Bike dealers are demanding price cuts as sales plummet

KARACHI:

Motorcycle sales have fallen by 80% due to high inflation, prompting dealers to appeal to bike assemblers and car parts sellers to cut prices, taking into account the declining purchasing power of customers.

“We are looking for motorcycle buyers as sales of all bikes have fallen. Recently, the US dollar has depreciated significantly against the Pakistani rupee and petrol prices have also come down, but customers are yet to get any relief,” Karachi Motorcycle Dealers Association President Mohammad Ahsan Gujjar told The Express Tribune .

“About 30,000 motorcycles were sold in a month in Karachi and now we are not selling nearly 6,000 motorcycles,” he revealed and urged the Chinese and Japanese assemblers to reduce the prices of 70cc motorcycles by Rs 20,000 and Rs 40,000 respectively.

In the last one-and-a-half years, Japanese companies have increased the rates of motorcycles with engine displacement of 100cc, 125cc and 150cc in the range of Rs 125,000 to Rs 175,000, which, Gujjar said, must be withdrawn immediately.

Prices had risen when the US dollar was at Rs 334, but has now fallen to around Rs 284. With this, the raw material also became cheaper. “Thus, bicycle prices must be reduced,” he stressed. Dealers deal in both Chinese and Japanese brands including Atlas Honda, Suzuki, Super Power, Super Star, Unique, Hi-Speed ​​and others in Karachi markets.

“People mostly buy regular 70cc bikes as this is a vehicle for the middle and lower middle class that they use more than other bikes,” he said.

The association president warned that traders were finding it increasingly difficult to cover the ongoing costs of doing business, including workers’ wages, utility bills and other expenses in the current poor economic conditions. “If the market position remains static and prices do not come down, they would have no choice but to close the stores,” he added.

Former president of Pakistan Motorcycle Assemblers Association Muhammad Sabir Shaikh revealed that actually motorcycle assemblers had imported auto parts when the US dollar was trading at Rs 290 and stopped all imports when the dollar jumped past Rs 300.

He pointed out that for about a month and a half the dollar continued to rise and for another month and a half it fell, adding that there is still uncertainty in the market regarding the appreciation and depreciation of the dollar. “It is quite difficult for assemblers to take a decision on price cut before January 2024 as they are unable to announce any price cut due to continued currency volatility,” he said.

“When the US dollar goes up, bike prices go up, that’s right. But there are also many other reasons that raise prices, such as high electricity and natural gas tariffs, an increase in the prices of raw materials, etc.” Shaikh claimed that assemblers had started asking dealers to reduce prices ranging from Rs 2,000 to Rs 5,000 on all motorcycles to provide some relief to buyers, but no price list was officially issued in the market.

Auto analyst Zain Shariq said there are two main aspects to understand the market phenomenon. First, there is a cycle of three to four months from the import of auto parts, and if the US dollar rises or falls, it will take some time to affect the market. Second, there are bloated utility bills, labor costs, and high inflation rates that force businesses to raise prices.

He stressed the need to provide maximum relief to customers in order to keep businesses running.

Published in The Express Tribune, November 5^u2023.

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