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Car Financing Dropped by Rs. 26 Billion From June – November 2022

The sky-high inflation and tightened restrictions on auto loans took a toll on car financing in November 2022. The decline 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. 388 billion in November 2022, observing a month-over-month (MOM) decline of just 1.3%, and a year-over-year (YOY) increase of 0.8%.

The auto-financing has declined for the 5th consecutive month in November 2022. Since June 2022, when auto financing was at its highest at Rs. 414 billion, it has dropped by Rs. 26 billion or 6.3%. Ismail Iqbal Securities (IIS) (PVT.) LTD. has attributed the drop to inflated policy rates.

This shows that the auto loan restrictions are gradually paying off, causing the demand and sales of new cars to diminish.

Troubling Times Ahead

Research analysts foresee 2023 as the worst year for the car industry due to several reasons including factory shutdowns, diminished demand, rising inflation, operational hindrances, cost increase, etc.

Above all, they reckon that, due to a current dearth of essential items, the government will likely keep the auto-sector development on the back burner.

An IIS report added:

We remain conservative on the auto sector sales for the remaining part of the fiscal year. Not only the demand will remain subdued, but the supply side will remain under serious pressure owing to the depleting foreign exchange reserves and the will to bring the Current Account Deficit (CAD) under control.

With this foresight, the chances of any significant development in Pakistan’s auto sector seem bleak.



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