Pakistan’s automobile industry is grappling with a fundamental shift in its economic model as government tariff reductions on imported vehicles erode the viability of local assembly operations.
Industry stakeholders argue that the policy changes have altered the competitive landscape, making it increasingly difficult for domestic manufacturers to justify production costs against cheaper imports.
The sector is currently navigating a period of significant regulatory ambiguity following the expiration of the 2021–26 auto policy framework.
This lapse has left manufacturers in a state of limbo, with companies divided on how to proceed during the interim period.
Some firms are adopting a wait-and-see approach, while others are reassessing their investment strategies in light of the new tariff regime.
The tension between trade liberalization and industrial protectionism is at the heart of the current debate.