Car financing in Pakistan witnessed a significant decline in July 2024, as soaring vehicle prices and elevated interest rates continued to dampen consumer demand.
According to the latest data from the State Bank of Pakistan (SBP), car financing fell by 20.06 per cent year-on-year, dropping from Rs285.19 billion in July 2023 to Rs228 billion in July 2024.
This sharp decrease is largely attributed to a combination of rising interest rates, inflated car prices, stricter loan regulations, and increased taxes on automobile imports and parts.
Month-on-month, the decline in car financing was relatively modest, with a 1.09 per cent reduction from Rs230.5 billion in June 2024.
The SBP data also highlighted a decline in consumer financing for house construction, which totalled Rs202.8 billion at the end of July 2024. This marks a 3.94 per cent decrease compared to the same period last year.
On a monthly basis, house construction financing saw a slight dip of 0.39 per cent, down from Rs203.58 billion in June 2024.
In contrast, personal financing reached Rs238.95 billion in July 2024. While this represents a year-on-year decrease of 4.51 per cent, it showed a slight uptick of 0.14 per cent from the previous month.
The impact of rising costs is evident in the automobile market, where even the most affordable vehicles are now out of reach for many consumers.
For instance, the Suzuki Alto, one of the highest-selling and traditionally considered among the cheapest cars from a reputable brand in Pakistan, now costs over Rs3 million for the top variant, the Suzuki Alto VXL AGS, while the base variant, the Suzuki Alto VX, is priced at Rs2.3 million.
