Auto Financing Growth Continues Amid Supply Chain Concerns

Auto financing in Pakistan has reached Rs336 billion by the end of February, reflecting the 15th consecutive month of expansion. Outstanding loan volumes rose from Rs328 billion recorded in January, supported by sustained consumer demand despite fewer working days in the month, as per data issued by the State Bank of Pakistan.

Expenditure levels remained relatively high following the annual model-year transition, a period that typically stimulates vehicle purchasing activity across the market.

Trade figures further suggest a favourable trajectory for the sector. Local automobile assemblers imported semi-knocked down (SKD) and completely knocked down (CKD) kits valued at approximately $1.3 billion during July–February FY26, representing a 126% increase compared to $575 million in the corresponding period of the previous fiscal year.

However, evolving geopolitical conditions in the Middle East have introduced elements of uncertainty. Industry stakeholders have expressed concerns regarding potential disruptions in the supply chain of imported components, alongside escalating freight and insurance costs attributable to regional instability.

Automobile manufacturers anticipate possible shipment delays and logistical bottlenecks in the near term, which could impact production cycles. Shipping routes traversing the affected region remain vulnerable to cost escalations and congestion-related delays.

Market dynamics currently present a mixed outlook. Certain dealers have observed a slowdown in vehicle bookings within urban centres ahead of Eidul Fitr, whereas demand in rural markets continues to exhibit relative stability. Prospective buyers are also closely monitoring potential price adjustments in response to external economic pressures.

The used vehicle segment has experienced increased activity within lower price brackets, indicative of constrained purchasing power among consumers. While interest in new vehicle models persists, industry participants note that resale demand may not proportionately align with initial booking volumes.

Sector representatives anticipate that the full extent of supply-side disruptions will become clearer in the coming weeks, as companies evaluate shipment schedules and assess available inventory levels.