Auto-financing hits record Rs285bn
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KARACHI: Robust demand from consumers took auto-financing to a record high of Rs285 billion during March, an increase of 30 per cent year-on-year or Rs66 billion, Director Topline Securities Mohammad Sohail said on Monday.
Quoting the figures issued by the State Bank of Pakistan, he added that auto-financing witnessed the highest monthly increase of Rs12 billion or 4.5pc month-on-month in March.
As on Feb 28, 2021, auto-financing had hit all-time high of Rs273bn, he added, attributing the boom in car financing to low interest rates at 7pc this year compared to 13.5pc in March 2020.
While car prices have gone up substantially, buyers are more interested in picking up cars through cheap bank financing owing to low interest rates.
“I think the average share of car financing in the country’s total car sales stands at 50pc,” he said.
When asked whether people are investing in cars as they have ample liquidity available due to less foreign travel amid the Covid-19 pandemic, he said, “Perhaps some people are cashing in on the situation, but one thing is certain that the buyers of locally assembled cars are only upper-middle income and higher income group people instead of lower-middle class.”
Despite improvement in auto demand, the total sale volume of cars, light commercial vehicles (LCVs), imported used and new vehicles would range between 200,000-225,000 units at the end of the current fiscal year which cannot compete with 2017 figures when total sales had hit 350,000 units.
Barring a slight reduction in sales of heavy vehicles, the entire auto sector posted positive growth during the nine months of the current fiscal year (9MFY21), with car sales going up 31.5pc, followed by 157.6pc in jeeps and 41.4pc in LCVs and pickups. New entrants like Hyundai and Kia are also doing roaring business.
As the demand of cars and other vehicles soars, assemblers have yet to come out with any price cut in vehicles despite the rupee’s upward journey from August 2020 against the US dollar. Back in August, one dollar was equal to Rs168.78 while currently it equals Rs151-152, signaling low cost of imported parts and accessories.
Published in Dawn, April 20th, 2021
