Car Financing Sees First Rise in Over Two Years

• Car financing in Pakistan slightly increased in September 2024.
• Automobile financing in Pakistan rose slightly to Rs227.54 billion in September 2024.
• This uptick breaks a 26-month streak of continuous decline in car financing.

ISLAMABAD: Car financing in Pakistan experienced a slight rise in September 2024, increasing to Rs227.54 billion, a 0.11 per cent jump from Rs227.3 billion in August, according to data from the State Bank of Pakistan (SBP). This marks the first increase after 26 consecutive months of decline in the car financing sector.

Despite this minor recovery, car financing has fallen by 16.43 per cent year-on-year, down from Rs272.29 billion in September 2023. The year-over-year drop is attributed to rising interest rates, escalating car prices, stricter lending regulations, and increased taxes on imported vehicles and parts.

In the housing sector, loans for home construction amounted to Rs201.8 billion in September 2024, reflecting a 3.11 per cent decrease compared to the same period last year. On a monthly basis, housing loans dipped 0.3 per cent from Rs202.4 billion in August.

Personal loans presented mixed results, with a 3.15 per cent year-on-year decline, totaling Rs240.65 billion. However, month-on-month, personal loans grew by 0.87 per cent compared to August.

Overall consumer financing, encompassing auto, housing, and personal loans, saw a 3.59 per cent drop year-on-year, falling to Rs809.25 billion. However, compared to August, it showed a modest increase of 0.66 per cent, rising from Rs803.94 billion.

Additionally, SBP data indicated a 4.88 per cent rise in private sector loans, reaching Rs8.41 trillion in September, with a 2.05 per cent increase month-on-month from Rs8.24 trillion in August.

Breaking down sector-wise, the manufacturing sector saw borrowing rise to Rs4.71 trillion, marking a 6.57 per cent increase year-on-year and a 1.72 per cent growth from August. The construction sector’s borrowing grew to Rs205.49 billion, reflecting a 6.22 per cent annual rise and a 6.96 per cent monthly increase.

Meanwhile, loans to agriculture, forestry, and fishing reached Rs397.26 billion, recording a 6.01 per cent increase year-on-year and a slight 0.46 per cent rise month-on-month, according to Mettis Global.