KARACHI: Auto financing in Pakistan rose for the sixth straight month, reaching Rs271.2 billion at the end of May, up from Rs263.3 billion in April, supported by a decline in the policy rate.
The current level, however, remains below the peak of Rs368 billion seen in June 2022.
The State Bank of Pakistan has cut the policy rate to 11 percent from 22 percent since June 2024, encouraging vehicle leasing, especially for smaller cars. Analysts believe this trend may continue in the short term, though policy and structural challenges remain.
The sector recorded a 39 percent increase in sales of cars, SUVs, pickups, and vans, reaching 126,226 units year-on-year. However, the future remains uncertain beyond September 2025 due to the changing policy environment.
The newly introduced NEV Adoption Levy 2025 also adds pressure on the auto sector. The levy imposes a 1 percent tax on vehicles with engines up to 1,300cc, 2 percent on 1,301–1,800cc, and 3 percent on engines above 1,800cc. According to Insight Securities, this could raise vehicle prices by Rs44,790 to Rs596,970, depending on engine size.
Listed companies such as Honda Atlas Cars and Indus Motor are expected to face the biggest impact from the levy. Sazgar Engineering, which focuses on hybrid electric vehicles, may see a limited effect.
In a related move, the government has introduced the National Tariff Policy 2025–30. The policy proposes phasing out additional customs duty over four years, regulatory duty over five years, and eliminating the Fifth Schedule of the Customs Act 1969 within five years.
