Pakistan auto industry depends on the dollar price in the international market and from the last few months the continuously increase the strength of the dollar badly affect the automobile sector. The prices of vehicle increase continuously and out of the purchase for the low-income employees and Pakistan auto industry badly affected. Local car manufacturer rising their vehicle prices just because of the devaluation of the currency. This is great news for the Pakistan auto industry that the foreign auto manufacturer starts producing their plants in Pakistan but the rising price of dollar effect their products and the prices of vehicles were also affected. Almost all the local auto manufacturer increase their prices according to the dollar strength increase.
Effects on the Local Automobile Industry
Local car manufacturer increases the prices of cars and motorbikes just because of the devaluation of the currency and the sales of the car are down because the new prices are not affordable for everyone to buy a car. Recently Honda, Pak Suzuki, and Al-Haj Faw increase the prices of its cars and these are the largest local car manufacturer in the country. The increasing strength of the dollar effect to decrease the buying power of consumers and the sales of local cars is down just because the new prices are very high as compared to the buying power of consumers.
The basic purpose people buy a local car is just the local cars are available at low prices as compared to imported cars. But now the prices of local cars are high and the consumer’s interest in the local car was low. the rupee value contentiously down and it does not just effect on the automobile sector it’s also effects on the economy. The other reason for down cars sales is the rising price of fuel the fuel rates are very as compared to the last 4 months and its effect on the sales of cars. Most of the automotive parts imported from other countries and the duty of the automotive parts high against the dollar.
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The local Auto industry of Pakistan spends the largest part in the Pakistan economy in the form of car sales taxes and promote the Pakistan local auto industry. Local cars manufacturer has a big hand in the success of Pakistan auto industry. That is not possible for the government to complete the demand for vehicles in the country without encourages the foreign auto manufacturer.
Effects on Imported Cars
The prices of imported cars totally depend on the price value of the dollar and this time the imported car including in the luxury purchase car because the law of SRO No. 52 (I) 2019 the custom duty paid in the dollar and only the overseas Pakistani can import used cars. In this situation, there is only one option for consumers to buy local cars.
Our economy is imported base and most of the automotive parts import from other countries and the buying and selling depend on the rate of the dollar. There is no doubt that imported cars are perfect for long time use because the machine and the features that they used in cars are of high quality.
Import cars are expensive then the local car but they are more reliable then the local car most of the people import car for long time use and that’s why they want to spend a high amount to buy a cars but in this current situation there is no possibility to buy an imported car in low amount because our rupee value is very down against dollar.
Whenever the strength of dollar increase it badly affect the import of Pakistan and its damaged the value of Pakistan auto industry worldwide.
Effects on Car Leasing
The car leasing is falling down just because of the high interest rates and it’s just happened because of the devaluation of the rupee. People are going for leasing because they have no power to pay a full amount of car at one time and today the rate of interest decreases the car sales by finance.
The interest rates are higher than the car prices. The leasing car is one of the fast running business in the country because it is very easy for the people to buy a car with lease mostly the low-income employees move to the leasing car because it’s easy for them to pay an amount of car in episode vise. But recently all the finance leasing companies and banks increase their interest and its happened just because of the increasing strength of the dollar.
Conclusion
In short words, the devaluation of rupee against dollar is going to destroy the automobile industry and in Pakistan auto industry is one of the largest fast-growing industry. In this situation, the hike prices of local cars are not affordable. If the rupee continuously devalues like current situation there is no possible situation to stop the hike prices of local cars. Most of the dealers in the country shut down their business just because of the negative effects of dollars on the automotive industry. At this time Pakistan auto industry is the fastest growing industry and if the dollar rate did not stable there is no possibility for the auto industry to move on and rise up the production of cars because as the rate of the cars high people stop purchasing of the car because it’s going to out of budget.
