The automotive market in Pakistan has observed many developments during the last few years. The selling price of new cars in this industry depends on many variables. The Suzuki Alto compact may continue to pique your interest, or it may be the premium category Honda Civic that does. Similarly, you may wonder what determines the prices of cars to better assist you in making a purchase decision. In this blog, we will delve into new car Prices in Pakistan, looking into factors for some popular models that impact the new car prices in Pakistan. i.e. Toyota Yaris, Suzuki Alto, Suzuki Cultus, Honda Civic, Suzuki Swift, and Toyota Corolla.
9 Factors Influencing New Car Prices in Pakistan
The following are the factors that influence new car prices in Pakistan:
1. Exchange Rates
The exchange rate of the Pakistani Rupee (PKR) to foreign currencies, especially the US dollar (USD) and Japanese Yen (JPY) is one of the determinants of new car prices in Pakistan. Because many cars or their parts are brought in, a depreciation of the Pakistani rupee against these currencies will always elevate the cost of such cars. For instance, while producing Toyota Yaris and Honda Civic in Pakistan, manufactured rendered services do not eliminate the need for parts sourced from other countries. The devaluation of PKR translates into high prices of these parts hence increasing the cost to the consumer. Even the Suzuki Alto and Suzuki Cultus that are manufactured locally have upward revisions because of factors including the use of components such as the engine and other electronic equipment that are imported.
2. Import Duties & Taxes
The Government of Pakistan undertakes different tariffs and taxes for both Completely Built Units (CBUs) and Completely Knocked Down (CKD) units. Such tariffs include:
Customs Duty
Tariffs levied on cars imported or spare parts of cars. If Suzuki Swift and Toyota Corolla cars are assembled more locally as compared to other imported cars, then consequently their tariff rates also tend to be lower.
Excise Duties
Some vehicles attract additional tax known as an excise duty and may also be taxed based on the range of the engine capacity. For instance, A Honda Civic with a big engine has higher excise duty than even a relatively lower-engine Suzuki Alto. The VAT taxes and the Federal Excise Duty (FED) The prevalent trend of revision of these taxes by the government has a direct effect on new car prices in Pakistan. Over the past few years, various tax adjustments have been the reason for increases in prices of such vehicles as the Toyota Corolla and Honda Civic.
3. Local Manufacturing and Assembly
Local manufacturing and assembly considerably affect the retail price of a car. Cars manufactured unconventionally in Pakistan tend to be sold at a lower price than fully imported ones. Among the non-custom cars in the Pakistani market, Suzuki Alto is probably the most reasonably priced because a larger percentage of its structure is accomplished in Pakistan. However, the Suzuki Yaris and Suzuki Cultus were partially assembled in Pakistan and incorporated some parts from outside Pakistan. Hence, this brought forth some increases in the new car prices.
4. Inflation and Production Costs
The overall inflation of Pakistan also comes in handy when targeting the new cars price in the Pakistan market. With the increases of inflation come higher costs of buying raw materials such as steel, rubber, and plastic among so many other resources that are needed in the construction of automobiles. It is these materials that affect the cost production of the vehicles resulting in increments of prices.
These years production costs including costs of labor and energy have been increasing. Popular items like Suzuki Swift and Honda Civic have suffered from this increased cost of production in their prices.
5. Technology and Features
An additional determinant of new car prices in Pakistan is the degree of technology and features employed in the car’s design. There is a growing trend in Pakistan where consumers demand new modern features such as touch screens, advanced safety systems, and improved fuel consumption standards. High-end automobiles such as the Honda Civic and Toyota Corolla can be embedded with features including push start, reverse cameras, and automatic climate control which of course raise the costs of such vehicles significantly. At the opposite extreme, however, are the entry-level models such as the Suzuki Alto and Suzuki Cultus which are more concerned about price and provide very little in basic features.
6. Fuel Prices and Efficiency
Fuel efficiency is a crucial consideration for many Pakistani car buyers mainly due to the ever-rising and falling trend of fuel prices in the nation. Fuel economy is very important in cars which would also influence their prices if they were to be mass-produced. For instance, the Suzuki Alto and Toyota Yaris, being fuel-efficient cars, will always be attractive to those who do not wish to use so much for buying a car. It is often the case that this demand leads to the destabilization of prices for these models. On the contrary, cars with more powerful engines such as the Honda Civic and Toyota Corolla, even though such cars are not fuel-conservative, are still preferred by buyers who do not mind spending for speed and comfort.
7. Demand and Supply Dynamics
As in any free market, car pricing in Pakistan is also influenced by the forces of demand and supply. Increased buying of certain models forces prices upward while excess supply has to be cleared by giving discounts or slashing prices. Certain models such as the Suzuki Alto and the Toyota Corolla tend to do better in the market due to their popularity. This demand maintains the rate moves if not increases in the high season. On the other hand, for those vehicles that are not in high demand, ie, older models or those with a higher than normal supply, dealerships try to lower the cost at discounted rates for some time due to slow sales and stock clearance.
8. Government Policies and Subsidies
The government also stands as one of the major factors affecting car pricing in Pakistan. Due to policy changes, manufacturers may at times be required to cut the costs of production or payment of higher levies. Notably, one of the objectives of the Pakistani government’s auto policy 2021-2026 is that it seeks to promote car ownership and the development of electric vehicles through lower tariffs and subsidies. This policy advantages regional manufacturers of small cheap cars that are assembled in Pakistan, such as Suzuki Alto and Cultus, as they become cheap.
9. Competition in the Market
The market competition has an impact on new car prices in Pakistan as well. During the introduction of some new brands or models, the common practice is that other older manufacturers are forced to employ cutthroat approaches. When the Toyota Yaris came into the market, it buttressed the Honda City units and since then, there has been price competition that was beneficial to the buyers. On the same doctrine, the Suzuki Swift also encounters stiff price competition from hatchbacks including the KIA Picanto, and therefore price cuts cannot be easily done as brands try to sell better value for the low prices.
Conclusion
In Pakistan, the key determinants of new car prices are many, including exchange rates, policies, and domestic competition. Nevertheless, whether it is an affordable Suzuki Alto, a medium-priced Toyota Yaris, or a high-end Honda Civic, knowing these factors can help greatly. Monitor currency volatility, taxation, and other market factors when seeking the best-offered prices during car purchases.
