KARACHI: As locally assembled cars have gone beyond the reach of many people, the option of buying used cars has also become a challenging task following a massive increase in their prices over the last three years.
The persistent rise in the prices of new cars has forced a number of consumers towards used automobiles as they cannot purchase costly locally assembled cars by cash or on a monthly instalment despite low interest rates.
The price of locally assembled Honda cars is well ahead of its Japanese counterparts, perhaps owing to the low localisation aspect.
According to data provided by Arif Habib Ltd, Honda Civic IVTEC is now priced at Rs3.614 million as compared to Rs2.4m in January 2018, while Oriel and Turbo models are now tagged at Rs3.864m and Rs4.564m as compared to Rs2.549m and Rs2.899m.
Rates of new locally assembled vehicles have risen by 40pc since 2018
Honda City 1.3, 1.5 Aspire Manual and 1.5 Aspire Prosmatec now sell at Rs2.599m, Rs3.019m and Rs3.174m as compared to Rs1.599m, Rs1.789m and Rs1.929m. BR-V IVTEC was priced at Rs2.329m in Jan 2018 now sells at Rs 3.374m.
Toyota Corolla 1.6 and Altis Grande 1.8 now carry price tags of Rs3.249m and Rs3.869m as compared to Rs2.199m and Rs2.589m. Toyota Fortuner is now available at Rs9.269m as compared to Rs5.550m.
Suzuki WagonR VXR and VXL are now available at Rs1.530m and Rs1.760m versus Rs1.064m and Rs1.124m earlier 2018.
Cultus VXR, VXL and AGS models were priced at Rs1.270m, Rs1.391m and Rs1.470m in earlier 2018 as compared to current rates of Rs1.655m, Rs1.830m and Rs1.975m earlier 2018.
Suzuki Alto 660cc models VX, VXR and VXL models were launched at Rs 999,000, Rs1.101m and Rs1.295m as compared to current prices of Rs1.113m, Rs1.335m and Rs1.521m.
Prices of locally assembled cars had been much higher till June 2021. The rates came down by Rs40,000 to Rs400,000 from July 1, 2021 on cars and SUVs after the government’s decision of slashing duties and taxes.
Amid rising prices, own-money or premium on spot sales at the showrooms of locally assembled cars have further pushed up purchasing cost of vehicles. Car dealerships have been charging up to Rs1m on new in-demand models.
A random market survey shows that the prices of used cars (1,000cc to 1,800cc that were previously locally assembled vehicles) have seen a jump of Rs50,000-60,000 to Rs400,000-500,000 in the last three years depending on the models, exterior and interior outlook and resale value of the models.
Local assemblers have been attributing increasing car prices to vulnerable exchange rate, high freight cost and raw material prices like steel, plastic materials etc.
However, used car prices have not swelled with the price intensity of locally assembled cars in the last three years. Used car prices do not increase at the rate of new cars, making used cars a more affordable choice for more and more consumers — where the price of new cars has risen by as much as 40pc or more since 2018 while most used car prices have risen by 15-20pc, depending on the make, model, and year of manufacturing.
Rising demand for cars and SUVs has also opened new business avenues for online sale/purchase of used car platforms. One of them is VavaCars whose country manager Mujahid Khan said as with new cars, used car prices have seen a rise in prices over the last few years, with 2021 seeing volatility as a result of the government’s efforts to control new car prices.
He said the government’s effort to control new car prices earlier this year yielded a very short term benefit, and within a matter of months, new car prices have risen again on the back of “own” money charged on new cars for early delivery. Mujahid said VavaCars has set out to solve the problem of buying and selling used cars for our customers, offering best in class value in a hassle-free way, across a wide-range of price points, and choice of vehicle selection across brands.
All Pakistan Motor Dealers Association Chairman H.M. Shahzad said that the value of used cars (which were locally assembled) has not depreciated in the last three years while the price of second-hand vehicles, which had been arriving under different schemes, had risen by 8-9pc from May 2021 till to date due to rupee devaluation against the dollar.
Published in Dawn, September 26th, 2021