KARACHI: Indus Motor Company, the makers of Toyota vehicles, has increased prices of Corolla Xli and GLi variants by Rs20,000 each.
The company has raised the price of Xli manual from Rs2.499 million to Rs2.519 million while the price of Xli automatic has gone up from Rs2.599 million to Rs2.619 million. It hiked the rate of GLi manual from Rs2.749 million to Rs2.769 million and GLi automatic from Rs2.849 million to Rs2.869 million, as per a notice of the company sent to its dealers.
“Like other automakers, Toyota’s profit margins in recent months have been compromised, so it appears that the company wants to support its margins by taking advantage of the seasonality factor,” said Ahmed Lakhani, a senior auto analyst at JS Research. “There seems to be no other reason to make its cars costlier.”
On June 27, the rupee hit its lowest level against the dollar at Rs164.05 while at present it stands at around Rs155.
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Inflation also spiked to a six-year high during this period, which made car leasing from banks difficult as the financing cost rose above 16%. The government has also imposed federal excise duty in the range of 2% to 10% depending on the engine of vehicles with additional customs duty.
The previous government had barred non-filers of tax returns from buying a new car who abandoned plans to purchase a new car fearing it would put them on the Federal Board of Revenue’s (FBR) radar. These factors shook the auto sector in 2019, especially in the second half of the year. However, January has a record of high sales, which analysts attribute to the seasonality factor.
“As compared to the last quarter of a calendar year, more cars are sold in January, February and March,” remarked Lakhani.
“Everybody wants to buy a car with the registration of new year, which is the seasonality factor,” he elaborated. “This benefits buyers when they go to resell their vehicles.”
He said “it seems to be a right time for the companies to cushion their dwindling profit margins”. Last quarter of calendar year 2019 recorded half the sales posted in the same quarter of previous year.
Pak Suzuki Motor Company also raised prices of different car models from Rs49,000 to Rs90,000 in mid-December 2019. “Slowly, the economy of the country is improving so we expect inflation to go down, so will the key interest rate, resultantly, this will make car leasing relatively easier and demand will pick up in coming months,” said the analyst.
Published in The Express Tribune, January 2nd, 2020.