Auto

Car Financing Witnesses 25% Increase Compared to Last Year

Auto financing has once again risen up to Rs. 367 billion in April 2022, recording a Month-over-Month (MoM) increase of just 0.9 percent and a Year-over-Year (YoY) increase of 25.4 percent.

This has been a relatively smaller rise in car financing compared to last month, which implies the recent price hikes have impacted car demand negatively as predicted by the industry analysts earlier this year.

In Toyota Indus Motor Company’s (IMC) quarterly financial briefing in March, CEO of the company, Ali Asghar Jamali, highlighted that automakers have no choice but to increase price hikes due to local currency depreciation and rising operational costs.

Also, Engineering Development Board (EDB) summoned all major automakers in Pakistan to a meeting earlier this month. In the meeting, the Ministry of Industries and Production (MoIP) demanded justification from the companies regarding the price hikes.

Despite MoIP’s reservations, automakers were adamant that the price hikes are beyond their control, and could take place multiple times this year. In conclusion during that meeting, the government issued a warning to all carmakers against frequent price hikes.

Ministry of Finance has now proposed a 100 percent regulatory duty (RD) hike for locally assembled cars with engines larger than 1300cc to limit the import of CKD kits for up-market cars. They also imposed a complete ban on Completely Built-Up (CBU) cars to pin down the soaring import bill and preserve the local currency.

Pakistan’s economy is in trouble these days, the effects of which are being felt by all industries including the auto sector.

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Published by
Waleed Shah