Auto financing in Pakistan is on the rise, reaching Rs. 249 billion by the end of February, up from Rs. 241.6 billion in January. This increase is fueled by a growing number of car buyers opting for bank leasing to purchase new and used vehicles. The surge in demand follows a significant decline in interest rates, which have dropped from 22% to 12% over the past eight months.

Steady Growth in Auto Financing

The trend of increasing auto financing began in August 2024, when the total stood at Rs. 227.3 billion. Although the current figure is still below the all-time high of Rs. 368 billion recorded in June 2022, the consistent growth signals a recovering market.

Car Sales on the Rise

The Pakistani automobile industry is witnessing strong sales across various vehicle segments, including cars, SUVs, vans, and pickups. This positive momentum is expected to continue, driven by:

Stable car prices and exchange rates
Improved consumer confidence
Introduction of new vehicle models

During the first eight months of FY 2025, total vehicle sales stood at 89,770 units, reflecting a 50% increase compared to 59,700 units sold in the same period last year. This growth is further supported by a 23.4% increase in the import of Completely Knocked Down (CKD) and Semi Knocked Down (SKD) kits, which rose to $575 million in 8MFY25, up from $466 million in the previous fiscal year.

Challenges in Auto Financing

Despite favorable market conditions, securing car financing remains a challenge for many buyers due to stringent policies. Some key limitations include:

Maximum loan cap of Rs. 3 million
Reduced payment tenure:
- 5 years for cars up to 1,000cc
- 3 years for cars below 1,000cc
30% down payment requirement

These restrictions can make it difficult for potential buyers to afford vehicle financing, particularly for mid-range and premium models.

What’s Next for Pakistan’s Auto Industry?

With increasing demand, stabilizing prices, and improved financial accessibility, the Pakistani auto market is poised for further growth. If interest rates remain low and financing policies become more flexible, we can expect even greater expansion in vehicle sales and financing options.

Are You Planning to Buy a Car on Financing? What are your thoughts on the current financing policies? Share your experiences in the comments below! For the latest automotive updates in Pakistan, stay connected with www.caradvisers.com.