Previous month-on-month reports narrated a poor sight of the auto financing sector in Pakistan. Trouble started to surface after a strange car price hike saga and import curbs inflicted by the State Bank of Pakistan ensued. This subtle episode shattered the sales and auto finance, whilst the latest reports carry different figures presenting a perfect salvage.
When the prolific back-breaking inflation and import restrictions are staring into the abyss of financial ruin, the auto financing sector is still living alive. Simply put, the sector offset the impact of the prevailing economic bust in the industry.
As per recent reports, auto financing observed a month-on-month slight decline of just 0.7% in August, clocking in at Rs. 350 billion. While witnessing a year-on-year jump of 3.5%.
Reports highlighted that car financing died down since the inception of this year, but the downturn is not enough to leave the automakers bewildered. Meaning, chances are that new car demand would steer the sector out of the rampant challenges.
Moreover, consumers come with a different view, dumping it all through the door of gut-wrenching curbs by the State Bank of Pakistan. Suffice it to say; the recent restraints have curtailed the chances of getting even a mild financial deal.
Car Prices Surged By 47% This Year- Report
Buying a car over these nine months has been a wild experience. Roaring car prices have shattered buyers’ capacity to purchase a new car. Same is the case with used cars now.
Local automakers have hiked car prices by 47% since January this year. Car companies have blamed the rupee depreciation, flourishing inflation, and rising raw materials and shipping costs for the current market dynamics.
A report shared by Engineering Development Board (EDB) has revealed the car price drift from January to September 2022.
Why Car Prices Increased So Dramatically?
As per the report, since the inception of this year, car prices have observed an enormous hike of 47%. EDB stated that the Rupee devaluation of 31%, coupled with a massive increase in duties and taxes by the incumbent government on the automobile sector, has nudged the car prices to cross the limit line.
Moreover, the burgeoned freight charges and raw material costs added more to the pain. Surprisingly, freight has increased by 250% during the last nine months. Similarly, production costs and logistics also increased due to expanding raw material costs.
