In a recent downturn for the motorcycle industry, sales have plummeted by a staggering 80%, leaving bike dealers grappling with the consequences of high inflation.
Faced with this dire situation, dealers are now making a fervent plea to bike assemblers and auto parts vendors, urging them to reconsider their pricing strategies to mitigate the impact of the declining purchasing power of consumers.
The Details
The root cause of this crisis can be traced back to a series of unfortunate events. While the US dollar has seen a significant decline against the Pakistani rupee and petrol prices have been reduced, motorcycle buyers have yet to experience any relief.
Over the past eighteen months, Japanese companies hiked prices on motorcycles with engine capacities ranging from 100cc to 150cc, citing the then-prevailing exchange rate of the US dollar at Rs334. However, the landscape has shifted, and the current exchange rate stands at around Rs284.
In addition to this, the cost of raw materials has also decreased, creating a compelling case for an immediate reduction in bike prices.
Dealers are sounding the alarm, emphasizing the increasing strain on their businesses. Rising operational costs, including wages, utility bills, and various other expenses, are proving challenging to bear in the current economic climate.
Expressing their concerns, dealers warn that if market conditions persist and prices remain unaltered, they may be left with no choice but to close shop.
Highlighting the volatile nature of the currency market, dealers stress that the continuous fluctuations in the US dollar exchange rate have made it difficult for assemblers to make decisions about reducing prices.
The uncertainty surrounding the appreciation and depreciation of the dollar adds another layer of complexity to an already intricate situation. As a result, dealers acknowledge the reluctance of assemblers to announce any price cuts before January 2024.
Honda makes nearly all its parts in Pakistan for its Motorcycles including engine blocks. Logic states that the rise and fall of Dollar should not impact in case of localization. But we see here that these manufacturers increased prices more than double the rate Dollar was flying at.
With their closely guarded pricing mechanism and with facts in hand, it seems more of profiteering than actual adjustment. For these companies, Pakistan is not a significant market and they can leave whenever they want with all the loot at hand. Its their Local partners like Atlas who need to see how to remain here and not just play in the hands of the Japanese or any other foreign manufacturer. Its not wise for them to kill the goose that lays the golden eggs.