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An Overview on Auto Leasing Sector of Pakistan and Its Impact on Automobile Industry

Kausar, Muhammad Naveed (2006): An Overview on Auto Leasing Sector of Pakistan and Its Impact on Automobile Industry.

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Automobile sector is intensely affected by the boost in leasing business in Pakistan. During last three year leasing option became the major source of expansion, growth and stability to the automobile sector. The contribution of automobile leasing to growth of automobile sector is in the range of 40%, 50%and 60% last three years. This shows the success of auto lease sector in Pakistan.

Despite of arrivals of new models, the supply of number of units is low as compared to the demand for cars. The increase in the demand for the cars is mainly due to the availability of leasing and other financing modes for people. People are becoming more conscious about having their own cars as society as a whole has become very class and status conscious and does not want to use the public transport. So all these reasons have influenced the demand for the cars positively.

Car-financing has opened new vistas of demand of brand new cars and every person, who can afford to pay 6,000 to 15,000 monthly installments is getting new card. This has provided an opportunity to the common people to obtain new car through leasing, but it has caused a serious blow to the second hand cars business. We people (whose mainstay was the second hand cars business) now keep on waiting for used cars customers for several days and rarely find the buyers. Even the business of used spare parts and workshops has also suffered a serious blow due to the availability of zero-meter cars through banks. The demand of new cars is steadily on the increase and despite increasing capacity the local manufacturers are unable to meet the demand

The auto market of Pakistan still primarily remains a used car market. The prices of which are dictated by the prices of new cars.

This research is to study the how car leasing and financing affects the competition between financial institutions. The research reveals the important points concerning tremendous competition between the financial institutions and auto manufacturer that are playing in this field to increase their market share.

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