Car prices are rising, especially since 2018, as the rates have been jacked up multifold. The companies have cited multiple reasons, including COVID-19, expensive raw materials, increased freight charges, and currently non-availability of LCs by the State Bank of Pakistan (SBP). The car assemblers have repeated multiple times that the cost has gone up; hence, they are forced to increase the prices.
However, the data reportedly shows an opposite picture, revealed during a recently held meeting of auto parts manufacturers. Journalist and economist Ali Khizar shared the details of this meeting. Along with the car prices, they also analyzed bike prices versus their costs.
Car Prices Increase Vs. Cost
During this meeting, the manufacturers did an interesting analysis of car and bike price increases vs. cost, adjusting to taxes from 2018-2023. Giving the example of Suzuki Alto, the manufacturers’ data shows that its price has increased by a huge 128%. In comparison, the auto parts prices were hiked from 33% to 90%, and the Pakistani rupee depreciated against the US dollar by 71%.
Autoparts manufacturers have done an interesting analysis of car and bikes prices increase vs. cost – adjusting to taxes from 2018-23
Alto
Car prices increase 128%
Parts prices increase 33% to 90%
Pkr dep 71%— Ali khizar (@AliKhizar) February 21, 2023
The same data shows that the Toyota Altis 1.6L price has gone up by 149% in comparison to only 33% to 90% in parts prices and 71% depreciation of PKR.
Toyota Altis 1.6 2018-23
Price increase 149%
Parts prices increase 33% to 90%
PKR dep 71%— Ali khizar (@AliKhizar) February 21, 2023
Bike Prices Vs. Cost
In comparison, the increase in bike prices is in line with the cost increase. The data shows that the price of Honda CD 70 is hiked by 84% from 2018 to 2023, while their parts price went up by 66% to 72%, and PKR appreciated by 71%.
Interestingly, the increase in bike prices is in line with cost increase
Honda CD 70 from 2018-2023
Price increase 84%
Parts Price increase 66% to 72%
PKR dep 71%— Ali khizar (@AliKhizar) February 21, 2023
In conclusion, car prices have gone much higher than the cost increase, and its major reason could be less competition and possible collaboration. Meanwhile, there is better competition in the bikes industry, which is thriving the parts industry and retaining the consumer surplus.
Conclusion – Car prices increase is much higher than the cost increase -implying – less competition and possible collusion
While in bikes
Better competition is thriving the parts industry n retaining consumer surplusN/
— Ali khizar (@AliKhizar) February 21, 2023
The data by the manufacturers clearly shows that the car companies have hiked prices extensively, even though the cost was not increased that much in comparison.
What do you think about the car prices increase vs. cost? Please share your thoughts in the comments section.
