Car Financing Has Reached an All-Time High in Pakistan

Car financing reached an all-time high of Rs. 273 billion in FY21. The Head of Research at Arif Habib Ltd., Tahir Abbas, shared the data compiled by the State Bank of Pakistan (SBP), according to which a Month-on-Month increase of 4 percent and an increase of 29 percent has been observed since 30 June 2019.

He added that auto-financing in car sales had grown by 40 to 50 percent in February 2020 as compared to the 20-25 percent increase observed in March 2020.


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The interest rate, which was 13 percent last year, currently stands at seven percent, and Abbas opined that it will increase by around 0.5 percent in the coming days. He added that it will not impede the growth of auto-financing.

“I expect a growth of 16 to 20 percent in car sales during FY21, keeping in view robust demand for cars,” Abbas said and remarked that the economic activity is much stronger now as compared to how it was between March and May of last year.

He acknowledged that the Automotive Development Policy (ADP) 2016-21 has had a significant role in helping car sales, as it had resulted in a bump of Rs. 51 billion in car financing in the seventh month of FY21.


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Abbas also stated that car sales had gone up from 79,534 units by the eight-month of FY2o to an impressive 96,139 units in the same period of the current financial year, as per the PAMA figures. This sizeable increase in sales had occurred despite the frequent increases in the prices of the vehicles. Additionally, with numerous new options that have arrived or are yet to arrive in the market, the prediction of a further increase in car financing may just be accurate.

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