KARACHI: Low interest rates and buyer enthusiasm for locally assembled vehicles have driven auto finance funding to an all-time high of Rs 308 billion as of June 2021, up 3.6 percent per month and 46 percent since June 2020. show data released by the State Bank of Pakistan on Monday. According to the SBP, total vehicle funding increased by Rs. 97 billion, up from Rs. 211 billion in June last year.
Despite high prices for locally assembled vehicles over the past year and a half, followed by late deliveries and high premiums, buyers remained bullish to cash in on the possibility of a low interest rate of 7 percent, which stood at 13.5 percent in March 2020.
“The share of auto loans in total car sales now ranges from 40 to 45% depending on the car model, up from 15-20% about two years ago,” said Tahir Abbas, head of research at Arif Habib Limited.
People now have a wide variety of locally-assembled vehicles, he said, following rapid competition between new and old players and a sharp slowdown in imported used cars.
“Vehicle demand will maintain an upward trajectory for the next six months following price cuts announced by car assemblers following a 2.5% federal excise (FED) cut, an additional customs duty from 7% to 2% and a general sales tax to 12.5%. from 17% for cars up to 1000 cubic meters.
Vehicle sales by members of the Pakistan Association of Automobile Manufacturers in fiscal 21 rose 56.7% to 151,182 units from 96,455 units.
Indus Motor Company Limited CEO Ali Asghar Jamali said auto finance funding is growing due to very attractive interest rates. “I feel like the next six months will be very good in terms of car sales.”
Regarding Roshan Apni Car reservations for overseas Pakistanis who have opened a Roshan Digital Account (RDA), he said “the answer is reasonable.” The inflow of RDA deposits exceeded $ 1.5 billion, which amounted to $ 418 million in January 2021.
Samiullah Tariq, head of research at Pak Kuwait Investment, said a number of people who were unable to travel abroad due to Covid-19 restrictions preferred to buy new locally assembled vehicles for domestic travel as they were even more fascinated by the new models and low interest rates.
He said that total car loans from car sales had doubled to 40% from 15-20% two years ago.
Posted in Breaking Dawn, July 27, 2021