Declining lending rates drive surge in auto loans
Outstanding auto loans rose to Rs285.6 billion in July, up from Rs276.6bn in June, marking the eighth consecutive month of growth, according to data released by the State Bank of Pakistan (SBP). While the trend is positive, the current level remains well below the all-time high of Rs368bn recorded in June 2022. Industry experts attribute the uptick in auto financing to improved consumer sentiment and a more favourable interest rate environment. The current lending rate stands at 11pc, significantly down from 22pc in June 2024. This has helped offset the recent increase in car prices, triggered by the imposition of the New Energy Vehicle (NEV) adoption levy from July 1. Samiullah Tariq, Head of Research at Pak-Kuwait Investment Company, noted that auto financing is likely to continue its upward trajectory if the SBP maintains the current policy rate in the upcoming Monetary Policy Committee (MPC) meeting. Mohammed Sohail, CEO of Topline Securities, echoed this view, adding that stable economic conditions and growing car sales could further enhance financing opportunities.