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Pakistan’s automotive sector has reported a staggering Rs50 billion loss over the past year as rising imports of used vehicles continue to eat into local sales, industry sources say. Between December 2024 and December 2025, nearly 25% of domestic vehicle sales comprised old imported cars, highlighting a growing threat to the country’s auto manufacturing ecosystem.
Regional Comparison and Policy Impact
While Pakistan struggles with a flood of used vehicles, neighboring countries maintain stricter controls. India reports almost zero used car imports, Vietnam 0.3%, and Thailand 1.2%. Experts attribute Pakistan’s situation to the Ministry of Commerce’s Notification 1895, issued on September 30, 2025, which permitted imports of vehicles up to five years old. There are reports that this limit may be removed after June 2026, potentially increasing the influx of aged cars.
Industry Concerns
Pakistan’s auto sector comprises 1,200 factories, provides 2.5 million jobs, generates Rs500 billion annually in government revenue, and attracts $5 billion in foreign investment.
“Import-friendly policies risk diluting these gains at a time when industrial revival and localization are priorities,” said Shehryar Qadir, Senior Vice Chairman of Paapam.
Almost all imported vehicles, 99% of 45,758 units, came from Japan, compatible with local right hand drive conditions. Minor imports came from Thailand, the US, Jamaica, Germany, Australia, China, and the UAE. Former Paapam chairman Abdul Rehman Aziz highlighted coordination issues among the State Bank of Pakistan, FBR, and provincial excise departments, noting cases where imported cars were registered under names different from the importers.
Rising Concerns for Local Auto Sector
Industry analysts warn that without stricter regulations, the automotive sector’s growth and localization efforts may face serious setbacks, while used car imports continue to erode domestic market potential.
