KARACHI: Robust demand continued to push auto loans, which swelled for the 20th consecutive month to Rs386.3 billion in July from Rs382bn in June, according to data released by the State Bank of Pakistan (SBP).

Mashood Ali Khan, an auto sector expert, told Dawn that rising auto financing signals improving consumer confidence and a gradual recovery in automobile demand, as the SBP policy rate has remained significantly lower at 11.5pc compared to 22pc a few years back.

“A further reduction in interest rates toward single digits could provide an additional boost to automobile sales and consumer financing,” he said, urging the central bank to enhance the existing Rs3 million financing limit to Rs6-7m, particularly for the locally assembled vehicles.

Higher limits would allow consumers greater access to financing while supporting the recovery of the formal automobile market, he said, adding that bringing financing rates into single digits could further improve vehicle affordability.

Lower financing costs would particularly benefit middle-income consumers, who currently face difficulties purchasing vehicles due to high prices and financing costs, Mashood said.

However, increasing auto financing alone cannot be considered a complete industrial policy. “If we finance more cars but continue importing more components, we will increase consumption without creating sufficient industrial value. Pakistan needs automobile financing and automobile localisation to move together,” he said.

The forthcoming auto policy should therefore establish a clear and measurable localisation roadmap for all assemblers, particularly new Korean and Chinese brands.

The new policy should require manufacturers to achieve defined annual localisation targets, develop Pakistani vendors, transfer technology, and gradually increase domestic value addition, he said.

Published in Dawn, August 19th, 2026