Pakistani Rupee plunged drastically to approach an all-time low against the US dollar during the opening hours of the trading session on Thursday, the 2nd of March 2023.
During the last couple of years, the PKR has fallen to a record low several times already. And the cascading decline continues as the Rupee has now reached a new low of Rs 283 against 1 US Dollar in the open market. Experts claim the recent depreciation of the local currency is part of a market correction as IMF demanded to end the significant gap in rates between the open and inter-bank markets.
This will bring a new wave of inflation & price hikes in the country, and before anything becomes costlier, we can always expect local auto assemblers to be the first ones to announce a massive price increase. Regardless of bold claims for achieving up to 70% localization, and whether the assembly plant is operational or not– as most auto assemblers are already observing Non-Production Days (NPDs), car prices in Pakistan will always go up in tandem with Rupee depreciation. At times the impact transferred to the customers is more than 100% of the depreciation of currency value.
Related: Cars in Pakistan Became More Expensive Compared to Rupee Depreciation
In the first two months of this calendar year, each auto assembler has pushed the prices up by as much as 4 times already. The month of February alone saw up to 3 price revisions by a single assembler (including one revision made due to an 18% GST imposed). Many “locally assembled” vehicles have already crossed the 1 crore (Rs 10 million) price barrier whereas ordinary hatchbacks are now being sold in Rs 3 million to Rs 5 million range. Sedans are available between the Rs 5 million and Rs 9 million range and the situation is only expected to become worse keeping in view the massive currency depreciation.
Sales of locally assembled cars in Pakistan have been cut in half already and the future isn’t too bright either. The CEO of Indus Motor Company (Toyota) Ali Asghar Jamali already indicated that some auto assemblers might exit Pakistan as the automobile sector continues to face unforeseen external challenges due to unprecedented rupee devaluation and import restrictions imposed by the government. We can only hope at this stage for things to become better.
A 3d animation professional with over 20 years of industry experience having served in leading organizations & production facilities of Pakistan, an avid car enthusiast and petrolhead with an affection to deliver writings to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com