Pakistan's auto loans rise to Rs328 billion in January, marking 14th month of growth

Pakistan’s outstanding auto loans continued their upward trend, reaching Rs328 billion in January 2026, an increase from Rs319 billion in December 2025, marking the 14th consecutive month of growth. 

The State Bank of Pakistan's data revealed that the surge in loans was driven by increased demand due to the change in model year and vehicle registration.

Auto financing has struggled to surpass its peak of Rs368 billion, reached in June 2022, when annual car sales volumes were approximately 240,000 units. 

According to market experts, despite the ongoing economic challenges, the demand for vehicles remains strong, with consumers increasingly turning to bank financing to purchase cars. This trend suggests a gradual recovery in auto sales, indicating that consumer demand is still present and could accelerate with the right policy support.

They believe the current growth momentum is mainly due to the State Bank's existing auto financing cap of Rs3 million, which has enabled many middle-income consumers to access vehicle ownership. 

However, they suggest that if the cap were raised to Rs6-7 million, it could drive significant growth, particularly in the sedan and mid-range vehicle segments, which are currently out of reach for financing-dependent buyers.

Raising financing limits would not only benefit consumers but also provide broader economic benefits, such as boosting industrial production, generating employment, developing vendors, and increasing government revenues through taxes and duties, he added.

Auto sales are expected to remain strong, driven by a 137% increase in imports of semi- and completely knocked-down kits, which reached $1.144 billion in the first seven months of fiscal year 2026, compared to $706 million in the same period last year.