Auto financing in Pakistan reached Rs. 249 billion by February’s end, climbing from January’s Rs. 241.6 billion figure, as consumers increasingly opt for bank leasing options for both new and used vehicles. This uptick follows the central bank’s decision to slash interest rates from 22% to 12% over the past eight months.
The automotive financing sector has shown consistent improvement since August 2024, when it stood at Rs227.3 billion, though current figures remain below the record Rs368 billion achieved in June 2022.
Industry analysts note that the automotive market is experiencing robust sales across all segments including cars, SUVs, vans, and pickups. Market stability in both pricing and exchange rates, coupled with renewed consumer confidence and the introduction of fresh models, has created a favorable environment for continued growth.
Vehicle sales data for the first eight months of fiscal year 2025 reveals a substantial 50% year-on-year increase, with 89,770 units sold compared to 59,700 during the same period last year. Supporting this growth trend, imports of CKD/SKD kits jumped 23.4% to $575 million from the previous year’s $466 million.
Despite these positive indicators, significant barriers to auto financing persist. Current regulations impose a Rs3 million loan cap, with shortened repayment periods of five years for vehicles up to 1,000cc and just three years for smaller engines. The mandatory 30% down payment requirement presents an additional obstacle for potential buyers in an otherwise improving market.
Industry experts anticipate continued growth in auto financing as interest rates remain favorable and consumer demand strengthens in the coming months.
