Pakistan’s auto financing portfolio reached a record Rs369.1 billion in May 2026, surpassing the previous peak recorded in June 2022 and signaling strong recovery in the country’s automotive sector.

According to State Bank of Pakistan (SBP) data, outstanding auto loans increased 36% year-on-year and 3% month-on-month, marking the 18th consecutive month of growth. The rise has been driven by lower borrowing costs, attractive financing packages from banks and automakers and the release of pent-up consumer demand.

Industry experts believe many consumers delayed vehicle purchases over the past several years due to high inflation, economic uncertainty and elevated financing rates. As conditions improve, buyers are returning to the market, particularly in segments where financing plays a major role.

Automakers and banks have also introduced promotional offers, including free registration, insurance packages and flexible financing plans, further supporting demand.

The recovery in financing has coincided with stronger vehicle sales. Sales of cars, SUVs, pickups and vans rose 45% during the first eleven months of FY2025-26, reaching 183,704 units.

Meanwhile, imports of CKD and SKD kits nearly doubled during the period, reflecting increased production activity by local assemblers.

Market participants expect auto financing and vehicle sales to remain on a growth path, supported by improving consumer confidence, greater model availability and increasing competition among automotive manufacturers.