Auto financing sees 3.7% rise in October amid falling interest rates

Car financing increased for the second consecutive month, rising 3.7% month-on-month to reach Rs236 billion in October, up from Rs227.541 billion in September and Rs227.296 billion in August, according to data released by the State Bank of Pakistan (SBP). 

However, on a year-on-year basis, auto financing fell by 10.7%.

Auto financing had shown signs of recovery in September after a 27-month slump. It peaked at Rs368 billion in June 2022 but came under pressure due to elevated interest rates. 

The SBP has reduced interest rates multiple times since June, bringing them down from 22% to 15% by early November.

Sales of cars, SUVs, vans, and pickups surged 50% during the first four months of FY25, reaching 40,693 units, supported by price discounts from local assemblers and fixed-rate auto financing options offered by private banks.

Despite the rise in vehicle sales, Indus Motor Company Ltd (IMC) announced its second plant shutdown for November, suspending operations from November 27-29 due to low inventory levels and persistent supply chain challenges. 

This follows earlier shutdowns from Nov 18-20, as well as closures in July, August, September, and October for similar reasons.

According to Pakistan Bureau of Statistics (PBS) data, imports of completely knocked down (CKD) kits jumped by 35% to $282 million during July-October FY25, compared to $208.5 million in the same period last year. This indicates significant booking backlogs for local assemblers.