Car Financing Drops for 22 Months

Jawad

20 May 2024

261

Car Financing Drops for 22 Months

Car financing continued to decline for 22 consecutive months in 2024, with a significant year-on-year drop of 23.7 percent, reducing the total to Rs. 236 billion by the end of April from Rs. 309 billion in the same period last year. According to the State Bank of Pakistan (SBP), consumer financing for house building also saw a decrease, falling by 3.3 percent to Rs. 206 billion by the end of April 2024.

The auto sector has been experiencing turmoil for nearly two years. In the first ten months of the ongoing financial year, automobile sales plummeted to 79,575 units, a stark contrast to the 115,381 units sold in the same period of FY23. The decline in auto sales over the past ten months can be attributed to rising car prices, expensive auto financing, and a decrease in consumer purchasing power.

Despite some car assemblers offering discounts on registration and other charges in recent months, the overall growth in the auto sector remains sluggish. High car prices continue to be a significant barrier to sales, reflecting trends observed in FY23. These financial challenges have stunted the recovery and growth of the automobile market.

In contrast, personal loans on credit cards surged by 30.7 percent year-on-year, reaching Rs. 116 billion by the end of April 2024. However, overall consumer financing, including credit issued to end-users, fell to Rs. 803 billion in April 2024, marking a 7.5 percent year-on-year decrease. This overall decline highlights the ongoing challenges faced by the financial sector in boosting consumer spending and lending.

Car financing auto sales decline consumer financing rising car prices expensive auto loans house building loans personal loans credit card surge automobile market financial sector challenges

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