Auto Financing in Pakistan Drops for 18th Consecutive Month

Auto financing in Pakistan has seen a continuous decline, reaching Rs251.25 billion in December 2023. This marks a YoY decrease of 25.55% and a 2.26% MoM drop compared to December 2022 (Rs333.747 billion) and November 2023 (Rs257.06 billion), respectively, according to the latest data released by the central bank.

It's noteworthy that this marks the eighteenth consecutive month of decline in automobile financing.

This sustained downturn is primarily attributed to factors such as increased interest rates, rising car prices, regulatory restrictions on loan acquisition, and higher taxes on the import of automobiles and their components.

According to data from the State Bank of Pakistan (SBP), consumer financing for house building reached Rs208.15 billion by the end of December 2023, reflecting a 3.17% YoY decline. On a monthly basis, financing for house building has seen a slight increase compared to the previous month's Rs206.92 billion.

Simultaneously, financing for personal use amounted to Rs244.41 billion, experiencing a YoY decline of 3.84% and a 0.64% MoM decrease.

Consequently, the overall credit disbursed to consumers witnessed a fall, totaling Rs818.22 billion during the review month. This indicates a 9.09% YoY decrease and a 0.81% MoM decline.

The outstanding credit to the private sector also showed a 1.44% YoY decrease, amounting to Rs8.54 trillion in December 2023. However, it experienced a 4.26% MoM increase compared to Rs8.19 trillion in November 2023.

Within the private sector credit, loans to the manufacturing sector reached Rs4.85 trillion in the review period, marking a 2.15% YoY decline. Monthly comparisons, though, reveal a 5.76% MoM growth, as the loans to this sector stood at Rs4.58 trillion in November.

Borrowing from the construction sector amounted to Rs200.28 billion in December 2023, showing a 0.45% YoY increase and a 3.32% MoM rise compared to the previous month.

Looking ahead, the data indicates a positive trend in loans to the agriculture, forestry, and fishing sectors, reaching Rs417.37 billion in the month under review. This signifies a substantial 19.27% YoY increase, and on a sequential basis, the loans to the same sector recorded a notable 6.09% MoM growth.