Following a decline in car sales last month, here’s a further update depicting the bleak state of the country’s local auto industry. Just a few days ago, the PAMA sales report indicated an 8% decrease in car sales. Now, there’s been a significant 25% drop in car financing, marking the 20th consecutive month of decline.
As per the reports, in the calendar year 2024, car financing plummeted by a staggering 25 percent year-on-year, reaching Rs. 243 billion by the end of February, down from Rs. 325.9 billion in the corresponding period last year.
This decline in financing has exacerbated the challenges faced by the auto sector, which has been in turmoil throughout the financial year 2023-24. Automobile sales dwindled to 46,417 units in the first eight months of FY24 from 78,575 units in FY23.
Several factors have contributed to this downturn, including exorbitant lending rates and stringent lending policies imposed by the central bank, such as caps on financing amounts and reduced loan repayment durations.
Downtrend In Car Sales
After a brief uptick for a month or two, there has been another downturn in car sales. According to the latest report from the Pakistan Automotive Manufacturers Association (PAMA), there was a significant 8% decrease in month-on-month (MoM) car sales, with 9,709 units sold in February 2024 compared to 10,536 vehicles in January 2023.
However, in a year-on-year (YoY) analysis, there’s been a stark increase of 57%. Car manufacturers managed to sell 6,186 cars during the same period last year.
Similarly, there was a notable 10% decline in sales of two and three-wheelers, reaching 93,764 units last month compared to 104,619 units sold in January 2024. Particularly significant is the 11% decrease in sales for Honda, a prominent Japanese motorcycle manufacturer, which sold 82,104 units last month, compared to 92,041 units in January 2024.
Meanwhile, Pak Suzuki also experienced a slight 3% decrease, selling 1,446 units last month compared to 1,484 bikes in January 2024.
What’s your though regarding the recent drop in car financing? Tell us in the comments section.
