The inflation and tightened restrictions on auto-sector imports have started impacting car demand and by extension, car financing.
According to the latest report, auto financing came in at Rs. 353 billion in August 2022, observing a month-over-month (MOM) decline of 2.2%. However, on a year-over-year (YOY) basis, it went up by 8.8%.
Arif Habib Limited (AHL) highlights in its report that car financing has reached the lowest level since January 2022. Given the recent decline in production, it will likely dwindle further.
Carmakers have witnessed a major decline in production, which may cause sales to plummet further in the coming months. According to details from a reliable source, the production figures are as follows:
|Carmakers||Production in July||Production in August||Percentage Change|
The automakers blame the new mechanism introduced by the State Bank of Pakistan (SBP) which requires approval for CKD import clearance. Toyota, Honda, Suzuki, Hyundai, and other automakers are observing production cuts to cope with the situation.
Analysts reckon that the situation will worsen due to continued local currency depreciation, logistics challenges, and production delays. A renowned economic analyst Arslaan Asif Soomro told ProPakistani:
With the USD racing past Rs. 240, car prices will likely skyrocket once more. However, global commodity prices may soften further thus giving enough cushion to car makers to maintain margins.
The sales are already on a downward trajectory for the past few months due to rising prices and falling demand. The import restrictions, delivery delays, and production cuts may further aggravate the issue.