Auto financing in Pakistan drops for 24th consecutive month

July 18, 2024 (MLN): Automobile financing in Pakistan has dropped by another 1.0% month-on-month to Rs230.5 billion in June 2024, compared to Rs232.79bn a month earlier, according to the latest data released by the central bank.

This marks the 24th consecutive monthly decline in consumer financing for transport, i.e., the purchase of cars, etc.

On a year on year basis, car financing decreased by 21.5%, as in the same period last year, the figure for financing was reported at Rs293.73bn.

This decline is mainly attributed to higher interest rates, an increase in car prices, regulative curbs for acquiring loans, and higher taxes on the import of automobiles and their parts.

Going by the data provided by the State Bank of Pakistan (SBP), consumer financing for house building stood at Rs203.58bn by the end of June 2024, down by 4.1% YoY.

Month-wise, the financing for house building has decreased by 0.8% compared to Rs205.3bn incurred in the previous month.

Meanwhile, financing for personal use clocked in at Rs238.6bn, down by 5.6% YoY while up 0.4% MoM.

Thereby, the overall credit disbursed to consumers registered a decline of 6.7% YoY to clock in at Rs802.35bn. Compared to the credit of Rs801.1bn in the previous month, consumer financing has recorded a 0.2% MoM rise.

The data released by the central bank further showed that outstanding credit to the private sector rose 5.8% YoY to Rs8.57tr in June 2024.

On a sequential basis, private sector loans reported a rise of 2.0% MoM compared to the credit of Rs8.41tr in May.

Under the credit to the private sector, the loans to the manufacturing sector clocked in at Rs4.84tr in the review period, up by 6.6% YoY and 0.9% MoM.

The borrowing from the construction sector stood at Rs192.85bn in June, up by 1.4% YoY while down 1.6% MoM.

Going forward, the data further shows that loans to the agriculture, forestry, and fishing sectors rose to Rs400.88bn in the month under review, up by 16.4% YoY, and on a sequential basis, the loans to the same sector recorded growth of 4.1% MoM.

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