upward trajectory this year alone, before even hitting the second quarter. Hardly two months prior, the company had raised prices in the range of Rs10,000-Rs20,000 in a balancing act against the depreciating rupee.
Both of Suzuki Mehran’s variants, the VX and VXR are now costlier by Rs20,000. The price of Mehran’s VX has gone up from Rs689,000 to Rs709,000, while Mehran’s VXR price increased from Rs742,000 to Rs762,000. The price of Suzuki Ravi has been increased by Rs20,000 from Rs706,000 to Rs726,000. The price of Suzuki Bolan has increased by Rs20,000 from Rs764,000 to Rs784,000. Suzuki Bolan Cargo’s price increased from Rs730,000 to Rs750,000.
The government succeeded in its endeavor as Kia and Hyundai have already started working on their assembly plants while Volkswagen and Renault have also announced their plans to set up a plant in the country.
The price of Suzuki Swift NAV-MT increased from Rs1.375 million to Rs1.405 million while Swift’s NAV-AT increased from Rs1.511 million to Rs1.541 million. The price of Suzuki Cultus VXR increased from Rs1.250 million to Rs1.270 million.
The new price of Wagon-R’s VXL variant would now be Rs1.164 million, up Rs50,000 from Rs1.114 million, in the scenario that it resurfaces. In January’s price raises, experts had said that the move had been anticipated because of about 5% rupee devaluation against the dollar in December 2017. This time there has been no change in the rupee-dollar parity and hence no justification.
Read more: Honda follows Suzuki by introducing huge price hike
In a very risky but predictable move, Pak Suzuki Motor Company (PSMC) has pushed up the prices of different variants of its monopolized products in the range of Rs. 10,000-Rs. 20,000, effective from January 1st, 2018, GVS had reported earlier. Perturbed with the widening current account deficit, the government finally allowed the rupee to lose its value against the dollar in December 2017.
Due to rising sales, analysts say Pak Suzuki feels confident to raise prices at will without affecting profit. According to the PSX data, the market capitalization share of Pak Suzuki, Indus Motor and Atlas Honda Cars shrunk to Rs. 246.1 billion, down 9.73% from Rs. 272.7 billion in 2016.
The auto industry is sensitive to rupee depreciation because of its high dependence on imported raw-material and parts that become expensive with the fall in the rupee’s value against major international currencies. However, the same industry is also well-positioned, compared to other industries, to easily pass on the impact due to high demand of automobiles in the country.
Due to rising sales, analysts say Pak Suzuki feels confident to raise prices at will without affecting profit.
Read more: Suzuki launches automatic Cultus in Pakistan
According to the PSX data, the market capitalization share of Pak Suzuki, Indus Motor and Atlas Honda Cars shrunk to Rs. 246.1 billion, down 9.73% from Rs. 272.7 billion in 2016. When the PML-N government launched the long-awaited five-year auto policy 2016-21 in March 2016, its core target was to attract auto giants from South Korea, Germany and France.
The government succeeded in its endeavor as Kia and Hyundai have already started working on their assembly plants while Volkswagen and Renault have also announced their plans to set up a plant in the country. Analysts say that the industry would finally see tough competition when companies like Hyundai, Volkswagen, Kia and Renault would start their production from 2019