MG Motors has announced Rs600,000 reduction in the price of its model HS Essence, citing rupee’s appreciation against the dollar.

Effective from October 16, new price of the crossover SUV is Rs8,099,000.

“Passing on the forex benefit to the consumer is a logical direction for all businesses, including the automotive industry,” general manager of MG Motors Pakistan, Syed Asif Ahmed told Business Recorder.

Earlier this month, Lucky Motor Corporation (LMC) has also announced up to Rs500,000 reduction in prices of its KIA vehicles, in line with rupee’s recovery against the dollar.

The auto sector in Pakistan heavily relies on imports, and car prices in the country witnessed a significant increase over several months due to rupee’s record depreciation against the dollar.

The rupee reached a record low of 307.1 against the dollar in the inter-bank market on September 5.

However, in an unprecedented 28-session rally since then, the local currency gained 10.93% before closing slightly lower by o.07% in the inter-bank market on Tuesday.

The currency appreciation came in line with the caretaker government’s action against smugglers and hoarders.

Earlier, other than rupee’s depreciation impact, the auto sector was also hit by the previous government’s decision to put restrictions on imports to save depleting foreign exchange reserves.

Additionally, higher finance costs and massive increase in car prices also reduced consumer demand.

In the first quarter of FY24, car sales in Pakistan stood at 20,983 units, down 40% as compared to the same period the previous year.

“The automobile industry in Pakistan is facing demand challenges, primarily driven by high prices, costly auto financing, and a surge in taxes, resulting in a YoY decline in sales,” Deputy Head of Research, JS Research, Waqas Ghani told Business Recorder earlier.

However, Asif Ahmed is upbeat about Pakistan’s auto industry’s V-shape recovery.

“Pakistan has always shown a V type recovery (in the auto industry). This time also the industry is gearing up for a robust recovery,” he said.