A piece of potentially bad news for the local auto industry, especially for the new buyers as the dollar rate is steadily going up in Pakistan. And it means the prices of new cars can go up again. Since July 1st, 2021, the rate of the US dollar has hiked by 3.9%. Yesterday, the dollar price increased by Rs1.24 in a single session, closing at Rs163.67, And today, it has dropped to Rs164.15, the lowest in nine months.
Now, all of you remember what car companies did when the dollar price increased and reached up to Rs168 last year. All local car manufacturers raised the costs of their vehicles, citing an increased dollar rate. However, when the dollar rate dropped to Rs152 in April 2021, the same companies didn’t reduce the price. And since then, the dollar rate is steadily increasing, which could be a serious issue for consumers because prices can go up again.
New Auto Policy (2021-2026)
And it will be more important in the context that the federal government has recently reduced taxes and duties on cars under the new Auto Policy (2021-2026). The government has decreased 2.5% Federal Excise Duty (FED) and 4.5% Sales Tax on cars, resulting in a drop in new car prices. The prices of the cars have come down up to Rs400,000, while most of the prices came down in the range of Rs100,000-150,000. This was surely a great news for the local consumers, and it has played a major role in last month’s record-high sales of Pak Suzuki and Toyota Pakistan. Both companies have registered the highest sales in their companies’ history.
The good news is that no company has hinted about the price hike as they are enjoying the high sales post auto policy. And we hope that it will remain the same.
Reason for Increase in Dollar Rate:
According to experts, there is no shortage of dollars in the market, but the price is still rising because of fears that the exchange rate will be adjusted at a higher place. Currently, no one knows the target exchange rate, although the government has already announced that it would be okay with a 2 or 3% current account deficit in Fiscal Year 2022. Furthermore, some experts believe that the rupee will start getting stronger against the dollar in the coming days, so there would be no immediate impact on the auto industry and car prices.
What do you think about the dollar rate increase? Do you think the car prices will go up again? Share your thoughts in the comments section.
