Automobile imports are rising again, with all the subtlety of a grand SUV launch event, the kind that is becoming more and more frequent in Pakistan. In the first half of FY26, Pakistan imported close to $1.9 billion worth of road vehicles, parts, kits and related items, double the same as last year.
Close to 70 percent of these imports constituted of Completely Knocked Down (CKD) units indicating assembly of vehicles has shot up. Mirroring the import surge in knocked down kits of 2.3x stands the volumetric market growth which is up 50 percent for just passenger cars and SUVs alone. The Central Bank may soon start to clear its throat.
READ MORE: Editorial: New auto policy must set clear goals
Times are good for the market: reduced cost of financing, recovering appetite of car buyers that are now virtually drowning in new options, and a policy regime that is supporting EV imports through duty concessions. But in the past when balance of payment crises have hit, the SBP has had to step in to curb “luxury” imports, whetherthrough LC controls, or by imposing regulatory duties, outright bans, or placing restrictions on car leasing terms and tenors at a time when interest rates were already tightening.
Present demand is recovering despite the fact thatthe tighter regulations that reduced loan tenors, restricted financing up to Rs3 million and raised the down-payment threshold were not lifted. Buyers are willing to make do, and new models are launching with offers, that don’t circumvent government regulations, but do provide ease and flexibility.
What matters for the external account is not just how many cars are sold, but what kind.For everyFortuner, Tucson, Sportage, Oshan, Sorento, Haval, BYD, Jaecoo and a parade of NEVs promising efficiency, we are quietly importing battery packs, electronics, and high-value components that are expensive and dollar-denominated. Local assembly or localization in Pakistan does not mean import substitution.
SUV volumes in 1HFY26 have jumped 66 percent and their share in the market has crossed 25 percent, from a historical average of 15-17 percent. These vehicles are margin-rich and import-intensive and evidently, there is a market for them as buyers flock to the showrooms.
Before the market could even have a debate on technology, quality, longevity, value for money, reliability, after-sales service and importantly, resale for these new launches, particularly the Chinese ones, we could be sounding a signal for policymakers. This is not fearmongering.
Even though road transport imports are only 5 percent of total imports, this share has jumped to this level rather abruptly from the 3 percent that it maintained over the past three years.
Sudden changes in the external account and reserves thinning could put a stop to these imports faster than the peak speed of some of these turbo engines.
Growth in the automobile market, as exciting as it may seem, has a short shelf life. Until Pakistan pursues long-terms policies that promote deep localization and building our export capacity, we will keep running into the same wall, maybe this time with nicer interiors and larger tyers.
Comments