By Pakistan’s automobile sector is showing clear signs of revival as auto financing continues to gain momentum, driven by stabilizing interest rates, increased vehicle availability, and more flexible financing options. According to the latest data released by the State Bank of Pakistan (SBP), car financing in May 2025 rose to Rs. 271.24 billion, marking a 3.01% increase from April 2025’s figure of Rs. 263.31 billion.
On a year-on-year basis, the growth is even more substantial — a 16.51% jump compared to Rs. 232.79 billion in May 2024. This upward trend reflects growing consumer confidence and a renewed appetite for auto ownership in the country.
Key Drivers of Auto Financing Growth
Several factors are fueling this surge:
- Interest rate stabilization is making auto loans more manageable for middle-income buyers.
- Supply chain recovery has improved car availability, both for locally assembled and imported vehicles.
- Financial institutions are offering competitive and flexible loan terms tailored for new buyers.
This environment makes it an ideal time for potential buyers to consider vehicle financing, though high demand may lead to longer wait times for popular models.
Broader Trends in Consumer Financing
While auto financing is accelerating, other consumer credit segments are showing varied trends:
- House building loans dropped 1.69% YoY to Rs. 201.83 billion, though up slightly MoM.
- Personal loans grew 12.98% YoY, reaching Rs. 268.4 billion in May.
Overall, total consumer financing hit Rs. 911.44 billion, a 13.77% YoY increase and a 2.2% rise over April — indicating growing reliance on credit across sectors.
Sector-Wise Lending Snapshot
- Private sector credit reached Rs. 9.47 trillion, up 12.64% YoY.
- Manufacturing loans stood at Rs. 5.3 trillion (+10.58% YoY).
- Construction sector borrowing rose to Rs. 218.94 billion (+11.76% YoY).
- Agriculture, forestry, and fishing credit hit Rs. 464.73 billion (+20.67% YoY).
These trends highlight a broader economic rebound, especially in key sectors like agriculture and construction.
With car financing at a 12-month high, Pakistan’s auto industry is entering a promising phase. As banks ease terms and interest rates stay stable, car ownership is becoming increasingly accessible to a wider segment of the population. However, due to rising demand, early booking and planning remain essential.
