US Dollar Going Up, Are Car Prices Too??
As one social media user wrote that the US dollar has already broken Saeed Anwar’s record of 194 and now going for Fakhar Zaman’s 210, it seems that there is nobody to control this downfall of the rupee. In the last one month or so, the US dollar has climbed from Rs. 182 to Rs. 200 in open market, which is extremely dangerous for the Pakistani economy, trade, and car market. We all know that all car companies in Pakistan import major parts, meaning the payment is in dollars; hence, the prices are directly linked to the exchange rate.
The question is whether the car companies in Pakistan will increase the prices once again or not. It is pertinent to mention that the rates of almost all cars have been increased at least three times since January 2022. The companies have primarily blamed the dollar rate for these hikes, and we can expect another series of rate jumps in the coming days if the situation remains the same.
What is the Solution?
The solution is simple, local production. Now, you can say that car companies are “producing the car parts up to 70% locally”, which is true if you see the number of parts. But you must know that this 70% of parts are not-so-important ones, while the critical parts like engine, transmission, safety equipment, and hubs are imported. So, unless these companies start making/producing these important parts locally, the dollar issue will remain the same.
We know this is a long road, but the companies, with the assistance of the government, need to start from some point. Unless these companies start real, local production, the prices will keep increasing. Hence, replace the local assembly with local production and decrease your reliance on the foreign exchange.
And we think the Pakistani auto industry is old enough to start producing these essential car parts locally.
What is your take on this whole scenario? Do you think that local production will help in reducing car prices? Please share your thoughts in the comments section.