KARACHI: Amid a high interest rate regime, the amount of outstanding auto loans decreased for the seventh consecutive month at the end of January, data released by the State Bank of Pakistan (SBP) showed on Thursday.
The outstanding auto financing stood at Rs332 billion at the end of last month, which is 5.7 per cent lower than the January 2022 figure of Rs352.24bn and 1.6pc down than its December 2022 level.
The auto financing had been facing downward trend due to frequent interest rate hike, strict SBP measures to slow down auto demand to bring down import bill of parts and accessories.Head of Research and Development, Pak Kuwait Investment Company, Samiullah Tariq said the impact of soaring interest rates and curbs on auto financing by the SBP are now getting more visible with the passage of time. He added that the State Bank also wants to keep auto demand low in future.
“I think the share of car financing by banks is now almost zero as against 30-40pc out of total car sales,” he said.
At 17pc interest plus Kibor, the cumulative rate is now stands at 23pc, making it difficult for the consumers to afford costly monthly installments.Overall car, SUVs, jeeps and pickups sales had already registered a drop of 40pc in 7MFY23 to 94,296 units.
Published in Dawn, February 24th, 2023