Pakistan’s auto loans rose to Rs318 billion in November from Rs315.4 billion in October, marking the 12th consecutive month of growth, according to data released by the State Bank of Pakistan (SBP).
Despite the continued uptick, industry experts say the recovery remains limited compared to June 2022, when annual car sales were about 240,000 units and auto financing peaked at Rs368 billion.
Market participants attribute the recent improvement mainly to a sharp reduction in interest rates, with the policy rate cut from 22% in June 2024 to 11% by May. The SBP’s latest 50 basis point cut on December 15 is expected to provide additional support to auto financing in the coming months.
However, constraints remain, particularly the Rs3 million cap on auto loans, which limits financing options for buyers amid higher vehicle prices. Analysts have suggested revising the cap upward to better align with prevailing market costs.
Separately, auto sales during the first five months of FY26 increased 48% year-on-year to 75,042 units, compared with 50,856 units in the same period last year, driven by lower interest rates, improving macroeconomic conditions, and the entry of new models into the market.
