August 5, 2010

German Cars or Japanese Cars?

BMW 5 Series 2010. (Source: Express Tribune)
So it has been confirmed then: The new BMW 5 series has been launched in Pakistan and it will cost a cool 7.5 million. You might imagine that is a lot of money to pay for a German mid-size executive saloon car; and I would have to agree with you. And no doubt you will also claim that the car's real price ought to be nearer to the 6 million mark, and once again I will have to bend my head in respect to your astuteness. Of course you will back your claims by stating that the basic Porsche Cayenne costs 7 million, and hence the price of the BMW is unjustified. And once again, fair enough.

So while you're only too happy bashing the German automakers on the head, you or rather we, tend to overlook how we're being sucked dry by a very beefy auto industry present in our country. Let me put things into perspective for you. A Toyota Camry, which by no definition comes into the category of the word executive if the German dictionary is to be followed, costs Rs. 6.9 million. Only 600,000 less than the BMW. And only 100,000 less than the impeccable Porsche Cayenne. The Honda Accord meanwhile costs Rs. 5.7 million. And yet, a Porsche Boxster costs Rs. 6.5 million, Rs 400,000 LESS than a Japanese made Toyota. And for an instant you're bamboozled; you think there's been a mistake, a Japanese car in international markets costs half of a German premium car. How is it possible that it should cost more than a German car in the Pakistani market?

But wait. There's more. I have already told you the price of a Porsche Cayenne, an SUV of the highest standards, costs Rs. 7 million. A Japanese Toyota Prado which ought to cost about Rs. 5 million in Pakistan taking into account all the costs and taxes, if the international market rates are to be assumed, actually costs Rs. 9.7 million. The word you're looking for right now is : Ouch!

But wait, there's even more. A BMW X1, provided it is a small sized horribly-gone-wrong result of the mating of a saloon with a 4x4, will set you back by Rs. 5 million. Think about it. You can buy German built and assembled cars in Pakistan, for less than Japanese built cars. Isn't that like heaven on earth? Obviously these cars are all executive saloons and will cater to the elitist class. But here's the catch: if the elitist class cars, German cars, cost less than Japanese cars, imagine how much extra we're paying for the small category sedans such as the Altis and the Civic. As an example, the 1.8 Altis in India, with the CNG, costs 1.1 million INR. The same in Pakistan, without CNG because that's not offered, costs 1.9 million PKR, which goes upto 2 million PKR after registration. So you see the difference? 

The small category cars, particularly the Corolla GLi and the Honda City ought to cost less than 1 million rupees. But of course, the strong bicep flexing by the auto industry has captivated the government into submitting to its whims rather than do what is best for the country and the poor man. Reduce import duties and quotas, and invite German car makers to open plants here to build and manufacture the small category sedans such as the Mercedes C-Class, the BMW 3 Series and the Audi A4 here in Pakistan. Realistically speaking they ought to cost not more than 3-3.5 million PKR a piece, and that is the bargain of the century in the Land of Pure.

Note: All links open the car prices available on the official websites.