Pakistan has reported a 19 percent increase in auto loans for the month of December last year. According to the data collected by the Central Bank, the total amount of auto loans in December 2019 stood at Rs. 219 billion, and it has increased by 19 percent exactly a year later, making a total of Rs. 256 billion.
Experts believe this increase is a result of economic and business activities resuming when the first Covid-19 lockdown ended last year. While according to a report by a media outlet, the demand for 1300 cc vehicles has been increasing which has directed impacted the number of auto loans to go up.
The report without mentioning names hinted that the recently launched Toyota Yaris has been a key driver of the auto loans to increase. This claim can be substantiated if compare Toyota Yaris’ sales with Honda Civic and City the last few months. The sales show that Yaris was sold more than the latter mentioned cars.
Moreover, it is also believed that the decrease in interest rates has been a major reason for the increase in auto loans. In 2020, the interest rates were reduced by the State Bank of Pakistan by 625 basis points to 7 percent. Hence, customers had to pay lesser installments once the interest rate was reduced.
It is being speculated that the rising demand for passenger vehicles in the country would continue to increase even further, as the 2020 price hikes by automakers did not impact the rising demand either. In addition, Pakistan has been getting more and more investments as well as stakeholders for the Auto Development Policy (ADP) 2016-21, which reiterates the aforementioned notion about the unwavering demand for cars in the country.