According to statistics from the State Bank of Pakistan (SBP), vehicle financing reversed its downward trend in November, experiencing a slight increase to Rs235.454 billion in December 2024, up from Rs234.6 billion in the previous month.
From October to September and August, the amount of money borrowed for automobiles fell from Rs236 billion to Rs227.541 billion and Rs227.296 billion, respectively. In June 2022, the highest recorded amount was Rs368 billion.
Since June 2024, the SBP has reduced the policy rate by 900 basis points, bringing it down to 13% in December. Due to persistently falling inflation, analysts expect the Monetary Policy Committee to cut rates even further, to 12%, at their meeting on January 27.
Stakeholders in the industry also think that the present limitation of Rs3 million on auto loans inhibits demand. In order to further stimulate the market, assembly members and bankers are arguing for an increase to Rs5-6 million.
Budgetary policies, political stability, foreign currency reserves, and the parity of the rupee with the dollar are all important market factors that will influence the future of the automotive industry. Restrictions on imported goods have historically affected consumption as a means of managing foreign exchange crises.
Compared to the 28.73% average recorded in the same period previous fiscal year, Topline Securities predicts that the Consumer Price Index (CPI) for January will be 2.5-3% year-on-year. According to experts, car financing and the market as a whole could benefit from additional rate decreases if inflation keeps falling.