Auto industry needs immediate government assistance

The new administration has been asked to act quickly to promote the car industry in Pakistan and win back investor trust by the local auto industry.

“As of right now, over 40 models are being produced by 13 local brands combined, with a 500,000 unit annual capacity,” said Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM).

He did, however, point out that the substantial rise in used car imports is presenting major obstacles to the viability of the domestic auto sector, which in FY2022 alone invested around $2.5 billion and paid about Rs400 billion in taxes.

He bemoaned the way the local auto industry’s size and potential was being undermined by the increase in imported secondhand cars.

According to him, the local car sector created over 2.5 million direct and indirect employment in the nation in FY2022 and had a local purchase value of nearly Rs250 billion. According to Aizaz, “the import of 3,000 used cars on average per month is currently pushing the local industry’s growth into negative territory (approximately 40%).”

He said that there would eventually be job losses and financial losses (in the form of higher taxes) as a result of the significant flood of used automobiles into the nation. “It also affects the nation’s foreign reserves (economic loss of dollars), which causes the value of the PKR to depreciate,” he said.

It is important to note that during the final nine months of the fiscal year 2023–24, 27,852 units were imported overall—a 610% increase over the 3,924 units imported in the same time in the fiscal year 2022–23.

Data indicates that 5,864 SUVs, 6,491 Small Low Segment units, 8,626 Economy Segment units, and 5,563 Economy Pick-ups and MiniVans were among the imports. During the past nine months of the current fiscal year, 1,308 units of Other Vehicle categories—including Small High, Luxury, Buses, Trucks, and 1-Ton pickups—were imported.