Car importers peg prices to dollar amid falling Shilling
A Tata truck in a showroom in Kampala. New car companies are now pricing their rates against the dollar. PHOTO BY DOMINIC BUKENYA.
Kampala- Car importer CMC Motors yesterday announced it will start quoting vehicle and spare parts prices in dollar as the local currency continues to lose ground.
CMC Motors joins a list of other importers, including Spear Motors, Toyota Uganda, Nissan and Tata, whose prices are already pegged to the dollar.
Speaking at the launch of the company’s Shs2b tyre and auto centre in Nakawa, Kampala, Mr Mark Kass, the CMC Motors chief executive officer, said: “East Africa’s currencies are depreciating at around two and half per cent every 10 years. For this reason, all our products will be priced in dollars, we have no alternative but to do that.”
Depreciating Shilling
The Shilling has depreciated by more than 27 per cent this year, opening the week at Sh3,134, before falling to Shs3,314.87 by close of yesterday against the dollar.
Mr Baisama Awori, the Toyota Uganda national sales and marketing manager, told Daily Monitor yesterday their pricing is pegged to the dollar, “a decision that was taken even before the shilling’s troubles.
Mr Kass also expressed worry over the increasing lending rates, which have spiked to a market average of 24 per cent after Bank of Uganda increased its key lending rate from 13 per cent to 14.5 per cent, predicting that businesses are likely to suffer significant losses.
“Interest rates are rising on a month-on-month basis. We plan to reduce our borrowing and increase our equity participation instead. With the dollar hovering over the 20 per cent mark borrowing is bound to strangle business,” he said.
Jittery market
The Ugandan market continues to be jittery on the back of declining market fundamentals, including rising inflationary pressures, depreciating currency and rising interest rates.
At Spear Motors, Ms Noelina Nakiguli the company’s public relations officer, said: “Charging in foreign currency is something we have been doing, especially on vehicles imported from the US.
Others like Mercedes Benz, which are imported from Europe, we charge in Euros.”
