KARACHI: The downward trend in the interest rates has pushed up auto financing to Rs241.6 billion in January from Rs235.45bn in December 2024, data released by the State Bank of Pakistan showed.
In the last seven months, cutting interest rates to 12pc from 22pc has lured cash-rich customers towards auto financing of new and used vehicles. In June 2022, auto financing was at its peak of Rs368bn.
An analyst at Sherman Securities expects that headline inflation in February may clock in at 1.9pc due to a declining food and housing index compared to 2.4pc year on year. The State Bank may implement a 100bps policy rate cut in the Monetary Policy Committee (MPC) meeting scheduled for March 25.
He anticipates that the SBP will maintain a stable policy rate of 11pc for the remainder of FY25, ensuring a comfortably positive real interest rate of approximately 5pc.
Cars, SUVs, vans and pickup sales may remain robust in the coming months amid a 16pc increase in the import of semi and completely knocked-down kits by the assemblers to $482m in 7MFY25 from $415m in the same period last fiscal year.
The sales of the above segment rose by 55pc in 7MFY25 to 77,686 units from the same period last fiscal.
For many people, availing of auto financing is still a gigantic task despite plunging interest rates followed by a loan cap of Rs3m, a reduction in payment tenure to five years for cars up to 1,000cc and three years for below 1,000cc and a down payment requirement to 30pc.
Published in Dawn, February 19th, 2025
