Even though locally assembled cars have already become too expensive for a huge majority of people, buying used cars has also become increasingly difficult due to the significant rise in their prices in the span of the last three years.
Consumers have had to resort to purchasing used cars in the wake of the constantly rising prices of new cars. Even with low-interest rates, it is challenging for most consumers to be able to afford new automobiles via cash or even monthly installments.
Locally assembled Honda cars are significantly more expensive in comparison to their counterparts from Japan. This is the case probably due to the low localization aspect.
Data from Arif Habib Ltd shows the price of Honda Civic IVTEC to be at Rs 3.614 million in comparison to being priced at Rs 2.4 million in January of 2018. On the other hand, Oriel and Turbo models cost Rs 3.864 million and Rs 4.564 million from being tagged at Rs2.549 million and Rs2.899 million in the past.
In comparison to being tagged at Rs1.599m, Rs1.789m and Rs1.929m in the past, Honda City 1.3, 1.5 Aspire Manual and 1.5 Aspire Prosmatec are now available at Rs2.599m, Rs3.019m and Rs3.174m respectively. While BR-V IVTEC has moved from being available at the price of Rs2.329m in Jan 2018 to now selling at Rs 3.374m.
Toyota Corolla 1.6 and Altis Grande 1.8 currently have price tags of Rs3.249m and Rs3.869m in comparison to Rs2.199m and Rs2.589m previously. Toyota Fortuner is available at Rs9.269m compared to Rs5.550m in the past.
Suzuki WagonR VXR and VXL are currently available at Rs1.530m and Rs1.760m against Rs1.064m and Rs1.124m earlier in 2018.
Cultus VXR, VXL and AGS models were priced at Rs1.270m, Rs1.391m and Rs1.470m in 2018 as in comparison to the current rates of Rs1.655m, Rs1.830m and Rs1.975m.
Suzuki Alto 660cc models VX, VXR and VXL models were initially launched at Rs 999,000, Rs1.101m and Rs1.295m but are currently available at the prices of Rs1.113m, Rs1.335m and Rs1.521m.
Locally assembled cars were retailing at much higher prices till June 2021 after which the rates dropped down by Rs40,000 to Rs400,000 starting from July 1, 2021 after the government decided to slash taxes and duty rates on cars and SUVs.
In the midst of these price hikes, the purchasing cost of vehicles has also been raised by the own money or premium on spot sales at the showrooms of locally assembled cars. As much as Rs 1 million is being charged by car dealerships on new models that have high demand.
A market survey recorded a price hike ranging from Rs50,000-60,000 to Rs400,000-500,000 for used cars of 1,000cc to 1,800cc within the last 3 years. Factors such as the model of the car, the condition of its interior and exterior and the resale value were taken are taken into consideration while determining the increase in price. According to the local assemblers in the country, the reasons for such high prices are high freight costs, prices of raw materials such as plastic and steel, and the volatile exchange rate.
On the other hand, used car prices have not seen the same price hikes as the new locally assembled cars. The price for new automobiles has risen to over 40% since 2018, while used cars have experienced an increase of 15-20% based on the model, make and the year it was manufactured in. This makes the used cars an attractive option in comparison to the new cars.
This increasing demand for used cars has led to the rise of business avenues catering to the sale and purchase of used cars on online platforms. Country manager VavaCars- an online automobile business, Mujahid Khan commented that similar to the rise in prices of new cars, an increase is observed in the prices of used cars. This year there has been a lot of volatility owing to the government policies to control the prices of new automobiles he added.
Khan explained that the measures taken by the government to curtail prices of new cars resulted in a short-term benefit but within a span of a few months the prices have spiked again despite the “own” money charged for early delivery of new cars.
He shared the vision of VaVaCars and said that the company aimed at catering to the need for buying and selling cars in a hassle-free way while offering a range of price points and choices in terms of vehicle selection across various brands.
All Pakistan Motor Dealers Association Chairman H.M. Shahzad said that the value of locally assembled used cars did not depreciate in the previous three years, however, second-hand vehicles which arrived under various other schemes saw a rise of 8-9% between May of this year till date owing to the currency depreciation of rupee against the dollar.