State Bank of Pakistan along with major commercial banks took an initiative back in 2020 to mobilize foreign deposits of Overseas Pakistani. As part of initiative ‘Roshan Digital Accounts’ were offered to attracts overseas Pakistanis to invest more capital in Pakistan.
This has helped Pakistan in gathering $1 billion in deposits up till April-2021. State Bank of Pakistan has now allowed Overseas Pakistanis to avail vehicle financing in Islamic and traditional forms with markup as low as 7%.
This initiative is expected to give a further boost to the Automotive sector where car sales are expected to rise onwards with unleashing of increased demand from overseas Pakistanis
Assuming that the total deposits in the Roshan digital account system will reach $2 billion by December 2021, and about 10% (base case) will be used for Roshan Apni Car use, there will be a car financing of $200 million (PKR 31 Billion). Hence, PKR31 billion worth of additional car sales is expected in 2021 in addition to normal sales. Total car loans portfolio stood at PKR 285-billion at March-2021 end, while Roshan Apni Car scheme alone is expected to increase the car loan portfolio by 11% to ~320 billion by 2021 end.
The total sales volume of 54,764 units (Passenger Cars, Light Commercial Vehicles, SUVs) registered in 3MCY21 suggests that the total annual Car sales volume is between 190,000 and 200,000 units. Given the average selling price of Rs 2.5 million, this new scheme could generate about 12,500 units of additional sales by 2021 end, marking a 7% increase.
The automotive industry is expected to record more than 200,000 sales (PCs, LCVs and SUVs) in 2021, up 58% year-on-year. BT also expect that new entrants like KIA, Hyundai, Proton are more likely to be the recipient of additional car sales.
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