Despite sky-high inflation and tightened restrictions on auto loans, the impact on car financing in October seems meager. The decline, however, is progressive as the difference between auto financing in June 2022 and December 2022 is sizeable
According to the latest report, auto financing came in at Rs. 345 billion in October 2022, observing a month-over-month (MOM) decline of just 1.4%, and a year-over-year (YOY) decline of 0.1%.
Arif Habib Limited (AHL) highlighted in its report that car financing has reached the lowest level since January 2022. However, the decline is not as substantial as originally anticipated, and chances are that it may rise in the coming months once the economy stabilizes.
On the other hand, consumers are of the view that the State Bank’s restrictions have made it impossible to get a good financing deal. While talking to ProPakistani, a customer stated:
If you buy an average car that costs Rs. 3.8 million, and pay Rs. 1.5 million upfront, then monthly installment is Rs. 98,000, which is huge. Because if one waits and accumulate the same amount for 2 years then there is no need for financing. The last year is just to pay markup. So why even bother with financing?
Car sales showed slight signs of recovery last month. This implies that despite the recent car price hikes and restrictions on car loans, the demand for cars is still fairly high. At the same time, experts reckon that it may never be as high as last year when the car industry was booming.