Yesterday, Kia Lucky Motors revised its car prices up to Rs. 1.1 million. Along with its other products, the company increased the cost of Kia Picanto, a hatchback. After the new jump, the new price of the Kia Picanto Manual is Rs. 3.1 million, while Picanto Automatic will now cost Rs. 3.2 million. And it is astonishing, indeed.
For a reminder, at the time of its launch in 2019 the rate of Kia Picanto manual and automatic was Rs. 1,899,000 and Rs. 1,999,000, respectively. But which car used to cost Rs. 3,200,000 in 2019? Yes, you guessed right, Honda Civic. In May 2019, the price of the Honda Civic 1.8L VTi CVT was Rs. 3,199,000, the exact current price of Picanto.
It means, in just three years, the prices have almost doubled.
Major Reasons
There are multiple reasons behind this double-fold price hike, including COVID-19, economic instability, political uncertainty, and above all, rupee devaluation against the US dollar. The pandemic affected the local auto industry and the global car market alike and we are still seeing its aftershocks. COVID-19 led to record-high freight charges, a shortage of components, especially semiconductor chips, and very expensive raw materials.
Coming to Pakistan, the economy has more or less remained uncertain, another impact of the pandemic. The dollar kept flying high, directly affecting the local car market as companies still import major parts. Although the previous government reduced the taxes and duties on locally assembled cars, but the decision was reversed. Meanwhile, the companies are currently facing problems in issuance LCs of CKD kits from the State Bank, further burdening the industry.
Worriedly, the future doesn’t seem too bright as there is still political uncertainty in the country. Despite an IMF deal, the dollar has increased by almost Rs. 10 in just last two days. And its first impact appeared in the shape of the car price increase by Kia Lucky Motors. And the rest of the companies will follow suit; hence, keep your belts fasten.
What do you think about these car price increases? Share your thoughts in the comments section.
Well, on the bright side, with prices going this high, the artificial demand for cars would come to an end because the buyer would be forced to spend their limited income on necessities and this behaviour would allow the Pakistani economy to conserve money. The behaviour would eventually reduce trade imbalance, in other words, the economy would return to normal state due to adoption of more sustainable lifestyle by people of Pakistan.