Buying a car over these nine months has been a wild experience. Roaring car prices have shattered buyers’ capacity to purchase a new car. Same is the case with used cars now.
Local automakers have hiked car prices by 47% since January this year. Car companies have blamed the rupee depreciation, flourishing inflation, and rising raw materials and shipping costs for the current market dynamics.
A report shared by Engineering Development Board (EDB) has revealed the car price drift from January to September 2022.
Why Car Prices Increased So Drastically?
As per the report, since the inception of this year, car prices have observed an enormous hike of 47%. EDB stated that the Rupee devaluation of 31%, coupled with a massive increase in duties and taxes by the incumbent government on the automobile sector, has nudged the car prices to cross the limit line.
Moreover, the burgeoned freight charges and raw material costs added more to the pain. Surprisingly, freight has increased by 250% during the last nine months. Similarly, production costs and logistics also increased due to expanding raw material costs.
Used Cars Securing A Valuable Gain In Pakistan
As per the Bloomberg report, used cars in Pakistan are a considerable source to yield profit for the sellers – gaining more value than money.
Karachi-based analyst firm “Optimus Capital Management” (OCM) has called Pakistan “an unusual place” where a car purchased five years ago for Rs. 2 million can be sold in the used car market at Rs. 3.2 million today – meaning, a profit of 60%.
Citing the Pakistan Institute of Development Economics (PIDE) report, it is also pointed out that investors purchase a batch of new cars and sell them with whooping “On money” – a black-market premium. According to the report, automobile consumers pay more than Rs. 35 billion annually.
