After car sales, here we bring another update narrating that the country’s auto industry is still in peril. Price hike, rupee devaluation, production cuts has pushed the car sales and auto finance to historic down.
Auto loans in Pakistan took a significant dip in March, falling by 24.4 percent compared to the previous year, totaling Rs239 billion. This marks the twenty-first consecutive month of decline, indicating a tightening in consumer financing.
In March alone, there was a 1.4 percent decrease in auto loans compared to February, where the amount stood at Rs243 billion. This decline is part of a larger trend since June 2022 when auto loans hit a peak of Rs368 billion, subsequently plummeting by Rs129 billion.
Several factors contribute to this decline. Expensive auto finance, increasing car prices, and rapidly rising inflation have all played a role in reducing consumer purchasing power, thereby dampening demand for auto loans.
The State Bank of Pakistan has maintained its benchmark interest rate at a record 22 percent since July 2023, after a cumulative increase of 15 percentage points since September 2021 due to surging inflation.
However, analysts suggest that this downward trend may reverse soon. Anticipated interest rate cuts and a potential easing of inflationary pressures could stimulate demand for auto loans. The State Bank of Pakistan might initiate a reduction in its benchmark interest rate this quarter, which could positively impact the auto loan market.
Car Sales Dropped by 3% Last Month
As per the Pakistan Automotive Manufacturers Association (PAMA) report, there was 3% decrease observed in month-on-month (MoM) car sales, with 9,379 units sold in March 2024 compared to 9,709 vehicles in February 2024.
However, in a year-on-year (YoY) analysis, there’s been a slight decrease of 1%. Car manufacturers managed to sell 9,379 cars compared to 9,472 vehicles during the same period last year.
Similarly, there was 1% decline in sales of two and three-wheelers, reaching 93,016 units last month compared to 93,770 units sold in Feb’24. Atlas Honda sales dropped by 2% reaching 71,827 units last months against 82,104 units in February 2024.
