ISLAMABAD: Pakistan’s auto financing has reached a record high of Rs369.12 billion in May 2026, reflecting renewed consumer confidence, lower borrowing costs and strong demand for new vehicles, according to the State Bank of Pakistan (SBP).
Outstanding automobile loans increased by 36% year-on-year and 3% compared with April’s Rs359.5 billion. The latest figure surpassed the previous record of Rs368 billion set in June 2022 and marked the 18th consecutive month of growth in vehicle financing.
Market analysts said the sustained increase highlights the automotive sector’s steady recovery after several years of subdued demand. Research firm Topline Securities attributed the trend to improved affordability, better vehicle availability and stronger consumer confidence. It added that financing is expected to continue supporting passenger car sales, particularly in higher-priced segments.
The growth comes despite the SBP raising its policy rate by 100 basis points to 11.5% in April. Industry experts said consumers remain willing to finance vehicle purchases as lending rates are still considerably lower than the exceptionally high borrowing costs seen over the past two years.
Auto trader Sabir Shaikh said replacement demand had accumulated over the past five to six years as many consumers postponed purchasing new vehicles because of inflation, economic uncertainty and expensive financing. He noted that lower mark-up rates and promotional offers, including free registration, complimentary insurance and tracking devices, have encouraged buyers to return to the market.
Growing competition among automobile manufacturers and the arrival of hybrid and fuel-efficient models have also boosted consumer interest. Rising fuel prices have further increased demand for vehicles offering better fuel economy.
Meanwhile, former PAAPAM chairman Mashood Ali Khan urged the central bank to raise the maximum financing limit from Rs3 million to Rs8 million and extend repayment periods to seven years. He also called for lower sales tax on small cars to improve affordability.
Chairman of the All Pakistan Motor Dealers Association HM Shahzad also proposed introducing financing facilities for used vehicles to expand vehicle ownership and further strengthen Pakistan’s automotive sector.
