Auto Financing Growth Continues for 12th Month
- Outstanding auto loans in Pakistan reached Rs318 billion in November, marking the 12th consecutive month of growth, according to data from the State Bank of Pakistan (SBP).
- However,current levels remain below peak financing of Rs368 billion recorded in June 2022,when annual car sales exceeded 240,000 units.
- A significant factor driving the recovery is the reduction in the policy rate.
Pakistan Auto Loan Growth Continues, But Faces Constraints
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Auto Financing Shows Sustained Recovery
Outstanding auto loans in Pakistan reached Rs318 billion in November, marking the 12th consecutive month of growth, according to data from the State Bank of Pakistan (SBP). This represents an increase from Rs315.4 billion in October.
However,current levels remain below peak financing of Rs368 billion recorded in June 2022,when annual car sales exceeded 240,000 units. The recent growth indicates a positive trend, but the market hasn’t fully recovered to pre-2022 levels.
Interest Rate Cuts Fuel Demand
A significant factor driving the recovery is the reduction in the policy rate. The SBP lowered the rate from 22% in June 2024 to 11% in May, and a further 50 basis point cut on December 15, 2025, is expected to provide additional support to financing activity.
Financing Limits Pose Challenges
despite the positive momentum, the auto market continues to face challenges. A key constraint is the Rs3 million cap on auto loans, which limits financing options for many consumers.
Sales Surge in First Five Months of FY26
Auto sales during the first five months of fiscal year 2026 (5MFY26) surged by 48% to 75,042 units, compared to 50,856 units in the same period of fiscal year 2025 (5MFY25).This increase is attributed to the entry of new automotive manufacturers, lower interest rates, and improving macroeconomic conditions.
Topline Securities CEO Mohammed Sohail emphasized that continued economic stability, the introduction of new vehicle models, and further reductions in interest rates will be crucial for sustaining growth in car sales and auto credit.