Pakistan’s local car industry is facing a serious threat due to rising used car imports, which could cause a loss of Rs60 billion and force 40,000 workers out of jobs. Auto parts manufacturers and vendors have warned that if the government allows free commercial import of used cars from September, the entire car assembly industry may shut down within two years.
Former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), Aamir Allawala, stated that used cars already make up 25% of the market, with over 40,000 units arriving annually. In contrast, countries like India, Vietnam, and Thailand have strict rules, keeping used car imports below 1.5%. Their high import duties and strong administrative controls keep local industries protected.
Allawala explained that in Pakistan, used car imports often go undocumented, with payments sent through illegal channels like hawala and most sales made in cash. This not only damages the formal economy but also hurts local manufacturers who follow tax rules and depend on recorded transactions. According to him, this grey market takes away revenue and growth opportunities from local vendors and assemblers.
He warned that if imports are made easier, global automakers might stop manufacturing locally and shift to importing fully built vehicles instead. This shift would leave local vendors with no demand for their parts, forcing many to shut down. Allawala added that 13 assemblers operate in Pakistan today, but many of the new entrants barely use local parts, with one new player earning Rs36 billion in profits in FY25 despite zero localisation.
Meanwhile, PAAPAM Senior Vice Chairman Shehryar Qadir urged the government to follow Thailand and Vietnam’s auto development models. He believes these strategies can help boost local vendor support and increase auto exports. He also emphasized the need for policies that encourage meaningful investment and job creation rather than short-term import gains.
Supporting the local industry, Senator Aon Abbas, Chairman of the Senate Standing Committee on Industries, assured that the government stands with local manufacturers. During his visit to Indus Motor Company, he acknowledged the industry’s role in employment and growth. IMC’s CEO, Ali Asghar Jamali, expressed concern that more than 64% of their production capacity remains unused, even after heavy investment from global auto brands.