Karachi: Pakistan’s auto financing market continued its gradual recovery in November, with outstanding auto loans rising to Rs318 billion, up from Rs315.4 billion in October, marking the 12th consecutive month of growth, according to data released by the State Bank of Pakistan (SBP).
While this upward trend signals positive momentum, experts note that the recovery remains modest compared to June 2022, when annual car sales volumes reached approximately 240,000 units and auto financing peaked at Rs368 billion, said Mashood Ali Khan, an industry analyst.
The primary driver behind the recent uptick is the significant reduction in the policy rate, which fell from 22% in June 2024 to 11% in May. The SBP’s latest 50 basis points cut on December 15 is expected to further bolster auto financing and sales in the upcoming months.
Despite the recovery, several constraints continue to challenge the sector. The current Rs3 million cap on auto loans limits financing options for consumers seeking higher-end vehicles. Experts recommend revising this limit to at least Rs6 million to align with current market prices, which could stimulate demand and provide relief to buyers.
Mohammed Sohail, CEO of Topline Securities, added that economic stability, new vehicle models, and further cuts in interest rates will support both car sales and auto credit.
Reflecting this positive trend, auto sales during the first five months of FY26 (5MFY26) surged 48% to 75,042 units compared to 50,856 units in 5MFY25, largely driven by the entry of new players, lower interest rates, and improving macroeconomic conditions. Analysts remain cautiously optimistic, noting that policy support and market adjustments will be key to sustaining long-term growth in the sector.