KARACHI: A 100-basis-point rise in the interest rate to 11.5 per cent in April did not hit buyers’ sentiment, as outstanding automobile loans surged for the 18th consecutive month to Rs369.12 billion, breaking the peak of Rs368bn recorded at the end of June 2022.
According to data from the State Bank of Pakistan (SBP), auto financing by the end of April totalled Rs359.5bn.
Even the US-Israeli war on Iran since Feb 28 did not scare buyers from putting a handsome amount in purchasing costly vehicles, both locally assembled and used cars.
The jump in the SBP policy rate might have made financing a bit costlier, but buyers feel that the lending rate is still affordable. Various packages from assemblers and private banks for affordable car financing are also driving buyers crazy for new vehicles.
As petrol and diesel prices have remained high since the Middle East crisis began, consumers have turned more enthusiastic about new models, especially electrified vehicles.
Auto sector expert Mashood Ali Khan said the federal budget did not announce any relief measures, the SBP should increase car financing limits from Rs3 million to Rs8m and the repayment tenure from 3-5 years to 7 years, along with a reduction in sales tax on small cars.
On the other hand, he said banks are already offering special car financing to the corporate sector for amounts above Rs3m, based on corporate financial statements. This will allow the corporate sector to extend this advantage to employees for car upgrades.
He said the industry is now waiting for the new Auto Policy, which will set the direction for the automotive industry, including localisation targets for Korean and Chinese models.
“Based on our experience, Japanese car manufacturers plan to keep one model in the market for at least five years, unlike Chinese and Korean brands that launch new models very frequently,” Mashood said, adding that the government must ensure in the policy that any new model should remain in production for a minimum of five years to ensure spare parts availability at dealerships so that consumers do not face hurdles when components need replacement.
Sale of cars, SUVs, pickups and vans clocked in at 17,660 units in May, up by 19pc year on year while down 20pc month-on-month, taking 11MFY26 total sales to 183,704 units, up 45pc.
Auto sales would remain brisk in the coming months in view of a 98pc import surge of semi and completely knocked down (CKD/SKD) kits by the local assemblers to $1.877bn during 11MFY26 from $949m in the same period last year.
Published in Dawn, June 19th, 2026