KARACHI — Pakistan's vehicle financing market continued to expand in August despite a month-on-month decline in new vehicle sales.

Data from the State Bank of Pakistan showed that outstanding auto loans climbed to Rs393.3 billion, compared with Rs386.3 billion in July. This represented the 21st consecutive month of growth in vehicle financing.

Vehicle sales, meanwhile, stood at 15,558 units during August. Although this was an 11% increase compared with August last year, sales were 21% lower than in July. Total sales for the first two months of FY2027 reached 35,376 units, representing year-on-year growth of 41%.

Industry participants have linked some of the recent monthly weakness to uncertainty surrounding Pakistan's next automotive policy and challenges affecting supply chains.

The financing environment remains an important factor for the industry. Existing limits and repayment periods can restrict vehicle affordability, particularly for customers who depend on bank financing to purchase locally assembled vehicles.

Meanwhile, the country's electric-vehicle market is also developing. BYD Pakistan and Mega Motor Company unveiled the Sealion 6 at the Pakistan Auto Show 2026 in Lahore, with local assembly targeted for the fourth quarter of 2026.

The combination of rising auto financing and investment in local vehicle production could influence the industry's next phase, although manufacturers and consumers remain attentive to policy, financing costs and supply-chain conditions.