KARACHI: While continuing to show a gradual recovery, the outstanding auto loans reached Rs318 billion in Nove­mber from Rs315.4bn in October, marking the 12th consecutive month of growth, showed State Bank of Pakistan (SBP) data.

However, this recovery remains modest compared to June 2022 when annual car sales volumes were around 240,000 units and auto financing peaked at Rs368bn, remarked Mashood Ali Khan, an auto sector expert.

The primary driver behind the recent uptick is the significant reduction in the policy rate, which had been reduced from 22pc in June 2024 to 11pc in May. The SBP’s latest 50bps cut on Dec 15 is expected to further support financing activity in the coming months, he hoped.

Despite this improvement, several challenges continue to constrain the market. The Rs3 million cap on auto loans significantly limits financing options.

“I suggest that the SBP should consider raising the auto financing limit to at least Rs6m to better reflect current market prices and support demand. Such a move could provide meaningful relief to consumers and stimulate the auto sector,” he added.

Topline Securities CEO Mohammed Sohail said: “Economic stability, new models and further cut in interest rates will support car sales and auto credit.”

Auto sales during 5MFY26 had surged by 48pc to 75,042 units from 50,856 units in 5MFY25 due to entry of new entrants, low interest rates and improving macroeconomic sentiments.

Published in Dawn, December 18th, 2025