Auto financing reaches a record high of Rs326bn in August

September 21, 2021 (MLN): Low-interest rates and robust demand from consumers have taken the auto-financing to a record high of Rs326billion by the end of Aug 2021, an increase of Rs103.93bn or 47% YoY, as it was Rs221.9bn in Aug 2020, Central bank data showed.

Compared to the previous month, Car financing volume was up by 4% from Rs313.8bn in July 2021 as consumers’ appetite for owning a car has increased due to the availability of cheap bank financing.

By the end of FY21, auto-financing stood at Rs308bn compared to Rs211bn at the end of FY20, showing a growth of 46% YoY.

Similarly, the sale of passenger cars surged by 80% YoY to clock in at 17,899 units during the month of August 2021 as compared to 9,885 units sold in August 2020.

Meanwhile, car prices have also gone up substantially, affecting consumers’ ability to buy on cash. The robust demand from consumers can also be attributed to the introduction of new models and brands by new entrants especially in the category of cars of or above 1,000cc engines and jeep (Sports Utility Vehicles/SUVs) segments which provides people with a wide variety of locally-assembled cars.

Similar growth in car financing was last seen during President Musharraf’s administration when banks had sufficient liquidity and provided large amounts of loans for cars without examining the borrowers’ ability to repay debts. Later, the euphoria settled down as a large number of people defaulted on car loans.

Going by the data, for house building, banks’ financing stood at a record level of Rs111.7 billion by the end of August 2021, a jump of Rs31.8bn from Rs79.85bn in Aug 2020 mainly due to mainly SBP’s measures to promote housing and construction of buildings in the country.

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Posted on: 2021-09-21T16:27:53+05:00