Growing costs of raw materials and increasing freight charges have led analysts to deduce that the prices of cars are likely to go up in the coming months.
Director of Sales and Marketing at Changan Pakistan Syed Shabbiruddin told a leading news outlet that between 70 percent to 80 percent of the vehicles in the market are composed of imported steel — a key influencer of car prices in the local and international markets.
Motorcycle Prices Affected
He explained that the recent hike in the prices of motorcycles is due to the increased cost of raw materials, which has been transferred by the manufacturers to the customers, and added that the increasing freight charges and costs of raw materials are likely to force auto manufacturers to increase the prices of their vehicles.
Taha Madani, a research analyst at BMA Capital Management Ltd. said that the demand for cars has been increasing consistently since last year and that it may offset the increasing price of steel as automakers are also observing an increase in the revenue due to a rise in the number of sales.
He predicted that the manufacturers are likely to raise the prices of vehicles regardless of the high number of sales in order to increase their profits.
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Steel Sheets Getting Expensive
Another research analyst at JS Global Capital Ltd. Waqas Ghani revealed that the Cold Roll Channel steel sheets used to cost Rs. 132,000 per ton a year ago but now their price has gone up by 75 percent to Rs. 239,000 per ton. He opined that the prices of steel are likely to remain the same for some time and then decrease again.
The Chief Operating Officer at Zia-ul-Haq & Sons, Shaukat Qureshi, remarked that the freight charges have increased from $800 before the pandemic to $4000 at present. He added that there is an acute shortage of containers and port staff across the board, which is an additional cause of concern for overseas traders.
The analysts concurred that the higher costs of steel and shipping will increase car prices in the near future.