Auto financing reaches Rs364bn in March, up by 2% MoM, 28% YoY

April 19, 2022 (MLN): Despite higher interest rates, regulative curbs for acquiring the loans and an increase in taxes on the import of automobiles and their parts, automobile financing in Pakistan has increased by 2% MoM to Rs364 billion in March 2022, Central bank data showed today.

Similarly, compared to the same month last year, Car financing volume was up by 28% from Rs285bn in March 2021, due to increased consumers’ appetite led by 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.

To note, the sale of passenger cars also witnessed a rise of 26% MoM and 33% YoY during March 2022, clocking in at 22,799 units as opposed to 18,054 units sold in February 2022 and 17,105 units in March 2021. The rise in industry sales volume was mainly the result of demand for the Cars segment in the midst of a likely rise in prices in FY22, higher vehicle financing, and higher sales of up to 1300cc segments mainly on the lower FED and GST.

Going by the SBP data, for house building, banks’ financing stood at a record level of Rs170.2 billion by the end of March 2022, a jump of 82% YoY and 7% MoM, mainly due to SBP’s measures to promote housing and construction of buildings in the country. Financing for personal use stood at Rs241bn, and remained stable on monthly basis while increasing by 5% YoY.

This led the overall credit disbursed to consumers to clock in at Rs851.5bn during March 2022, registering a growth of 28% YoY and 3% MoM.

The outstanding credit to the private sector grew by 22% YoY and 3% MoM to Rs7.79 trillion in March compared to Rs6.41 trillion in the same month last year and Rs7.5 trillion in February 2022.

Loans to the manufacturing sector rose to Rs4.3 trillion in March from Rs3.454 trillion in the same period a year earlier and Rs4.2 trillion in the previous month.

Under the manufacturing sector, textile manufacturers remained leading borrowers. The overall borrowing to the Textile sector increased by over 28% by the end of March to Rs1.45 trillion compared to Rs1.13 trillion in the same month of the last year, SBP data said.

The construction sector increased borrowing to Rs185.4 billion in March compared to Rs138.46 billion in the same month of the last year.

Meanwhile, Agriculture, forestry and fishing sectors’ outstanding borrowed rose to Rs314.64 billion compared to Rs281.82 billion in March 2022.

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