LAHORE: Pakistan’s auto financing sector saw continued growth in June, with outstanding car loans rising to Rs276.6 billion, up from Rs271.2 billion in May. This marks the seventh consecutive month of growth, according to data from the State Bank of Pakistan (SBP).Â
However, this growth remains below the peak of Rs368 billion seen in June 2022.
The decline in interest rates, which have fallen from 22% to 11% since June 2024, has significantly boosted consumer demand for auto loans. However, the recent increase in car prices, triggered by the imposition of the NEV adoption levy from July 1, could potentially affect future financing activity.
Despite the positive trend in financing, auto loan growth is constrained by the current Rs3 million cap on car loans. Industry players have urged the SBP to raise the cap to Rs6 million to provide more low- and middle-income consumers with access to financing options.
Car leasing continues to be a challenge for many due to strict terms, such as shorter repayment periods and high down payment requirements.
Auto sales, including cars, pickups, SUVs, and vans, surged by 43% year-on-year, reaching 148,023 units in FY25, compared to 103,829 units in FY24. The increase was driven by a broader range of vehicle options, lower inflation, and favorable interest rates.
Topline Securities expects total car sales for FY25, including those from members and non-members of the Pakistan Automotive Manufacturers Association (PAMA) and imports, to exceed 217,000 units, a 31% year-on-year increase. However, this figure still falls short of the 330,000–350,000 units sold in FY18.
For FY26 and FY27, the brokerage forecasts a growth of 14% and 13%, respectively, with total sales reaching 248,000 and 280,000 units. However, even with these projected increases, FY27 sales would remain 15-20% lower than the historic high seen in FY18.
