'Auto Industry in Pakistan at a standstill'

Pakistan’s automobile industry has effectively come to a halt due to delays in announcing a new auto policy, and manufacturers lacked clarity on the future auto policy, according to an auto industry expert.

Speaking on ARY News program On My Radar, Ali Asghar Jamali, the chief executive of Indus Motor Company, said most vehicle assembly plants had either shut down or suspended production because manufacturers lacked clarity on the future auto policy of the government.

Jamali said the industry sold around 305,000 vehicles last year, including about 40,000 used imported vehicles. He noted that restrictions on used-car imports had contributed to industry growth of about 42 percent.

He said the government’s 2021–2026 Auto Industry Development Policy had achieved its two main objectives: attracting new manufacturers beyond the country’s traditional three manufacturers and encouraging investment in new-energy vehicles.

According to Ali Asghar Jamali, several Korean and Chinese companies entered Pakistan under the policy, increasing competition despite the country’s relatively small market of around 300,000 annual vehicle buyers.

However, CEO Indus Motor Company warned that incentives offered under the policy expired in 2026, including a reduced sales tax on hybrid and plug-in hybrid electric vehicles (PHEVs), which increased from 8.5 percent to 25 percent.

Ali Asghar Jamali argued that five-year industrial policies were too short to encourage long-term investment, calling instead for policies lasting between 10 and 15 years to allow manufacturers to recover investment costs.

He also pointed to uncertainty over import duties, saying the government’s National Tariff Policy had reduced completely built-up (CBU) vehicle duties while discussions continued over duties on completely knocked-down (CKD) kits.

He said duties on both imported and locally assembled vehicles in the 800cc category currently stood at 30 percent, while a key statutory regulatory order (SRO) had yet to be issued, leaving manufacturers uncertain whether to continue assembling vehicles locally or rely more heavily on imports.

Ali Asghar Jamali urged the government to resolve the pending policy issues, reduce sales tax on hybrid vehicles to 18 percent, and introduce a longer-term auto policy to restore investor confidence.

He said Pakistan’s auto industry had achieved more than 50 percent localization over the past three decades and invested an additional Rs.3–4 billion to increase local content. However, he said further localization would only become commercially viable if production volumes increased.

CEO Indus Motor Company has also called for government subsidies on small vehicles to make them more affordable for lower-income consumers.