LAHORE: PAAPAM has requested Prime Minister Shehbaz Sharif and top government officials including the finance minister, minister for industries & production, and others to include vital protective measures in the Auto Policy 2026-31. In this regard, protection against used-car imports into Pakistan remains a key topic for debate.
Protection against misuse of policies pertaining to importation of automobiles from abroad has been highlighted as one of the important issues raised by PAAPAM.
PAAPAM Seeks Safeguards Against Used-Car Imports: A Warning Over Removing Key Protections
PAAPAM Chairperson Usman Aslam Malik in a statement issued on Tuesday cautioned against the rollback of certain safeguards, particularly the requirement of imposing one year non-transferability on imported cars through offshore schemes, which he believes could adversely impact the domestic automotive industry and derail economic documentation efforts in the country.
Malik emphasized the key implications of stripping away protection under the auto policy, arguing that unchecked imports will endanger 1.8 million jobs offered through domestic production of auto components in Pakistan. According to him, every used vehicle imported is capable of wiping out PKR 1.5 million worth of locally-made auto components.
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Speaking about the scale of such economic activity and the related informal market that has evolved, Malik revealed that annual imports stood at around 50,000 vehicles last year, accounting for almost 30 percent of the local auto market share. “This business activity has created a PKR 200 billion informal economy,” he added, highlighting how this topic should be viewed in terms of financial accountability, documentation challenges, and competitive advantage considerations.
The PAAPAM chairperson pointed out another issue that makes matters even more complex, which includes the compounding effect of declining tariffs. According to the National Tariff Policy 2025-30, tariffs imposed on second-hand automobiles will gradually fall from a 40 percent premium over brand-new automobiles to nil within five years, starting with FY26 to FY30.
In light of the 30 percent customs tariff reduction on CBUs (850cc or lower), announced in the Budget 2026-27 alongside a maximum of 36 percent depreciation rate, imports of second-hand automobiles have started getting highly profitable businesswise.
Malik warned that lifting the non-transfer period of one year would wipe out all local manufacturers, which account for about 65 percent of components by value provided to assembly units operating within the country. These numbers speak volumes about the level of integration between local parts manufacturers and Pakistan’s entire automobile industry value chain.
Pakistan’s local parts manufacturing industry currently accounts for roughly 65 percent of component production by value supplied to assembly plants in Pakistan. Local parts manufacturers provide up to 65 percent of component production by value to assembly plants operating within Pakistan.