In October 2023, auto finance fell for the sixteenth consecutive month, with the total amount of auto loans reducing by 3% on a monthly basis to Rs. 264 billion from Rs. 272 billion in September.
Auto finance may have peaked at Rs. 368 billion in June 2022 and has since declined by Rs. 104 billion, according to data from the State Bank of Pakistan (SBP).
SBP damaged local assembler sales by shortening the payback period and increasing the car loan maximum to Rs. 3 million.
Sales of cars, vans, and trucks fell by 44% to 27,163 units in 4MFY24, from 48,573 units in SPLY. This decline was caused by stifled demand as a result of a large price rise and costly vehicle financing. Additionally, since last year, assemblers have often stopped output because of shortages brought on by import restrictions imposed by the central bank.
“It seems we are near the bottom in auto financing, but we may see some improvement as Kibor is coming down,” stated Mohammed Sohail, CEO of Topline Securities. When the central bank cuts its policy rate, which is anticipated to happen shortly, he predicts that customers will go back to banks for vehicle loans.
