Changan Pakistan has increased car prices for the second time since March – this time choosing to jack up prices across the board by Rs120,000. The reason the company is giving is increasing costs of steel and shipping.

After revealing the Alsvin sedan launch price in January this year, the Chinese carmaker increased the price of its two automatic variants by up to Rs101,000 just two months later in March.

The Alsvin 1.37L 5-speed manual transmission was initially priced at Rs2.2 million. It is now selling for Rs2.27 million. The 1.5L 5-speed dual-clutch automatic transmission was initially priced at Rs2.4 million and the top-of-the-line 1.5L Lumiere at Rs2.55 million. Their new prices are Rs2.52 million and Rs2.71 million.

The new prices of vans Karvaan Plus and Karvaan Standard are Rs1.66 million and Rs1.52 million after an increase of Rs120,000. The pickup truck M9 now costs Rs1.35 million after the price hike.

The price of the cars also went down last month, but that was due to a reduction in government duties and taxes.

Less than two months after car prices were slashed
after a reduction in duties and taxes, companies in Pakistan have started jacking
them up again with Changan Pakistan being the first one. Their excuse: raw
material prices and freight charges have gone up.

“Around 70% to 80% of a typical passenger car is made up of some grade of imported steel,” said Syed Shabbiruddin, the director for sales and marketing at Changan Pakistan. “A car price is, therefore, highly sensitive to the price of steel and the exchange rate.”

If steel prices go up, car prices will inevitably increase, he said. In fact, even motorcycle producers recently passed on the burden to their consumers. Soon car companies will also have to raise vehicle prices because of rising steel prices and the increased cost of shipping, Shabbiruddin said less than a week before his company increased prices.

“An unprecedented increase in shipping costs due to
the recent wave of Delta variant in South Asian countries is also putting
pressure, especially on new car assemblers, to increase prices to pass on the
impact,” he added.

Research analyst Waqas Ghani wagered that steel prices
might remain at this level for the next few months.

“However, steel is a commodity and its price might
even go down after some time. I don’t think the steel price will remain high
permanently,” he said. According to him, Cold Roll Channel steel sheets used to
cost Rs132,000 per ton a year ago. This has gone up to Rs239,000 per ton.

Similarly, the price of steel rebars that are used in the construction sector has increased from Rs117,000 to Rs173,000 in a year, said Ghani. The price hike was the outcome of steel scrap prices going up from $300 per ton to $535. He was comparing prices from last August to this year.

Also read: Toyota
and Suzuki register record sales in Pakistan

At least three independent sources in the auto industry confirmed to SAMAA Money that the shipping cost has gone up from $800 for a container pre-pandemic to up to $4,000.

“The containers are also not available because ports have choked amid the pandemic,” said Shaukat Qureshi, the Chief Operating Officer at SZS’s auto division, which is planning to launch electric cars in Pakistan.

“Moreover, countries such as China have reduced their
number of workers at the ports which is creating hurdles.”

However, analysts pointed out that these two factors
were caused by a spill-over effect of the coronavirus pandemic.

Research analyst Ahmed Lakhani said that this was the first time that all car companies reduced prices this year and the impetus actually came from the government and not the private sector.

“Before this, I have not seen car prices going down in
Pakistan except for a couple of instances when companies reduced a single
model’s price because of low demand,” he said. It happened only in the Suzuki
Wagon-R and United Bravo’s case. Other than that, prices have technically been
irreversible.