Car financing has reached a record high of Rs 308 billion as of June 2021, witnessing a 3.6% month-on-month increase and 46% on year-on-year basis as per the data released by the State Bank of Pakistan (SBP). According to SBP figure, car financing in total saw a jump of Rs 97 billion compared to Rs 211 billion in June last year.
Despite high prices of locally-assembled cars in the last one and a half years followed by delayed deliveries and hefty premiums/ own money, buyers remained eager to cash in on the opportunity of low interest rate which came down from 13.5% to 7% in March 2020. According to Head of Research at Arif Habib Limited, Tahir Abbas:
“The share of auto financing in total car sales now stands between 40% and 45% depending on car models as compared to 15-20% some two years ago.”
Demand of local assembled cars will remain high in the next six months following a reduction in prices announced by the car assemblers after the government reduced various duties & taxes in the recently announced Auto Policy 2021-26, furthermore SBP is likely to keep the interest rate unchanged at 7% in the monetary policy to be announced on Tuesday.
CEO of Indus Motor Company Limited Ali Asghar Jamali, who is also Chairman of PAMA (Pakistan Automobile Manufacturers Association) said auto financing is picking up due to very attractive interest rates. “I feel that the next six months will be very good in terms of car sales” he said. About booking of cars under Roshan Apni Car for overseas Pakistanis who have opened Roshan Digital Account (RDA), he said “the response is reasonable”. The inflow of deposits under RDA had crossed $1.5bn which was $418mn in January 2021.
A computer animation professional with over 23 years of industry experience having served in leading organizations, TV channels & production facilities in Pakistan. An avid car enthusiast and petrolhead with an affection to deliver quality content to help shape opinions. Formerly written for PakWheels as well as major publications including Dawn. Founder of CarSpiritPK.com