Auto loans swell to Rs386bn

Dawn reported that auto financing extended for a 20th successive month in July, climbing to Rs386.3 billion from Rs382bn in June, based on figures published by the State Bank of Pakistan. Mashood Ali Khan, an auto sector analyst, said the trend points to stronger consumer confidence and a slow revival in vehicle demand. He linked this partly to the policy rate of 11.5pc, well below the 22pc level of a few years ago.

Khan argued that a further cut in interest rates, toward single digits, would give car sales and consumer lending an extra lift. He also urged the SBP to raise the current Rs3 million financing ceiling to Rs6-7m, mainly for locally assembled vehicles. Higher limits, he said, would widen access to credit and help the formal car market recover. Cheaper financing would mainly help middle-income buyers, who find vehicles hard to purchase because of steep prices and borrowing costs.

Khan cautioned that more lending alone is not a complete answer for industrial policy, since importing extra components would lift consumption without adding enough domestic value. He said the forthcoming auto policy should set measurable localisation targets for all assemblers, especially newer Korean and Chinese brands, alongside vendor development and technology transfer.