Car Financing in Pakistan Seeing Significant Growth
Carmundi, online car classifieds site that focuses on emerging markets, has shared a pretty interesting report on “Car Financing in Pakistan.” It gives us a look at the current and possible trends of the market and how buyer’s attitudes toward credit have transformed in recent years.
The report is based on states and data gathered from governmental institutions and authorities, in addition to interviews conducted with car dealers, financial institutions, baking experts in the country.
According to the report, IMF acknowledged Pakistan’s exceptional performance in terms of fulfilling goals set for their $6.6 billion loan program. Currently, crude oil prices are low and over $14 million is generated from 6 million workers abroad.
A 4.1% expansion was seen last year, meanwhile, starting July 2015 a 4.5% growth in the economy is predicted by IMF. The automobile industry in Pakistan is seeing growth as well, courtesy of the country’s healing economy. A report from 2014 showed that 78% of Pakistanis plan to buy a new/used car in the next couple of years.
Report also showed that 89% prefer waiting till they are financially sound before getting a new/used car. Car sales peaked during 2012 as over 157,000 units were sold and like I mentioned, the market is seeing growth once again due to improvements in the economic sector.
This is also due to decline in international oil and commodity prices, which has showed positive effects on automobile market in Pakistan.
Between July of last year and March of 2015, consumers finance saw a growth of 6.4%. The growth is the result of high demand for new car models and regulations permitting banks to offers loans on models older than nine years.
Loans for automobile went up for 20%.
Micro and Macro economic indicators, rise in foreign investment, and political stability suggest that Pakistan, a market of 200 million people, will see further growth in the automobile sector. This will have a direct effect on car financing, depending on low interest rates and correct environment.
According to Raja Murad Khan, Managing Director of Carmudi Pakistan:
Car Financing is an integral part of the Auto Industry and the recent trend is giving a positive outlook to both consumer financing and automobile Industry. We see more and more people asking us about lease and financing options and it’s very healthy to see financial institutions come up with new offerings.