Auto-financing ‘all-time high’ at Rs273bn

Published March 19, 2021
Car financing has reached an all-time high of Rs273 billion as of Feb 28, 2021, showing a jump of four per cent month-on-month and 29pc since June 30, 2019. — Reuters/File
Car financing has reached an all-time high of Rs273 billion as of Feb 28, 2021, showing a jump of four per cent month-on-month and 29pc since June 30, 2019. — Reuters/File

KARACHI: Car financing has reached an all-time high of Rs273 billion as of Feb 28, 2021, showing a jump of four per cent month-on-month and 29pc since June 30, 2019, Head of Research at Arif Habib Ltd Tahir Abbas said while quoting the data of the State Bank of Pakistan (SBP).

He told Dawn on Thursday that the share of auto-financing in total car sales has swelled to 40-50pc now as compared to 20-25pc in March 2020 when the interest rate was 13.5pc. “We expect no change in the interest rate in Friday’s monetary policy statement by the SBP which will augur well for the auto sector,” he said expecting an interest rate hike to 7.5pc from the current 7pc in May but it would not cause any dent in the growth of auto-financing.

“I expect a growth of 16-20pc in car sales during FY21 keeping in view robust demand for cars,” he said, adding that so far lockdown situation is quite better than complete countrywide shutdown in March-May 2020.

He recalled that lower policy rate had helped car sales to sharply as auto-financing has increased by Rs51bn during 7MFY21.According to figures of Pakistan Automotive Manufacturers Association (PAMA), car sales during 8MFY21 soared to 96,139 units from 79,534 units in the same period last year despite high prices.

However, a number of car assemblers are still facing problems due to global congestion at ports resulting in supply chain issues of raw materials. Besides, freight rates have also jumped manifold.

Local industry was of the view that the delay in shipment of raw materials from abroad may continue till June 2021 which is also resulting in late delivery of vehicles to the customers.

Published in Dawn, March 19th, 2021

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