Investors reap ‘late delivery’ windfall as auto prices soar – Business

KARACHI: Investors, who secured delivery of their reserved vehicles at old rates after a months-long delay, are reaping bargains by selling their cars, jeeps and vans at huge premiums due to massive price hikes in recent weeks .

With the country on the brink of default, suspensions of reservations, massive price increases, restrictions on car financing and sales down 25-30% in FY23 and days of non- production, local assemblers passed on the negative impact of a rising dollar. against the rupee to consumers.

The price gap between old and new locally assembled vehicles now hovers between Rs590,000 and Rs3.12 million, as fears of further price hikes loom should the rupiah continue to fall against the dollar.

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Due to the suspension of reservations from certain large assemblers, showrooms are now dealing with customers whose delivery time for vehicles has reached maturity after a long wait of three to six months.

Market sources have said that the “over the money” or price difference on Kia vehicles is between 1-1.3 million rupees.

For example, investors are demanding 7.6 million rupees for all-wheel-drive (AWD) Sportage models, which have been priced up to 7.250 million rupees from 6.363 million rupees.

The Kia Picanto automatic reserved for the old prices of Rs2,312m and Rs2.7m in previous months is now priced at Rs3.2mn. However, the buyer has to manage more than Rs1m to get the instant delivery from the investor.

Kia Lucky Motor Limited and Hyundai Nishat Motors have hiked the prices of various models up to Rs 1.1 million.

Sources said a similar situation exists in the prices of Toyota vehicles as a ‘premium’ or difference that investors charge between Rs 500,000 and Rs 2.5 million on various models.

A Toyota dealership said investors are taking a large consumer chunk out of cars whose delivery is now in line with the old prices. “You either call this practice ‘on the money’ or a big price disparity,” he added.

Indus Motor Company (IMC) raised prices from Rs 590,000 to Rs 3.12 million, followed by Honda Atlas Cars Limited (HACL) from Rs 785,000 to Rs 1,450m.

A Japanese assembly car dealership said customers were receiving deliveries of their old vehicles booked six months ago, but waiting for the price to be set in the market and then selling them.

A dealer has said a bounty of Rs 100,000-150,000 exists on Honda City as the company has yet to suspend its reservation, while the reservation of Toyota and Suzuki vehicles has been closed from May 18 to July 1.

He said “on the money” on Suzuki Cultus and Alto660cc is around Rs 500,000 as the company has yet to announce a price hike but the old low priced reserved deliveries are being cleared.

A used car dealership said a number of people had parked their two- to three-year-old cars and large vehicles waiting to hit a jackpot at some point given the continued rise in prices.

He said many people have taken their money out of their businesses and entered the automotive sector as investors due to the upward trend in vehicle prices.

Sources said some “on the money” deals are stuck in authorized dealer showrooms, despite eloquent claims by assemblers that their showroom staff are not involved in the syndrome “ on the money”. Many transactions are concluded outside the showrooms.

Dealers said the “cash on cash” practice typically grows due to long vehicle delivery delays ranging from two to 10 months.

Posted in Dawn, July 31, 2022

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