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Pakistan’s auto financing sector continues its upward trend, with auto loans reaching Rs305 billion by September, up from Rs294 billion in August, according to the State Bank of Pakistan (SBP). This marks the 10th consecutive month of growth, signaling renewed consumer interest in vehicle ownership despite ongoing regulatory constraints.
After a period of sluggish sales due to import restrictions and high interest rates, the auto sector is now showing signs of recovery. Although the figure remains below the all-time high of Rs368 billion (June 2022), the growth reflects rising consumer confidence and stronger vehicle imports.
| Key Metric | August 2025 | September 2025 | Change |
| Auto Loans (Rs Billion) | 294 | 305 | +11 |
| SKD/CKD Kit Imports ($ Million, Q1 FY26)** | 231.4 | 458 | +114% |
According to Pakistan Bureau of Statistics (PBS) data, imports of semi- and completely knocked-down (SKD/CKD) kits jumped 114% year-on-year in the first quarter of FY26 a clear sign of revived production and sales momentum.
Experts attribute the surge partly to the State Bank’s rate cut, which brought the policy rate down from 22% to 11%, making auto loans more affordable.
“The reduction in borrowing costs has re-energized the automotive market, especially in mid-range segments,” noted an analyst from a local brokerage firm.
Policy and Regulatory Landscape
Despite the recovery, structural hurdles persist. The Rs3 million loan cap, 30% mandatory down payment, and shorter loan tenures continue to limit access for many buyers.
| Loan Type | Tenure Limit | Remarks |
| Vehicles up to 1,000cc | 5 years | Moderate access |
| Above 1,000cc | 3 years | Limited financing |
| Loan Cap | Rs3 million | Analysts propose Rs6m |
“While the sector is improving, the SBP remains cautious about easing restrictions, given the pressure increased imports could place on foreign exchange reserves,” a senior banker explained.
Outlook: Growth with Constraints
Analysts suggest that with stable monetary policy and continued consumer demand, the auto financing sector could maintain its growth trajectory. However, a balance must be struck between supporting domestic demand and preserving external reserves, especially amid higher vehicle imports.
