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Why does the automobile sector in Pakistan offer cars and motorcycles on easy terms?

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KARACHI (Trade Desk) Automobile and motorcycle manufacturers in Pakistan are seeing a new offer every day for consumers.
Companies that used to charge an extra Rs 2 to 5 lakh on buying a new car are now ready to offer new cars and motorcycles at lower prices and on terms that were unimaginable a few months ago.
Mohammad Haroon, a resident of Karachi, told Urdu News that he received a call from a vehicle assembly company in Pakistan offering a new vehicle at a fixed interest rate.
The company’s salesperson also offered them a discount on registration and other necessary documents.
The phone call came as a surprise to Mohammad Haroon because two and a half years ago he wanted to buy a 1000 cc car for his home use but the bank’s strict conditions and the demand from car companies were so high that he could not achieve it
He said that for the purchase of a new vehicle, Rs 2 lakh more than the original price of the vehicle was charged, while in terms of other documents, an expenditure of Rs 80,000 was mentioned.
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Mohammad Haroon says he works in an international company but still can’t buy a car on these terms.
Recently, other companies including Suzuki, Yamaha and Chery have not only announced a reduction in the prices of their products but also offered easy installments and interest-free motorcycles as well as convenience in bank processes for purchasing Is vehicles.
President of the Pakistani Automobile Dealers Association HM Shehzad told an Arab news agency that the companies that assemble vehicles at the local level in Pakistan have collected money from customers voluntarily in the past, but now the situation is different.
According to him, the automobile sector in Pakistan is suffering from a serious crisis due to huge increase in dollar rate and interest rate.
HM Shahzad says that due to decline in vehicle sales and other reasons, companies are now offering vehicles on easy terms.
According to Central Bank data, the buying trend in the automobile sector in Pakistan is seen to be lower for the 21st consecutive month. 69 thousand 78 vehicles have been sold during the 9 months of this financial year, while 1 lakh 10 thousand 898 vehicles were sold during the same period last year.
Increase in consumer finance interest rates
Due to the strict monetary policy adopted by the State Bank of Pakistan, the interest rate of consumer financing in the country is currently more than 25%, because consumer financing is decreasing rapidly.
During the first 9 months of this year, a 26% reduction in car fences was recorded. At the end of June 2023, Carfinance’s portfolio was Rs 293 billion 73 crore which has decreased to Rs 239 billion 44 crore.
Importing used vehicles from foreign countries
According to Abdul Waheed Khan, Director General of the Pakistan Automobile Manufacturers Association, one of the main reasons for the decline in the sale of vehicles manufactured in Pakistan is the importation of used vehicles from foreign countries.
He says the government will have to think about the car sector. Due to increase in dollar value, increase in interest rate and which affects the purchasing power of the middle class, there is a significant decrease in vehicle sales in the country.
Automobile sector expert Mashhood Khan says there is a continuous significant decline in vehicle sales in Pakistan, but the administration is not paying attention to it.
“Car financing in Pakistan is at 22 to 24 percent, people are no longer interested in buying cars because of rising interest rates. Some time ago, when the new car model came out, the people who ordered are not going for new cars anymore.’
He said, on the one hand, there is a decrease in the value of the Pakistani rupee against the dollar, which increases the cost of production, and on the other hand, there are strict conditions on the purchase of vehicles from the central bank. .
Pakistan Automobile Dealers Association President HM Shahzad says local car manufacturing companies have done nothing but import goods from abroad and assemble vehicles.
If local companies had set up manufacturing factories in Pakistan, the situation would have been different today. The automobile sector in India is very developed. The main reason for this is that they do not assemble the vehicles but make them in their own country.

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