One of the reasons why our economy and automotive industry was flourishing during Musharraf era was that people had money to spend, banks were giving people money to spend on anything they wished to purchase and return on installments but than the power transition from older to current government scared all the investors away from the country forcing us into a foriegn debt crisis and when banks decided not to give people money to spend, and that’s how our local economic crisis began.
I am not an economist by any stretch but I do like to stay informed; the whole reason why the great depression kicked in was that people didn’t have money to spend because banks weren’t liquid or stable enough to offer consumer financing.
Paapam chairman Nabeel Hashmi has said that banks and financing institutions were charging high mark ups and making undue profit at the cost of the industry.
He called for rationalization of consumer finance schemes rates for car financing, urging the authorities to refuse consumer financing of used or imported cars, as they do not contribute to any economic process or industrialization.
“In order to make available and affordable vehicles to the Pakistani public a special consumer finance/leasing schemes with single digit markups be reintroduced for locally made cars, two wheelers, HCV and buses (linked with local contents) to promote growth of local auto industries, besides creating employment and generating investments in high cost components and assemblies,” Hashmi elaborated.
Cost of vehicle financing is automatically paid back with economic benefit in the shape of taxes, jobs and technology creation, he added.
Paapam vice chairman Munir K Bana said that auto sector would like consumer financing with innovative ideas like vehicles with higher local contents (made in Pakistan components) may be given special financing rates.
In short, what they’re asking is that the banks should start giving people money to spend on cars specifically.