Key points
- Pakistan’s central bank has slashed interest rate to 12pc
- Two and three-wheelers sales’ increased by 33pc on YoY basis
- Interest rate was at an all-time high of 22pc in June 2024
ISLAMABAD: Pakistan’s automobile sector grew 45.74 per cent in the seven months of the current financial year (7MFY25) on a year-on-year (YoY) basis.
According to the Pakistan Bureau of Statistics, the growth was mainly contributed by a 41.66 per cent growth in jeeps and cars, followed by LCVs 201.45 per cent, trucks 129.97 per cent, and buses 46.23 per cent.
However, the production of diesel engines declined by 8.78 per cent during the months under review.
In February, brokerage house Topline Securities said in its report that Pakistan’s car sales surged by 61 per cent (YoY) in January due to lower interest rates, increased customer confidence and newer variants entering the market.
Pakistan car sales were clocked in at 17,010 units in January 2025, reflecting a 61 per cent YoY surge and a 73 per cent month-on-month (MoM) increase.
Interest rate
In January, Pakistan’s central bank announced that it would cut its key interest rate by 100 basis points to 12 per cent.
The State Bank of Pakistan (SBP) has slashed rates from an all-time high of 22 per cent in June 2024 in one of the most aggressive moves among central banks of emerging markets.
Lower interest rates charged by the SBP means commercial banks also lower the interest rates they charge on loans, including auto loans.
Challenges
In the last few years, the automotive industry has grappled with multiple challenges, including a decline in demand, exacerbated by factors such as rising car prices due to inflation and currency fluctuations, according to Dawn.
Moreover, non-enticing auto financing options offered by banks further dampen consumer interest.
Pakistan Bureau of Statistics said the production of pharmaceutical products grew 1.96 per cent and fertilisers 0.65 per cent, respectively.
