Auto financing in Pakistan continued its downward trend for the 26th consecutive month, dropping to Rs227.3 billion in August from Rs228 billion in July, according to the latest data from the State Bank of Pakistan (SBP).
This marks a fall of Rs140.7 billion from Rs368 billion in June 2022.
The persistent decline in auto loans can be attributed to high borrowing costs and fiscal consolidation measures that have dampened consumer demand.
On a year-on-year basis, auto financing fell by 18.25%, down from Rs278.05 billion in the same period last year.
Despite recent interest rate cuts by the SBP, private-sector borrowing, including auto financing, has not seen a substantial recovery.
The central bank reduced the interest rate for the first time in three years, lowering it to 20.5% in June 2024, followed by further cuts to 19.5% in July and 17.5% in September. However, these reductions have yet to stimulate a revival in auto sales.
The decline in consumer financing is not limited to auto loans. House-building loans fell to Rs202.4 billion by the end of August, marking a 3.39% year-on-year decline. Similarly, financing for personal use dropped by 3.89% year-on-year to Rs238.57 billion.
Overall, consumer credit disbursements recorded a 4.92% year-on-year decline, amounting to Rs803.94 billion by the end of August.
