Bank Car Financing Drops for 21 Months

Jawad

19 Apr 2024

276

Bank Car Financing Drops for 21 Months

In the calendar year 2024, car financing experienced a continued decline for 21 consecutive months, reaching Rs. 239 billion by the end of March, down by 24.4 percent Year over Year (YoY) from Rs. 317 billion in the corresponding period of the previous year, according to data from the State Bank of Pakistan (SBP).

Throughout the financial year 2023-24, the automotive sector has faced significant challenges, with automobile sales plummeting to 69,078 units in the first nine months of FY24, down from 110,898 units in the same period of FY23.

Several factors have contributed to the sluggish performance of the auto market in the past nine months. High lending rates have deterred potential buyers, compounded by restrictions imposed by the central bank on auto financing.

Moreover, the high cost of cars has remained a notable obstacle to increasing sales. Despite some assemblers offering discounts on registration and other fees, these incentives have failed to attract a substantial number of buyers.

In contrast, consumer financing for house building remained relatively stable, amounting to Rs. 206 billion by the end of March 2024.

On the other hand, personal loans facilitated through credit cards experienced a decline of 3.6 percent YoY, reaching Rs. 242 billion by the end of March.

Overall, credit extended to end-users, encompassing consumer financing, witnessed a notable decline, totaling Rs. 807 billion in March 2024, representing an 8.2 percent YoY decrease.