Due to skyrocketing inflation and increased restrictions on auto loans, auto financing is depleting quickly. The decline is progressive, as the margin between auto financing in June 2022 – when the record-high auto loan of Rs. 414 billion was recorded — and February 2023 is substantial.
According to the most recent report, auto financing in February 2023 amounted to Rs. 375 billion, with a month-over-month (MOM) decline of 1.57% and a year-over-year (YOY) decline of 5.06%.
In its report, Ismail Iqbal Securities (IIS) noted that auto financing has reached its lowest level since September 2021. However, the decline is not as severe as anticipated, and there is a possibility that it will resurge once the economy stabilizes.
Consumers, on the other hand, believe that the State Bank of Pakistan’s (SBP’s) restrictions have rendered it impossible to obtain favorable financing terms. During a conversation with ProPakistani, a customer stated:
In February, automobile sales reached a 3-year low. This indicates that the factory shutdowns are taking a severe toll on sales and the price hikes are suppressing the demand for new cars.
Experts believe that the local car industry may never reach the previous year’s success when the auto industry was booming.
Editorial & Legal Practice Group
Authored and reviewed by the corporate law and tax litigation practice group at Javid Law Associates. Our team comprises High Court advocates, corporate legal advisors, and authorized tax practitioners across Pakistan.
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Jurisdiction: Pakistan