Pakistan auto financing grew 44%, reaches PKR346bn

Pakistan auto financing has reached PKR346 billion in October 2021, recording a growth of 44% year-on-year basis and 2.2% month-on-month basis, revealed State Bank of Pakistan.

Figures released by the State Bank of Pakistan revealed:

"Car financing jumped from PKR240 billion in October 2020 to PKR338bn in September 2021. Meanwhile, the imports of new and used CBU car units have dropped to $28m in October from $36m in September 2021. Total imports of CBU units in 4MFY22 grew by 112% to $123m from $58m in the same period in FY21."

SBP earlier made some decision that helped increase Pakistan auto financing:

"It reduced the period of auto-financing from 7 to 5 years and decreased the debt burden ratio from 50% to 40%. Aggregate financing limit to be availed by 1 person from all banks not exceeding PKR3 million at any point in time and minimum down payment for auto financing increased from 15% to 30%. These are applied to all imported vehicles and locally manufactured vehicles with an engine capacity of over 1,000cc."

Pak Kuwait Investment Company Head of Research Samiullah Tariq shared:

"The share of auto-financing in total car sales ranked between 30% to 40%. The real impact of SBP’s decision will be visible in March/April 2022 as the assemblers had been holding sizable booking of previous orders but the share of car financing by the bank is feared to go down to 20-25%. A number of car assemblers including Korean assemblers are giving delivery time of March to June 2022 in case a buyer makes an advance booking today."