KARACHI: Consumers remained reluctant to avail costly auto financing, which consequently plunged for the 21st consecutive month ending March 2024 to Rs239 billion, down by 1.4 per cent or Rs3.5bn month-on-month.

According to data issued by the State Bank of Pakistan (SBP), the total decline in the last 21 months stood at Rs128bn, down from Rs368bn at the end of June 2022.

Expensive financing, due to a 22 per cent interest rate, high monthly loan instalments, and the unbearable prices of vehicles, coupled with consumers’ thin buying power and the SBP’s curbs on financing to soften vehicle demand, have collectively impacted car financing.

Sales of cars, LCVs, pickups, and jeeps totalled 69,078 units during 9MFY24, down from 110,898 in the same period last fiscal year.

Auto assemblers have attempted to lure customers through various incentive schemes such as lower mark-up rate options, attractive sales packages, after-sales services, and discounts on vehicle registration, but they have failed to attract a large number of buyers.

A private banker noted that auto financing has been slow for both new and used cars, with used car prices reaching levels comparable to locally assembled vehicles.

Published in Dawn, April 19th, 2024