Auto financing drops for 23rd consecutive month, down 22.5% YoY in May 2024

Auto financing in Pakistan declined for the 23rd consecutive month in May 2024, reaching Rs233 billion, a decrease of 22.5% year-on-year and 1.2% month-on-month. 

According to the State Bank of Pakistan (SBP), the outstanding loan amount stood at Rs 300 billion in May 2023 and Rs236 billion in April 2024.

The total decline in auto financing since June 2022, when it was Rs 368 billion, stands at Rs 135 billion. 

Despite the SBP reducing the interest rate to 20.50% on June 10, after maintaining it at 22% for nearly a year, the cut has not spurred interest among buyers to purchase new cars.

Sales of cars, jeeps, LCVs, and pickups reached a 17-month high of 10,949 units in May, up 100% year-on-year and 4% month-on-month. However, total sales for 11MFY24 were down 25%, at 90,542 units compared to 120,845 units in 11MFY23.

Consumers have been reluctant to buy new vehicles due to high monthly loan instalments, a 22% interest rate, high vehicle prices, and SBP’s restrictions on financing. 

Private bank financing for used cars up to nine years old has kept auto financing alive over the past two to three years.