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Auto Industry Pushes to End Rs 3 Million Cap on Car Financing

Carr.pk
Carr.pk
2 min read
Auto Industry Pushes to End Rs 3 Million Cap on Car Financing - Carr.pk

The Pakistan auto sector is calling on the federal government and the State Bank of Pakistan (SBP) to remove the Rs 3 million ceiling on car financing. Industry representatives say the current limit, along with loan tenure restrictions, is holding back consumer demand and preventing local manufacturers from reaching their full potential.

The appeal came during a visit by Federal Minister for Commerce, Jam Kamal Khan, to Karachi’s Bin Qasim automotive cluster. The minister toured Tecno Auto Glass Factory and Pak Suzuki Motor Company’s production units, where officials from the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) briefed him on the hurdles facing the “Made in Pakistan” initiative.

Why the Cap Needs Review

PAAPAM argues that the Rs 3 million cap is outdated. Rising inflation and the rupee’s devaluation have pushed most mid-range cars beyond this threshold, making financing nearly impossible for middle-income buyers. The industry highlighted several concerns:

  • Stalled Market: Many consumers cannot secure loans for cars that now cost more than Rs 3 million.

  • Impact on Local Suppliers: Lower vehicle sales are hurting domestic parts manufacturers that depend on high-volume production from assemblers such as Suzuki, Toyota, and Honda.

  • Growth Potential: Minister Jam Kamal Khan noted that while annual car production currently sits below 200,000 units, the sector has the capacity to produce up to 1 million cars if financing and import policies are optimized.

Government Perspective

Minister Khan praised the quality of locally produced parts and stressed the importance of the auto sector to GDP growth and employment. He also expressed optimism about future policies aimed at limiting used-car imports. However, the decision to lift the financing cap rests with the SBP, which has historically maintained it to control import-led demand and manage the current account deficit.

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