After vehemently opposing the import of used cars into Pakistan’s automobile market for decades — a market still small relative to the country’s sheer size— Indus Motors is making a decisive pivot.
The company is adorning some big bog pants by preparing to capitalize on the government’s new policy allowing the commercial import of used vehicles. If you can’t beat them, join them; and Indus Motors may be playing the smartest hand possible. Meanwhile, latest numbers for locally assembler vehicles reveal vehicle demand is roaring back.
Three months into FY26, sales data reveal a recovery and a profound reshaping of demand. SUVs and light commercial vehicles (LCVs) are leading, outpacing passenger cars both in growth and in market share. What began as a slow tilt toward premium and utility segments has now solidified into a structural realignment of Pakistan’s industry landscape.
SUV and LCV sales have surged 72 percent in the first quarter year-on-year, compared to a 46 percent rise in passenger cars. The share of SUVs and LCVs has reached its peak at 31 percent of total volumes.
This means that while the total industry is still behind its FY22 peak, SUVs and LCVs with the latest offerings by new players like Haval are selling higher than ever before.
There are two major takeaways from this. One, that the market is growing narrower and more upscale, with consumers opting for larger, feature-rich vehicles over passenger cars, particularly sedans. And two, even when new players had the opportunity to introduce more variety into the market, virtually all of them offered high-end high-margin vehicles as opposed to catering to the affordable segment, where arguably the bulk of volumes could come from.
The fact is, there is no affordable segment in the Pakistani market. With auto financing costs still firmly in double-digits, and car prices sky rocketing over the past few years, even Suzuki Alto may be beyond the reach of many middle class or young families.
While Alto has performed really well upon its launch—at its peak, over 40 percent of the passenger cars were Suzuki Altos. That share has dropped to 38 percent in 1QFY26 indicating perhaps a weakening? Sales for the quintessential middle-class vehicle are also down 28 percent from the peak. The volumes are simply not there for other similar models like Wagon-R and Cultus. Even Suzuki Swift, Toyota Yaris and Kia Picanto which are popular mid-segment compactsare not performing as they should, losing ground to the expansion of expensive premium options.
Is the automobile market simply left for the wealthy society? Perhaps. This evolution is marking more than just a cyclical rebound. It is reflecting a deeper change in consumer behavior, moving decisively toward aspiration rather than accessibility. The government has tried to design policies to favor the latter, but with high taxation, lack of incentives for true localization, and perhaps a lack of innovative planning on the part of the assemblers, the market has drifted toward what’s profitable, not what’s inclusive. The result: a proliferation of SUVs, while the entry-level segment slowly withers away.
The uproar around used car imports stems from this very imbalance.Assemblers have been feeling a tremendous amount of pressure even when used cars were being imported under the gift and baggage schemes. Granted that these schemes were being misusedby motor vehicle dealers to import a large number of 3-year-old used cars into the country, but if local assemblers were doing their jobs right, they wouldn’t feel that used cars were competition for them. Except that they do.
Indus Motors is reluctantly adapting to the new used cars policy, not just because it is opportunistic, but because there is no other choice. Used cars are filling a widening gap left by complacent assemblers, catering to a segment priced out of locally produced options. With demand for local vehicles consolidating at the higher end, OEMs are set to face tighter competition in the coming quarters, uncertainty looms large for models that may soon have better, cheaper alternatives landing at the port.
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