Structural, regulatory challenges: CCP launches report on automobile industry

ISLAMABAD: The Competition Commission of Pakistan (CCP) Monday launched a comprehensive report, “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” highlighting structural and regulatory challenges in the sector and recommending wide-ranging reforms, including a long-term policy roadmap, improved vehicle financing, and removal of regulatory distortions to foster competition and efficiency.

The automobile industry remains a cornerstone of Pakistan’s economy, contributing around 2.8 percent to GDP and employing more than 215,000 people directly. As a key segment of Large-Scale Manufacturing, it plays an important role in industrial growth, technology transfer, and domestic value addition, particularly in the passenger car segment, including emerging electric vehicles.

The CCP study finds that despite successive policy interventions, the passenger car market remains concentrated in several engine categories due to high entry barriers, capital-intensive requirements, and regulatory complexities. While past protectionist policies helped establish domestic manufacturing, prolonged tariff protections and localization measures have not consistently translated into competitive outcomes or export-led growth.

The report also highlights fragmentation in the regulatory framework, with overlapping institutional mandates and policy inconsistencies affecting investment and industry development. Although previous auto policies aimed to increase localization, attract new entrants, and promote exports; structural rigidities, policy reversals, and weak implementation limited their effectiveness.

To address affordability constraints and stimulate demand, the CCP has recommended expanding access to auto financing by reviewing restrictive financing limits and introducing targeted, subsidized schemes for first-time buyers in coordination with financial regulators.

The study emphasizes the need for a predictable and coordinated transition toward electric vehicles, noting that inadequate charging infrastructure, limited domestic production capacity, and reliance on fossil fuel-based electricity remain key barriers. It stresses that sustained policy consistency and infrastructure investment will be critical to attract long-term private investment in the EV ecosystem.

The report observes the absence of a comprehensive vehicle scrappage and phase-out policy and recommends the introduction of a structured disposal scheme to address environmental concerns, improve road safety, and stimulate demand through the gradual removal of obsolete and high-emission vehicles.

The CCP has also called for strengthening domestic vendor development through transparent and non-discriminatory localization policies to enhance industrial linkages and integrate Pakistan’s auto sector into global supply chains.

To create a level playing field, the Commission recommends gradual rationalization of distortive protections, removal of regulatory asymmetries, and adoption of stable, pro-competition policies to encourage investment, innovation, and efficiency.

The CCP noted that a competitive automobile industry can deliver significant benefits to consumers and the economy, including lower prices, improved quality, greater choice, and enhanced export potential.

Copyright Business Recorder, 2026