KARACHI: The prices of all the imported cars including refurbished/used car would rise in the country after increasing the regulatory duties (RD).
An analyst at AKD Securities said that the impact of additional levies on imported variants is positive for local Original Equipment Manufacturers (OEMs), raising demand for their offerings. The price ranges and the marginal impact on selling price from the additional RD levied.
As price differential between the imported variants rises after the regulatory duties, local OEMs may experience heightened demand.
Offering the Mehran & Wagon-R in the 660-800cc segment where the additional RD imposed is Rs 65,000, raising the price for competing imported variants by 5-6 per cent. When compared to take home prices (including WHT) of PSMC’s variants the price differential between imported variants has increased to 18 per cent.
Additionally, in the 1000CC/1300CC segments the Cultus/Swift variants now retail at 12.2 per cent/12.4 per cent discount to comparable import variants vs 7.3 per cent /7.8 per cent before the hike.
Similarly, Corolla falls into 1300 CC & above segment in the passenger car segment, where the additional RD imposed is between Rs 85,000 to Rs 200,000. When compared to take home prices of INDU’s variants, the price differential to imports has increased to 24 per cent from 20 per cent before the RD based price hike. The Toyota Fortuner and Hilux are now exceedingly discounted to the cost of imported offerings, making them incomparable in competitive terms, the analyst said.
Retailing the Honda Civic, City & BR-V that falls in the 1300 CC & above segment where the comparison of hiked prices due to the additional RD shows that Honda City/Civic/BR-V now trade at differentials of +41 per cent/-8 per cent/+5 per cent vs the prices before the hikes where the discount was +37 per cent/-11 per cent/-+2 per cent.
This show that the relative competitiveness of the Civic remains muted when looking at imported alternatives at similar price points.
The analyst said considering the average price hike from the additional RD on competing imported variants ranges between 4-6 per cent. He said this opens up room for OEMs to raise prices. Heightened steel prices (rising 19 per cent to 24 per cent during FYTD/May’17TD) are expected to be passed on in the next pricing cycle (Nov-Jan) which may be pushed sooner due to the additional room afforded by this RD levy, effectively enhancing pricing power of local OEMs.
