Car Financing In Pakistan Bears Massive Drop; Report

Web Desk — Pakistan’s economic condition continues to plague the auto sector as banks’ car financing ratio went down again for the 13th time in July 2023, mainly due to rising interest rates.

A report published in Dawn says the total car loan amount fell to Rs. 285.2 billion from Rs. 293.7 billion in June.

According to the State Bank’s data, auto financing peaked at Rs. 368 billion in June 2022 and has since fallen due to increased interest rates, now at 22%. Other reasons for the decline include the rising vehicle prices.

The Central Bank reduced repayment length and raised the vehicle loan ceiling to Rs. 3 million which hurt the local assembler sales.

According to auto experts, the rupee’s continuous devaluation gives rise to various predictions that the interest rate will rise or stay unchanged due to rising inflation and concern about more vehicle price hikes.

There are predictions that the auto sector will remain in crisis till December. With no signs of a big drop in interest rates or prices, the sales situation may also remain alarming even during H1 2024.

Indus Motor Company (IMC) CEO Ali Asghar Jamali says the auto industry is facing the worst economic downturn ever.

Local and worldwide disruptions and CKD kit import limitations caused plant closures and major industry job losses in 2023.