After car sales, car financing in Pakistan is also bouncing back, driven by a sharp decline in interest rates. The latest data from the State Bank of Pakistan (SBP) reveals that auto financing surged to Rs. 241.6 billion in January, up from Rs. 235.45 billion in December 2024. This increase is attributed to the gradual reduction of interest rates, which now stand at 12%, down from 22% just seven months ago.
This shift has encouraged cash-rich consumers to opt for financing, whether for new or used vehicles. Historically, the auto financing sector peaked at Rs. 368 billion in June 2022. Now, with inflation cooling and economic indicators improving, the trend appears to be regaining momentum.
Analysts anticipate that the SBP may lower the policy rate by another 100 basis points in the upcoming Monetary Policy Committee (MPC) meeting on March 25. If implemented, this could push the interest rate to 11% for the remainder of FY25, ensuring a positive real interest rate of around 5%.
Car Sales on the Rise
The impact of lower rates is also evident in the automobile sector, where sales have soared by 55% in the first seven months of FY25, reaching 77,686 units. Meanwhile, imports of semi and completely knocked-down kits have climbed 16% to $482 million.
Concerning what local car makers earned last month in terms of sales, following a nominal 3% increase in December 2024, January this year, saw a record surge of massive 73%.
Automakers sold 17,010 units last month, compared to 9,820 in Dec ’24. Similarly, year-on-year sale has also grown by a substantial 61%. Local manufacturers managed to sell 17,010 cars in January 2025, compared to just 10,536 units during the same period in 2024.
Toyota Pakistan saw an impressive 102% surge in sales, delivering 3,335 units in January compared to 1,655 in December 2024. Similarly, Honda Atlas experienced a remarkable 99% jump, with sales rising to 2,210 units from 1,110 in the previous month.
Pak Suzuki Motors Company (PSMC) also recorded significant growth, selling 8,250 vehicles in January—an increase of 37% from 6,016 units in December.
Hyundai Nishat’s sales showed a steady rise as well, climbing 14% to 1,044 units last month from 918 in December. Meanwhile, Sazgar Engineering (SAZEW) reported sales of 161 vehicles in January.
What do you think about the increase in car loans last month? Tell us in the comments section.
