Car financing in Pakistan saw a significant decline in July 2024, as high vehicle prices and increased interest rates continued to lower consumer demand. According to the latest data from the State Bank of Pakistan (SBP), car financing dropped by 20.06 percent year-on-year, falling from Rs285.19 billion in July 2023 to Rs228 billion in July 2024. This notable decrease is mainly attributed to rising interest rates, inflated car prices, stricter loan regulations, and higher taxes on automobile imports and parts.
The total car financing decreased by 1.09 percent, reaching Rs230.5 billion in June 2024. Similarly, consumer financing for house construction decreased by 3.94 percent, totaling Rs202.8 billion at the end of July 2024. House construction financing saw a monthly decrease of 0.39 percent, falling from Rs203.58 billion in June 2024. On the other hand, personal financing increased slightly to Rs238.95 billion in July 2024, showing a 0.14 percent uptick from the previous month despite a year-on-year decrease of 4.51 percent.
The rising costs have affected the automobile market, making even the most affordable vehicles unattainable for many consumers. For example, the Suzuki Alto, a traditionally considered one of the cheapest cars from a reputable brand in Pakistan, now costs over Rs3 million for the top variant, the Suzuki Alto VXL AGS, while the base variant, the Suzuki Alto VX, is priced at Rs2.3 million.
