. .

Dollar has shed substantial value against the rupee

Jan-21 - 27, 2002

Despite a heavy surge in the value of the Pakistani rupee against foreign currencies, the local auto assemblers conveniently remain silent about a justified cut in the prices of their products. This silence on the part of the auto manufacturers is more pronounced as they have never missed much smaller currency devaluations to waste no time in increasing the prices in the past.

Since that fateful day in September dollar has shed substantial value against the rupee. The dollar which was trading for over 67 rupees is now trading at Rs 60 in both the official and the open market depicting over 10 per cent erosion in its pre-September 11 value. The downward slide of the dollar during last four months is marked by an unusual event for days the official dollar-rupee exchange rate dipped below than that in the open market. Today, the official and open market exchange rates for the dollar has been narrowed to a negligible margin like never before. The dollarization of the economy, as it is called, which in the past played havoc with the heavily import-dominated economy seem not to exist anymore.

Like many other industries the Pakistani auto industry is also heavily dependent on the imported knocked-down kits and a range of other precision-engineered parts to manufacture automobiles here in the country. The substantial slide in the value of dollar against the rupee translates into substantial reduction in the import bill for the auto manufacturers plus additional savings in import duties and taxes. These substantial savings in turn has resulted in significant reduction in the production costs and yet there is no indication of any attempt by the auto producers to pass at least a part of these savings to the car buyers.

The reduction in prices, justified as they are but not seem to be coming, make all the more sense if viewed in the backdrop of drastic increase in car prices over the years. These increases include all car manufacturers including ones which started commercial production a few years ago. A look at the increases is imperative to understand the soaring price pattern of all brands and makes of automobiles by each individual automobile manufacturer. Let's examine the prices on an individual basis to witness the disturbing price increases over the years.


Mehran 800 cc standard car which retailed for Rs 160,000 in February 1994 today sells for Rs 299,000 an over 85 per cent increase. At one time, in October 2000 the price touched a record Rs 328,000 level to dip to its present price in February last year. Similarly, the ex-factory price of 1000 cc Khyber standard model has registered a drastic increase of 140 per cent since 1994 from Rs 179,000 in February '94 to Rs 427,000 at present.

While there has been no increase in the prices of any of the models produced by Suzuki since February last year, industry observers say that it does not undermine the valid reasons for price cuts due primarily to strong performance of rupee over all the foreign currencies, including the Japanese yen.


The local manufacturer of Toyota Corolla Cars, Toyota Hilux trucks and Daihatsu 850 cc compact Cuore car, Indus Motor, increased the prices of its Corolla models during last one year with four exceptions decrease in the price of one its model and no changes in prices in other 3 models. The models whose price has remained unchanged include XE-Limited edition, Corolla 22.0 D and Corolla GLI at Rs 899,000, Rs 1,145,000 and Rs 1,189,000 respectively. The price of Corolla GLI standard up-grade model is the only reduction from Rs 1,109,000 to Rs 1,069,000.

Indus has increased prices of all of its other models. For instance, the ex-factory price of Corolla XE has increased from Rs 769,000 to 784,000, GLI manual transmission from Rs 1,029,000 to Rs 1,099,000. The prices of Daihatsu Cuore show a declining trend since it was launched commercially in April 2000.

Cuore CL standard model is retailing at Rs 349,000 at present, Rs 10,000 lower than the price it was selling for in April 2000. The air condition version of the same today sells at par at Rs 419,000 its price back in April 2000. However, there has been an increase in the price of the Cuore CX model which retails for Rs 399,000 today compared to Rs 439,000 since its launching in October 2000 till August last year.


Unlike Suzuki and Toyota the third manufactures of Japanese car in the country, Honda Atlas Pakistan, upped the prices of the majority of its Civic and City models during 2001. The prices both the manual and auto versions of Civic EXI and VTI registered increases the price of EXI manual increased from Rs 885,000 in February last year to Rs 945,000; EXI automatic from Rs 925,000 to Rs 985,000, VTI manual from 1,025,000 to Rs 1,105,000, VTI automatic from Rs 1,115,000 to Rs 1,195,000.

Kia and Hyundai

Dewan Farooque Motors, the manufacturer of Kia cars and Hyundai cars and trucks, also resorted to several price increases last year. The price of Kia classic LX has gone up from Rs 495,000 in October 2001 to Rs 525,000, Spectra automatic from Rs 799,000 in March 2001 to Rs 909,000. The price of Hyundai Santro GX went up from Rs 479,000 in August 2001 to Rs 509,000 at present.


The drastic increase in car prices over the years followed by a relative slowing down of it during 2001 calls for an indepth analysis of the situation by the policy makers. The drastic gaining of the value by the rupee in last four months calls for reduction in the prices of the passengers cars for the benefit of the buyers. In the absence of a consumer protection laws and consumer rights organizations puts heavy burden on the government to see that their interests are protected.