ISLAMABAD: Pakistan’s auto financing portfolio continued its steady growth and reached Rs315.4 billion by the end of October. Lower interest rates and rising demand for small and imported used vehicles drove this sustained momentum. The portfolio posted its 11th consecutive monthly increase, reflecting renewed consumer confidence after a prolonged slowdown.
Data released by the State Bank of Pakistan shows that outstanding auto loans rose from Rs305 billion in September. The portfolio now moves closer to the record level of Rs368 billion reported in June 2023. The upward trend began after the central bank slashed the policy rate in June 2024. The rate dropped from 22 percent to 11 percent and encouraged borrowers to re-enter the market.
Lower Rates Encourage Borrowing Activity
Industry officials note that the improved lending environment continues to support rising demand. Consumers show particular interest in smaller vehicles, including the Suzuki Alto 660cc. Imported used vehicles also maintain strong traction in major cities. Consequently, banks and assemblers introduced attractive financing packages to capitalize on this rising appetite, according to a report published by Minute Mirror today.
Some financing schemes now offer interest rates below 10 percent. Assemblers and banks jointly designed these packages to make vehicle purchases more accessible. New entrants and established assemblers also introduced fresh models across several segments to strengthen market competition and visibility.
Restrictions Continue to Limit Broader Expansion
However, several restrictions still limit the market’s growth potential. A financing cap of Rs3 million remains in place. Moreover, buyers must provide a mandatory 30 percent down payment. The maximum tenure also remains restricted to five years for 1,000cc vehicles and three years for smaller cars. These limits continue to discourage purchases of higher-priced vehicles.
Industry Calls for Policy Stability
The Pakistan Auto Show concluded on Sunday with strong participation from domestic and international exhibitors. A total of 172 exhibitors joined the event, including 33 companies from China and six from Iran. Prominent brands unveiled models across several categories while highlighting new electric vehicle technologies.
Nevertheless, industry stakeholders expressed concerns regarding policy continuity. The government has begun work on the Auto Policy 2026–31, prompting calls for clear long-term direction. Indus Motor Company officials warned that imported used cars now capture one-fourth of the market. These imports undermine investor confidence and constrain domestic production. Seventeen global automotive firms operate in Pakistan with a combined capacity of 500,000 units.
