Policy Brief

Automobile Policy 2026–2031: Recommendations from PIDE Research

Government focus and persistent incentives through ADP 2016-21 and AIDEP 2021-2026 have broken the Big-3 nexus and increased total number of automobile manufacturing and assembling firms to over 15 in Pakistan.

Author

Mujtaba Arshad

Published

July 2026

Pages

10

DOI

68:2026

Summary


Government focus and persistent incentives through ADP 2016-21 and AIDEP 2021-2026 have broken the Big-3 nexus and increased total number of automobile manufacturing and assembling firms to over 15 in Pakistan. Additionally, while production capacity has more than doubled in the last one decade, but automobile sales remain stagnant. Despite half a century of localization efforts, local parts and vendor industry is unable to produce high tech, high value parts and the industry remains highly dependent on CKD kits import. The local parts and vendor industry is largely disintegrated from GVC while exports of automobiles and auto parts remain negligible.

Donwload & Access

File Size:
4.75 MB
Language
English
Lisence
68:2026

Report Highlights


Moratorium & Retail Shift

  • Production capacity doubled since 2006, but output is still below 2006 levels.
  • Every 5-year policy target (2007, 2016, 2021) has failed to be met.

Tariff Overhaul

  • Three SROs have shielded local parts makers from competition for 20 years, killing innovation.
  • Full tariff rationalization could add USD 2 billion to the import bill.

Transparent Policy Process

  • AIDEP 2021-26 expired with no public draft of its replacement.
  • 2022 import restrictions pushed “On Money” premiums from 7-8% to 12-15%.