KIA slashes KIA Stonic price by 15 lakhs

KIA, a prominent automobile brand operated by the Lucky Group in Pakistan, recently made headlines by reducing the price of its popular model, the KIA Stonic, by a significant 15 lakhs. This price adjustment was a direct response to a new government tax regulation that required cars with a factory price exceeding 40 lakhs to pay a hefty 25% sales tax. As a result, the KIA Stonic's post-tax price was set at Rs 62 lakhs, prompting KIA to proactively lower the price to leverage the more favorable 18% tax rate applicable to cars priced under 40 lakhs.

The 24% reduction in the KIA Stonic's price indicates that the car was initially being sold at a margin higher than 24%. Despite KIA's annual production capacity of approximately 60,000 cars, the company only assembled around 10,000 units last year due to consumer reluctance to pay the high margins.

However, following the price drop, KIA witnessed a surge in demand, with over 700 KIA Stonic cars being sold in a single day. This success underscores the potential for increased sales volumes when prices are aligned with consumer expectations.

The strategic move by KIA, coupled with the entry of new players like MG and Hyundai into the Pakistani auto market, has introduced a new era of diversity in an industry previously dominated by Toyota, Suzuki, and Honda. Such decisions to lower prices not only benefit the auto sector but also contribute to market diversity and create additional employment opportunities, thereby positively impacting the overall industry and economy.