Arif Habib Limited (AHL) recently shared data that shows auto financing inched up just 1.3 percent in December 2021, recording a Month-over-Month (MOM) increase of just 1.3 percent but a Year-over-Year (YOY) increase of 38 percent.
This has been one of the smallest rises in car financing in the last 18 months, which implies that the recently hiked interest rate has begun to impact the dramatic rise in the demand for cars.
Industry analysts have affirmed this theory and added that this small rise is a consequence of the new regulations of the State Bank of Pakistan (SBP) to restrain the soaring import bill and attain a balance of payments.
Car industry analyst Arslan Hanif told the media last month that the increase in the interest rates from seven percent to 9.75 percent in September has impacted the demand for vehicles. He explained that these measures are being taken to contain the rising imports of luxury vehicles in line with the government’s aim to encourage the sales and manufacturing of locally assembled cars and electric vehicles (EVs).
On the contrary, overall sales of cars rose monumentally in December 2021, with the total sales figures coming in at 27,331 units, as reported by the Pakistan Automotive Manufacturers Association (PAMA).
It is speculated that this rise was driven by the impending increase in prices on account of the imposition of new Federal Excise Duty (FED) rates on all locally assembled vehicles with engine displacements of over 850cc. It is also presumed that the new cars that will come in 2022 will bump up car sales.
With these developments on the horizon, the next few months are sure to entail fascinating car market dynamics.
