Following a recent 7% devaluation of rupee against dollar, the Indus Motor Company published an ad in newspapers announcing it would book no new orders from the clients for the range of its cars. The rise in dollar’s value increases the production costs for the company as it pays in dollars for the import of raw material.
The dollar rose 7.4% on Tuesday to touch the mark of 133.6 rupees, up from 124.3 rupees the previous day. Sharp depreciation in the rupee’s value led to an increase in the cost of manufacturing vehicles and forced the automaker to review its price structure.
According to sources privy to the company, the automaker is evaluating the impact of an increase in the exchange rate before announcing new price structure. The booking will resume after the announcement of new price for the Toyota Corollas cars selling in Pakistan, particularly, the Xli and Gli variants.
However, the deliveries already scheduled for October for which amount has been paid in full will not see any hike in price.
While the company is in the process of evaluating the new price, the market analysts suggest a nearly 5 per cent hike in the prices of Corollas, which will add a significant amount to the existing price.
A 5% hike means that the 1300cc car,which has already been priced at around 1.9 million rupees, may add an additional 1 lac rupees for those who haven’t booked yet but plan to buy it in future. Earlier a policy paper from the Competition Commission of Pakistan (CCP) proposed to the government that the increase in price by the automakers shouldn’t be applied to the customers who have already made their bookings.
Past few months saw a gradual rise in the exchange rate from just around 100 rupees to as high as 137 rupees. Such an alarmingly high rupee devaluation has seriously affected the economy of Pakistan. It has also added to the price of several different types of imported goods and items of daily use for which the payment is made in dollars.