Auto loans rise for 18th month to Rs369 billion despite higher interest rate

Automobile financing in Pakistan increased for the 18th consecutive month, rising to Rs369.12 billion despite a 100-basis-point increase in the policy rate to 11.5% in April.

The latest level surpassed the previous peak of Rs368 billion recorded at the end of June 2022. According to State Bank of Pakistan data, auto financing had stood at Rs359.5 billion by the end of April.

The increase suggests that higher borrowing costs did not significantly weaken demand for vehicle financing. Industry observers said buyers continued to find current lending rates manageable, while financing packages offered by assemblers and private banks supported demand.

Demand for vehicles has also been helped by consumer interest in new models, including electrified vehicles, as petrol and diesel prices have remained elevated since the Middle East crisis began.

Sales of cars, SUVs, pickups and vans stood at 17,660 units in May, up 19% from a year earlier but down 20% compared with the previous month.

Total sales during the first 11 months of 2025-26 reached 183,704 units, showing a 45% increase from the same period last year.

Auto sales are expected to remain supported in the coming months, as imports of semi- and completely knocked down kits by local assemblers rose 98% to $1.877 billion during 11MFY26, compared with $949 million in the same period last year.