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Car Loans Continue to Break Records in Pakistan

Pakistan’s automotive industry is on a progressive trajectory in terms of vehicle sales as the low-interest rates and car buyers’ newfound inclination towards locally assembled cars have allowed auto financing to reach a record-high mark of Rs. 308 billion in the fiscal year 2021.

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This amount accounts for an increase of 3.6 percent on a month-on-month (MoM) basis and an increase of 46 percent on a year-on-year (YoY) basis, as depicted by the data released by the State Bank of Pakistan (SBP) on Monday.

Surprisingly, the exorbitant prices of locally assembled vehicles prior to the introduction of the Auto Policy 2021-26 as well as the menace of late deliveries and ‘own money’ were not enough to slow car buyers down in benefitting from the reduced rates of interest and the introduction of new vehicles in the market.


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While affirming the positive progress of the auto industry, the Head of Research at Arif Habib Limited, Tahir Abbas, said, “the share of auto financing in total car sales now stands between 40 and 45 percent depending on car models as compared to 15-20 percent some two years ago”.

He added that the demand for locally assembled vehicles is likely to continue on an upward trend because of the announcement of price cuts by automakers after the introduction of the new auto policy.

Abbas further stated that the SBP is likely to keep the interest rate unchanged upon the announcement of the monetary policy that will take place on Tuesday.

The CEO of the Toyota Indus Motor Company (IMC) and Chairperson of the Pakistan Automotive Manufacturer’s Association (PAMA), Ali Asghar Jamali, stated that vehicle sales are likely to remain strong in the upcoming six months due to the low interest rates and people’s fascination with new vehicles.

A Different View

Some analysts believe that the current volatility in the value of the local currency against the US Dollar is likely to push automakers to increase the prices of their products in the future.

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Moreover, the global shortage of semiconductor chips is still a matter of great concern for the global automotive industry as various car makers continue to navigate their way through the supply chain crisis.

All these factors are likely to lead automakers to increase the prices of their vehicles again soon, which could negatively impact the sales of vehicles.

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