KARACHI: Auto financing reached a new record high of Rs369 billion in May, surpassing the previous peak set nearly four years ago, as consumers secured loans amid improved affordability and reduced borrowing costs, data from the State Bank of Pakistan showed.
Car loans increased by 36 per cent year-on-year and 3.0 per cent on a month-on-month basis in May. These loans totalled Rs368 billion in June 2022.
“The new peak in auto financing indicates a strong recovery in consumer demand, supported by lower interest rates, improved affordability, and increased vehicle availability”, said Topline Securities in a post X on Saturday.
“Sustained growth in financing is likely to support passenger car sales going forward, particularly in the higher-priced and financed vehicle segments”, it added.
Data from the Pakistan Automotive Manufacturers Association showed last week that car sales increased to 17,660 units in May, up 19 per cent from a year earlier. However, it fell by 20 per cent when compared with the previous month.
Car sales rose to 183,704 units in 11 months of this fiscal year, an increase of 45 per cent from a year ago. Analysts attributed this rise to new market entrants, new product launches, relatively lower inflation in previous months, and a surge in auto financing.
The demand for auto financing remained high, despite the central bank raising the policy rate by 100 basis points to 11.5 per cent in April.
However, the SBP kept its benchmark interest rate unchanged this week. The central bank said in its monetary policy statement that private-sector credit grew by around 13 per cent, with increases in working capital, fixed investment and consumer financing.
The consumer financing increased to Rs1.1 billion in May from Rs911 million in the same period last year.
