Auto Loans Reach Rs305B Amid 114% CKD Import Surge

KARACHI: Auto loans in Pakistan climbed to Rs305 billion by September’s end, up from Rs294 billion in August, marking the 10th straight month of expansion, per the State Bank of Pakistan (SBP).

Though below the peak of Rs368 billion in June 2022, surging vehicle demand—evident in semi-knocked-down (SKD) and completely knocked-down (CKD) kit imports—signals sustained sector growth.

Pakistan Bureau of Statistics (PBS) data shows SKD/CKD imports in Q1 FY26 skyrocketed 114% to $458 million, versus $231.4 million last year.

A policy rate slash from 22% in June to 11% has amplified auto demand, even as car prices rose post the New Energy Vehicle policy rollout in July 2025.

Persistent structural hurdles plague the sector: A Rs3 million loan cap restricts high-end vehicle financing, prompting some analysts to advocate raising it to Rs6 million.

The SBP treads cautiously, wary of foreign exchange reserve strain from heightened imports.

Regulatory curbs, including a 30% down payment mandate and curtailed loan tenures—five years for vehicles up to 1,000cc and three years for smaller ones—continue to deter borrowers.