KARACHI: The amount of outstanding auto loans shrank for the 15th consecutive month to Rs272.3 billion at the end of September, showing a drop of 2.1pc on a month-on-month basis.

Data released by the State Bank of Pakistan (SBP) shows the total decline in the last 15 months was Rs95.6bn. At the end of June 2022, auto financing stood at Rs368bn.

The auto industry has been going through a challenging phase that involves frequent plant shutdowns due to the nonopening of letters of credit (LCs), depressed sales caused by soaring prices, regulatory measures aimed at slowing down demand in order to bridge the current account deficit, imposition of the upper limit of Rs3 million on auto loans and a reduction in the repayment duration.

Topline Securities Ltd CEO Mohammed Sohail said the decline in auto financing may come to a halt in the coming months based on the likelihood of car price stabilisation after the recent strength in the rupee`s value against the dollar.

He said the Karachi interbank offered rate (Kibor) has started to come down. This will help grow auto financing, which is linked to Kibor, he added.

The next meeting of the central bank`s Monetary Policy Committee (MPC) will be held on October 30. As per a survey conducted by Topline Securities Ltd, 70pc of the participants expect the interest rate to remain unchanged at 22pc. About 16pc of the respondents anticipate a dropof 25-100 basis points while 11pc of them believe it may plunge by more than 100 basis points. The remaining 3pc of the participants expect the interest rate will rise by more than 100 basis points.

Contrary to the market expectations, the SBP kept the policy rate unchanged at 22pc in its last MPC meeting held on September 14.

Mehran Commercial Director Mashood Ali Khan said the interest rate may remain unchanged. The country is facing economic uncertainties without a clearly defined economic roadmap, he said. This lack of clarity has been a contributing factor to the sustained high interest rates.

One potential solution, he said, lies in a collaborative approach. `If the government engages in open and constructive discussions with exporters, importers and industry leaders, a one-year policy announcement regarding stable foreign exchange rates could be formulated,` he said.

As far as the prices of fourwheelers are concerned, only Lucky Motor Corporation Ltd and MG Motors Ltd have announced price cuts. The landing cost of parts and accessories must have come down since September 5 when one dollar was equal to Rs307.10 versus the current rate of around Rs280.

Consumers are also waiting for a price reduction in twowheelers but so far their assemblers have been reluctant to give any relief.

Sales of cars, LCVs, vans and pickups fell by 40pc to 20,983 units in the first three months of 2023-24 from 35,002 units a year ago.