Auto loans in Pakistan rose to Rs305 billion by the end of September, up from Rs294 billion in August, marking the 10th consecutive month of growth, according to the State Bank of Pakistan (SBP).
While the current auto loan figure is still below the record high of Rs368 billion reached in June 2022, the increase in demand for vehicles, reflected in a surge in imports of semi- and completely knocked-down (SKD/CKD) kits, suggests continued growth in the sector.
Data from the Pakistan Bureau of Statistics (PBS) reveals that imports of SKD/CKD kits in the first quarter of FY26 surged by 114%, reaching $458 million, compared to $231.4 million during the same period last year.
The recent policy rate cut from 22% in June to 11% has further fueled auto demand, despite rising car prices following the implementation of the New Energy Vehicle policy in July 2025.
However, structural constraints continue to affect the sector. The cap on auto loans at Rs3 million limits financing options for higher-end vehicles, with some analysts proposing an increase to Rs6 million.Â
The SBP, however, remains cautious, citing concerns over the potential impact on foreign exchange reserves due to increased vehicle imports.
Regulatory restrictions, including a 30% down payment requirement and shorter loan tenures — five years for vehicles up to 1,000cc and three years for smaller cars — also remain barriers for potential borrowers.
