Pakistan’s car market remains sluggish, as car financing continued its decline in August. According to data released by the State Bank of Pakistan (SBP) on Monday, there was a 21.1 percent year-on-year decrease compared to August 2022, when it stood at Rs. 353 billion.

Reports revealed that auto financing has now dropped for 14 consecutive months, with a total decline of Rs. 89.8 billion. In August 2023, it saw a 2.5 percent month-on-month decrease, amounting to Rs. 7.1 billion, bringing the total to Rs. 278 billion.

During the period under examination, a significant surge in interest rates, soaring automobile prices, frequent factory closures, delivery delays for vehicles, bi-weekly incidents of unrest involving petrol bombs, and various measures taken by central banks have all contributed to the economic downturn.

The Downtrend

In contrast, consumer financing for residential construction reached Rs. 209 billion by the close of August 2023, marking a year-on-year increase of 1.7 percent. This growth can be largely attributed to the policies enacted by the State Bank of Pakistan aimed at stimulating the real estate sector in the country.

However, when observed on a monthly basis, financing for home construction experienced a slight decline of 0.8 percent month-on-month.

In August, personal loans extended through credit cards witnessed a notable year-on-year increase of 33.3 percent, reaching Rs. 103 billion. Furthermore, loans falling under this category demonstrated a modest 5.2 percent month-on-month uptick from the Rs. 98 billion recorded the previous month.

In August, the total credit extended to end-users, which includes consumer financing, amounted to Rs. 845.53 billion. This figure represented a 5.4 percent year-on-year decrease and a 0.7 percent month-on-month decrease.

During the same month under review, outstanding credit provided to the private sector experienced a 1.3 percent year-on-year decline, amounting to Rs. 8.14 trillion. Loans granted to the private sector also saw a 1.1 percent year-on-year decrease and a 0.5 percent month-on-month decrease, reaching a total of Rs. 7.96 trillion.