After a recent decline in car sales, the latest update highlights the grim situation in the local auto industry. Just a few days ago, the PAMA sales report showed an 8% decrease in car sales. Now, there has been a significant 25% drop in car financing, marking the 20th consecutive month of decline.

According to reports, in the year 2024, car financing has plummeted by 25% year-on-year, totaling Rs. 243 billion by the end of February, down from Rs. 325.9 billion in the same period last year.

This decline in financing has worsened the challenges faced by the auto sector, which has been struggling throughout the financial year 2023-24. Automobile sales dropped to 46,417 units in the first eight months of FY24 from 78,575 units in FY23.

Various factors have contributed to this downturn, including high lending rates and strict lending policies imposed by the central bank, such as caps on financing amounts and shorter loan repayment periods.

Decline in Car Sales

Following a brief uptick for a month or two, there has been another decline in car sales. According to the latest report from the Pakistan Automotive Manufacturers Association (PAMA), there was a significant 8% decrease in month-on-month (MoM) car sales, with 9,709 units sold in February 2024 compared to 10,536 vehicles in January 2023.

However, in a year-on-year (YoY) comparison, there has been a notable 57% increase. Car manufacturers managed to sell 6,186 cars during the same period last year.

Similarly, there was a significant 10% decrease in sales of two and three-wheelers, reaching 93,764 units last month compared to 104,619 units sold in January 2024. Particularly noteworthy is the 11% decrease in sales for Honda, a leading Japanese motorcycle manufacturer, which sold 82,104 units last month, compared to 92,041 units in January 2024.

Meanwhile, Pak Suzuki also saw a slight 3% decrease, selling 1,446 units last month compared to 1,484 bikes in January 2024.

What are your thoughts on the recent decline in car financing? Share your opinions in the comments section.