Auto financing in Pakistan witnessed its 17th consecutive monthly decline in November 2023 in a continued downward trend. According to recent data from the State Bank of Pakistan (SBP), the total car loan amount dropped by 2.6 percent month-on-month, hitting Rs. 257 billion compared to Rs. 264 billion in October.

Year of Decline in Auto Financing

Since November 2022, auto financing has seen a significant decline, plummeting by 24.4 percent or Rs. 83 billion. The figures reveal a stark contrast from the same period last year when auto financing stood at Rs. 340 billion. The persistent decrease paints a challenging picture for the auto financing sector, which hit its peak at Rs. 368 billion in June 2022, showing a substantial drop of Rs. 111 billion during the period under review.

Auto financing declined consecutively for the 17th month (total decline: PKR 111bn) with Nov’23 figure down 2.6% MoM (PKR 7.0bn) to PKR 257bn.@StateBank_Pak @GovtofPakistan @Financegovpk #SBP #Autofinancing #Pakistan #Economy #AHL pic.twitter.com/OohPtRcEEy

— Arif Habib Limited (@ArifHabibLtd) December 19, 2023

House Building Loans vs. Auto Financing

While auto financing takes a hit, consumer financing for house building remained stable at Rs. 207 billion by the end of November 2023, showing no change from the previous month. However, a year-on-year comparison indicates a 3.2 percent decline compared to Rs. 214 billion in the same period last year.

Personal Loans on Credit Cards

Amidst the overall decline in consumer financing, personal loans on credit cards witnessed a positive surge. The category recorded a 27.3 percent year-on-year increase, reaching Rs. 108 billion in November. On a monthly basis, there was a slight uptick of 2.9 percent from Rs. 105 billion in the previous month.

Overall Credit Landscape

The overall credit issued to end-users (consumer financing) experienced a notable drop to Rs. 825 billion in November, indicating an 8.5 percent year-on-year and 0.5 percent month-on-month decrease.

Private Sector Loans

Outstanding credit to the private sector saw a marginal decline of 0.2 percent year-on-year, totaling Rs. 8.19 trillion. Within this segment, loans to the private sector for business purposes stood at Rs. 7.05 trillion.

What do you think of this data? What impact will it have on our economy? Share your thoughts in the comment section below!