Auto financing shrinks for 13th month

Thin demand for vehicles and soaring interest rates continued to cast gloom on the auto sector as the amount of outstanding auto loans shrank for the 13th consecutive month by Rs8.5 billion to Rs285.2 billion at the end of July from Rs293.7bn in June. According to the State Bank of Pakistan (SBP) data, the highest financing of Rs368bn stood at the end of June 2022 and since then it has been sliding as a result of rising interest rates which is now at 22pc. The rest of the damage to auto leasing was given by the central bank through various measures to curb demand followed by skyrocketing prices of vehicles. An upper limit of Rs3m on auto loans and a reduction in repayment duration by the SBP further hit sales of local assemblers. Fahad Rauf, head of Research at Ismail Iqbal Securities, said the 25 interest rate after Kibor plus and various steps taken by the SBP to slow down auto demand are not allowing people to lift vehicles through bank financing. The SBP’s data shows that new vehicle buying through banks is not coming up while the net retirement is going on, he said.