KARACHI: The amount of outstanding auto loans fell for the 12th consecutive month by Rs6.7 billion to Rs293.7bn at the end of June from Rs300.4bn in May.
Based on the whooping Rs368bn at the end of June 2022, the country’s outstanding auto financing dipped by Rs75bn in FY23, showing data released by the State Bank of Pakistan (SBP).
The auto market is now witnessing a major fallout of a high-interest rate of 22pc which was 7pc in March 2020 followed by steps taken by the central bank to curb demand for automobiles and financing.
Abnormal price hikes by the assemblers have further slowed down the demand for vehicles, posting a drop of 55pc in sales of cars, SUVs, vans and pickups to 127,000 units during FY23.
Plummeting demand for vehicles coupled with parts shortage due to restrictions on imports owing to the foreign exchange crisis has led to plant shutdowns by the assemblers, thus rendering thousands of people jobless in the vending units.
An upper limit of Rs3m on auto loans and a reduction in repayment duration by the State Bank of Pakistan has further hit sales of local assemblers.
Mashood Ali Khan, an auto vendor/exporter, said that after the ouster of the PTI government, the economy sank on a month-to-month basis. One of the supporting pillars for the auto industry’s growth is based on auto financing but unfortunately, the industry has experienced rising interest rates, making it difficult for customers to buy new vehicles.
Published in Dawn, July 28th, 2023
