Pakistan’s auto financing sees Rs95.6 billion decline over 15 months

WEB DESK: In September 2023, outstanding auto loans in Pakistan experienced a continual decrease, marking the 15th consecutive month of contraction.

The total amount of outstanding auto loans dwindled to Rs272.3 billion, reflecting a 2.1 per cent decline on a month-on-month basis.

Data released by the State Bank of Pakistan (SBP) indicates a significant downward trend over the past 15 months, with a total decline of Rs95.6 billion. Contrastingly, at the close of June 2022, the figure for auto financing stood at Rs368 billion.

The auto industry faced a challenging phase marked by recurrent plant shutdowns due to the non-opening of letters of credit (LCs) and dwindling sales caused by escalating prices.

Additionally, the sector contended with regulatory measures aimed at curbing demand to address the current account deficit.

These challenges were compounded by the imposition of an upper limit of Rs3 million on auto loans and a reduction in the repayment duration, making it a complex landscape for both businesses and consumers.

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In this demanding environment, the industry had to navigate through a series of obstacles, adapting strategies and operations to cope with the changing dynamics.

Despite these challenges, industry players sought innovative solutions and adjustments to maintain stability and foster resilience in the face of economic pressures.

Mohammed Sohail, CEO of Topline Securities, expressed his perspective on the situation.

According to Dawn, he suggested that the decline in auto financing might reach a plateau in the upcoming months, primarily due to the potential stabilisation of car prices following the recent strengthening of the Paksitani rupee against the US dollar.