In a recent report, the state Bank of Pakistan (SBP) has revealed another decline in outstanding car finance for the 18th consecutive month, signaling a noteworthy shift in the country’s auto financing landscape.
As of the December 2023, the outstanding auto loans clocks at Rs. 251 billion, showcasing a continuous downward trend from Rs, 257 billion in November and a considerable decrease compared to the Rs. 337 billion recorded in December 2023.
This marks a month-on-month decrease of 2.3 percent and a staggering 25.5 percent drop year-on-year over the past 18 months, there has been an impressive total reduction of Rs. 117 billion in car finance, indicating a sharp contrast from the Rs. 368 billion outstanding 18 months ago.
Multiple factors contribute to this downturn, including the soaring cost of vehicles, heightened markup rates, and changes in the State Bank’s regulations. Industry experts point to these factors as key drivers behind the prolonged decline in car finance. However, amidst the gloom, there is a glimmer of optimism as analysts anticipate an upswing in auto financing over the next three months.
Car Sales Dropped by 66% Last Month
As per the latest report from the Pakistan Automotive Manufacturers Association (PAMA), there was a 10% month-on-month (MoM) decline in car sales last month, with 5,816 vehicles sold, as opposed to the 6,475 units sold in November 2023.
Comparing year-to-year (YoY) data, a significant 66% drop is observed, as car manufacturers managed to sell only 17,012 cars during the corresponding period last year.
Similarly, two-wheeler sales experienced a significant decrease of 7% last month, selling 82,362 units in Dec’23 against 88,493 units in November 2023.
Notably, Japanese motorcycle manufacturer ‘Atlas Honda’ sales dropped by 5%, reaching out 72,096 units last month compared to 76,043 bikes in Nov’23. Conversely, Pak Suzuki’s sales increased by 33% in sales, with 1,363 units sold last month compared to 1,028 in November 2023.
Despite the current challenges, stakeholders remain hopeful that the industry will witness a revival, potentially fueled by a more conducive economic environment and possible adjustments in car finance structures.
