The auto sector in Pakistan is returning to an upward trend as financing surged to an all-time high of Rs369 billion in May 2026, surpassing the previous record of Rs368 billion reached in June 2022, it was reported on Monday.
According to data released by the State Bank of Pakistan (SBP), outstanding automobile loans rose to Rs369.12 billion at the end of May, registering a 36% year-on-year increase and a 3% rise from April’s Rs359.5 billion.
The milestone marks the 18th consecutive month of growth in auto financing, highlighting the sector’s sustained recovery after several years of weak demand.
The sharp rise in financing comes despite a 100-basis-point increase in the SBP policy rate to 11.5% in April.
Market participants said buyers remain comfortable with prevailing lending rates, as they have seen worse rates in the recent past, especially compared with the exceptionally high borrowing costs over the past two years.
Industry observers noted that the availability of new models, including hybrid and electrified vehicles, has further strengthened consumer interest. Rising fuel prices have encouraged some buyers to shift towards more fuel-efficient options, boosting demand for newer technologies in the market.
The strong financing trend has coincided with a sharp recovery in vehicle sales. Sales of cars, sport utility vehicles (SUVs), pickups, and vans reached 17,660 units in May, up 19% year-on-year despite a 20% month-on-month decline. During the first 11 months of FY26, total sales climbed 45% to 183,704 units.
Supporting expectations of continued growth, imports of completely knocked down (CKD) and semi-knocked down (SKD) kits by local assemblers jumped 98% to $1.88 billion during July-May FY26, compared with $949 million in the same period last year.
Analysts believe the combination of improving financing conditions, rising model availability, and recovering consumer confidence will keep auto sales on an upward trajectory in the coming months, despite lingering economic and geopolitical uncertainties.
