KARACHI: The outstanding auto financing continued to decline for the eighth consecutive month in February dipping almost 9 per cent to Rs326 billion from Rs357bn in the same month last year, data released by the State Bank of Pakistan (SBP) showed on Tuesday.
Samiullah Tariq, head of Research Pak Kuwait Investment Company, said car financing would remain depressed in coming months due to a massive rise in monthly instalments on account of soaring interest rates and surging vehicle prices and delay in delivery due to plant shutdowns.
Car assemblers have continued to keep production activities suspended due to parts shortages after the central bank’s decision of putting curbs on imported parts and accessories in a bid to slow down the demand for vehicles.
The interest rate stands at 20pc which was 7pc in March 2020.
He said banks are offering loans at four to 5pc higher than the Karachi Interbank Offered Rate (Kibor), making it difficult for the buyers to afford higher monthly instalments amid unprecedented inflation.
“I do not think that the share of auto financing is more than 20pc of total car sales,” Tariq said.
Hinopak suspends production
Meanwhile, Hinopak Motors Ltd has suspended production operations from March 24 to April 4 due to a persistent shortage of parts and accessories amid import restrictions.
In a stock filing on Tuesday, the assembler of trucks and buses regretted that the commercial banks had been advised by the SBP to prioritise/facilitate the imports of essential sectors only barring the auto sector. Hence, the company is not in a position to continue with its production activities, it added.
Soda ash expansion
In contrast, Lucky Core Industries Ltd (formerly ICI Pakistan Ltd) announced the successful commissioning and commencement of operations of 60,000 tonnes per annum expansion project at its soda ash manufacturing facility in Khewra.
The expansion is a part of the 135,000 tonnes project (phase 2) of which a plant of 75,000 tonnes capacity was completed in 2022.
In a stock filing, the company said that the total installed capacity of the soda ash plant now stands at 560,000 tonnes per annum.
Published in Dawn, March 22nd, 2023
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