KARACHI: The amount of outstanding auto loans decreased for the sixth consecutive month at the end of December 2022, data released by the State Bank of Pakistan (SBP) showed on Thursday.
The outstanding auto financing stood at Rs337.47 billion at the end of last month, which is 4.5 per cent lower than the December 2021 figure of Rs353.63bn. The latest outstanding auto financing figure is 0.8pc lower than its November 2022 level. In June 2022, it was Rs367bn. Head of Research, Ismail Iqbal Securities, Fahad Rauf said that auto demand would remain depressed till June due to a huge price rise in cars and other vehicles and curbs on auto financing by the SBP.
He said as the assemblers had recently shocked the consumers by raising the prices, the 10.6pc rupee devaluation against the dollar would further force the assemblers to raise prices due to an increase in imported raw material prices.
Besides, high energy prices amid unprecedented food inflation would certainly further hit the consumers’ purchasing power, forcing them to review their plans to buy new vehicles.
“The share of auto financing in total car sales has plunged to less than 10pc from 35-40pc when vehicles demand was running high,” Fahad said.
The SBP has further raised its policy rate by 100bps to a 25-year high at 17pc and after adding Kibor, the car financing would touch 22pc thus pushing up the monthly installment and advance payment, making it difficult for consumers to lift vehicles on bank financing, he said. Mashood Ali Khan, director at Mehran Commercial an auto parts exporter, said the government was taking short-term measures to address the economic turmoil whose repercussions have so far been devastating for the trade and business community.
Published in Dawn, January 27th, 2023
