Auto Financing Plunged For 10th Consecutive Month

Production shutdown and months-long major downtrend in sales charts are not the only setbacks for Pakistan’s auto industry; incessant decline in the Auto financing sector is another challenge. As per the reports, car financing in Pakistan decreased for the consecutive 10 months.

Data released by the State Bank of Pakistan revealed that auto loans dropped by 16% last month to Rs. 308 billion compared to Rs. 368 billion in June 2022. Highlighting month-over-month charts, car financing decreased by 2.83%. Car leasing by private banks has observed a slump in the face of the rising SBP policy rate, which is currently 21% against 7% in March 2020.

As per the analysts, the share of auto financing used to be 60% of total vehicle sales, which has now dropped to just 25%. Car leasing is facing misfortune due to the steady increase in interest rates. 

Furthermore, the industry is under dire pressure, and the reason is back-to-back production cuts, closure of assembly plants, delayed deliveries, and record-low sales. And all calamity came after the State Bank of Pakistan inflicted import curbs on completely knockdown kits in July 2022.

Car Sales Facing Same Fate

Again, the crisis is not confined to just the auto loans sector. Car sales and production have the same fate. as per the PAMA report, car sales plunged by 85% year-on-year (YoY), selling 2,844 units in April’23 compared to 18,626 vehicles sold in the corresponding period of last year.

Similarly, month-on-month sales witnessed a similar trend – decreased by 52% sold 4,463 last month vehicles against 9,351 cars in March. The reason behind this nosedive is the poor sales of Pakistan Suzuki and Honda Atlas last month.