Liberalisation of used car imports threatens auto industry: PAAPAM

LAHORE: Pakistan’s local auto industry is facing a severe crisis as the government moves toward liberalizing the import of used vehicles, a policy shift that industry stakeholders warn could accelerate deindustrialization and undermine decades of investment.

The sector, which represents 13 world-leading brands supports 1.5 million jobs and involves nearly 1,200 auto parts manufacturers. With an estimated US$ 5 billion invested in tooling, facilities, and technology transfer, Pakistan is among just 16 countries worldwide manufacturing all four vehicle segments cars, trucks, buses, tractors, and motorcycles, industry sources said.

Under the National Tariff Policy, the government is pursuing trade liberalization in line with IMF and World Bank commitments. Although the auto sector was exempted from such measures until June 30, 2026 under the Auto Industry Development and Export Policy (AIDEP 2021–26), recent communications suggest drastic tariff reductions for imported cars. Customs duties may be slashed from 100%–50% to a flat 15%, while regulatory and additional duties are set to be phased out over the next five years, the sources said.

PAAPAM’s sources warned that these measures will destroy three decades of industrial development, leading to mass unemployment, capital flight, and a collapse of Pakistan’s auto parts ecosystem. “No CKD manufacturing country allows unrestricted used car imports. Such policies will only turn Pakistan into a dumping ground for outdated vehicles, undermine the ‘Pakistan Make’ initiative, and force companies to abandon local production,” PAAPAM sources cautioned.

Copyright Business Recorder, 2025