Auto loans rise despite sales slump

Dawn reported that outstanding car loans grew for a 22nd straight month, climbing to Rs407 billion in September from Rs393.3 billion a month earlier, based on State Bank of Pakistan figures. This happened even though vehicle sales weakened, as assemblers recorded a 12 per cent annual decline and a 3 per cent monthly fall, leaving total September volumes at 15,104 units across cars, SUVs, pickups and vans.

The report linked the weak month to the postponement of a new auto policy and to confusion over sales tax on hybrid vehicles, a dispute later resolved with an 18 per cent rate for models up to 2,000cc, down from 25 per cent. Even so, cumulative sales climbed 19 per cent to 50,480 units during 1QFY27.

Mohammed Sohail, chief executive of Topline Securities, said car financing could keep growing at a slower pace, given policy uncertainty and a recent upturn in KIBOR. The central bank kept its policy rate at 11.5 per cent at its September 14 meeting, while a banker involved in auto lending said financing would strengthen from November as consumer confidence, new models and new brands expand the car segment.