Where slipping rupee value and massive increase in duties imposed on imported cars considered as the reasons for next price hike series, semi-conductor chip shortage is adding fuel to the fire of discontent. The pandemic-led disaster dubbed “chip shortage” is still affecting the global industry – shattering sales and production.
A New Price Hike
REASON # 1:
Moody’s Analytics has revealed in a report that chip shortage doesn’t seem to be a solved problem anytime soon. The situation will normalize sometime in 2023, which in turn may nudge the local automakers to increase their car prices.
Report further informed:
“While the decline is notable given the upward trend in lead times for the past couple of years, 27 weeks is still far from the norm, and we expect lead times to remain elevated going into 2023.”
As per the report, people have increased reliance on digital products and services, mainly electric vehicles. Mind you, Electric vehicles with more complex functions demand more microchips. Therefore, semiconductor chip-stricken-automakers may observe a worse situation in the coming days.
REASON # 2:
Rupee depreciation has also anticipated a new price hike. Analysts don’t foresee an immediate appreciation of the Rupee’s value. And if this persists, the market may observe a new price hike.
Reports have also disclosed that the local automakers have witnessed a 59 percent month-on-month (MoM) decline in sales. Whilst, new capital value tax (CVT), auto finance restrictions, increased withholding tax on filers and non-filers, price hikes, and high-interest rates may drop sales by 30 percent in the fiscal year 2022-23.
Production Cuts
LCs-related issues have already forced the car companies to announce production cuts. Recently, Pak Suzuki and Toyota Indus Motor Company temporarily halted their production.
It should be noted that this is not the first time a car company announced a production cut. Earlier, almost all the automakers did so.
