Car financing rises by PKR 245 million in September

Car financing in Pakistan increased by PKR 245 million ($875,000) in September, reaching a total of PKR 228 billion, largely due to reduced interest rates.

However, the sector's overall growth remains slow despite some improvements in consumer inflation and a reduction in the central bank’s key lending rate.

Since June this year, the central bank has slashed the interest rates by 400 basis points to 17.5%.

Moreover, banks are offering loans at rates below the benchmark inter-bank rates. Bank have to disburse PKR 3.6 trillion by the year’s end to meet the Advances to Deposit Ratio (ADR). Failing to meet the ADR would invite 10% additional tax.

Several factors have contributed to the slowdown in credit demand in Pakistan, including high borrowing costs and fiscal consolidation. Despite the central bank easing monetary policy since June, private-sector borrowing has not increased.

On the other hand, personal loans on credit cards have seen a significant surge, increasing by 27.6 percent to PKR 132 billion by September 2024.

In September 2024, car sales in Pakistan totaled 10,200 units, up 24% compared with the same period last year. For the first quarter of FY25, auto sales hit 27,600 units, showing a 31% growth compared with the corresponding period last year, according to PAMA.