Pakistan’s Auto Industry Voices Concerns Over Misuse of Vehicle Import Programs

Pakistan’s automotive industry is raising serious concerns over the misuse of vehicle import schemes, particularly those intended for overseas Pakistanis, warning that this trend is undermining local production and threatening jobs. Industry experts highlight that schemes such as “baggage,” “gift,” and “transfer of residence,” originally designed to benefit Pakistanis living abroad, are being exploited to import used cars, which are then sold in the domestic market. This surge of imported vehicles is reducing demand for locally manufactured cars and putting significant pressure on the automotive sector.

Former chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAPAAM), Nabeel Hashmi, noted that domestic car production, which reached a peak of 325,000 units in 2020, has now dropped to between 150,000 and 175,000 units per year. The decline is attributed to high taxes, financing challenges, and the growing preference for used vehicles, which are easier and cheaper to import under these schemes.

PAPAAM data shows that Pakistan accounts for 24% of the region’s imports of completely knocked down (CKD) and used vehicles, far exceeding countries like India (0%), Vietnam (0.3%), and Thailand (1.2%). Between December 2024 and October 2025, Pakistan imported 45,758 cars from Japan alone, alongside vehicles from Thailand (130), the US (55), Jamaica (49), Germany (47), Australia (22), China (20), and the UAE (5).

Industry representatives are urging the government to tighten regulations on these import schemes to protect local automotive manufacturing. Former PAPAAM chairman Amir Allahwala emphasized that without intervention, the domestic sector could face further job losses, reduced investment, and long-term setbacks for local vehicle production.