LAHORE - Though the rupee’s parity with the Japanese yen has constantly been in favour of local auto assemblers following the 9 per cent Rupee gain against Yen during last three months, the car makers instead of lowering rates of their product is continuously escalating prices of vehicles without any justification.

The PSMC has increased its car prices up to Rs20,000 for its 1000cc vehicles to ‘celebrate’ the new year of 2014, industry sources said and added that though the company made cost pressure as the justification for price increase, yet the fact is import cost has decreased significantly as majority of car parts are imported from Japan and Japanese currency is constantly depreciating against Rupee during Oct-Dec 2013. It is to be noted that the PSMC has already increased car prices in Oct 2013 by 2 per cent.

Market sources said that all local auto assemblers, taking full advantage of government’s indifferent attitude towards consumers rights increased their car rate several times during the outgoing year. They said that Pakistan Suzuki Motor Company increased its vehicles prices up to Rs 90,000 in total for different models during 2013 while Indus Motor Company raised its vehicles prices up to 23.52 percent and Honda increased its vehicles rates up to 41.33 per cent during the period.

First price hike of 2013 was announced by PSMC in January, 2013 when the company increased Rs20,000 for its 800cc segment models while Rs50,000 were added in 1000cc segment. Similarly, first price hike of Honda in 2013 was observed in July, second was in August and last price hike was announced by the company in December. The Honda increased Rs55,000 for Honda City and Rs86,000 for Honda Civic and Prosmatec. Honda Accord’s prices witnessed Rs290,000 addition and CRV’s prices were jumped by a total of Rs400,000 during the outgoing year.

Similarly, IMC announced first price hike on June 28, 2013 where the company increased it vehicle’s prices by Rs14,000 to Rs461,500 for different models of its cars, following it the company again increased prices on September 1, 2013 within the range of Rs 21,000 to Rs75,000. The IMC increased third time its vehicle prices in November, 2013, by up to Rs 75,000.

Industry experts were of the view that Japanese auto assemblers have continued exploiting consumers by increasing prices regularly. The auto assemblers cited the increasing yen value as a reason for constant price hike. However, industry sources rejecting the assemblers claim said that Japanese yen has decreased against the rupee last year and all the three assemblers had imported their parts from Japan. 

They said that with recent rupee gains versus the dollar (+3% over the last month), local assemblers are headed towards a potential margin expansion from the third quarter of fiscal year 2013-14 (3QFY14) onwards.

The expected gain in margins for local assemblers is also expected because of the fact that auto assemblers had increased car prices by 2%-4% during the September-October 2013 period to cover earlier currency losses.