Pakistan’s local automotive industry has raised serious concerns over the rising influx of imported used cars, warning that it poses significant risks to domestic production, employment, and the country’s financial system.
According to new data from the Engineering Development Board (EDB) and industrial associations, the market share of imported used vehicles has surged from an average of 7.5% (2020–2023) to 20% in 2025. The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) estimates that local suppliers are suffering annual losses of Rs 48–60 billion due to reduced demand for locally produced auto parts.
Industry sources caution that if current policies remain unchanged, used car imports could reach 50% of total market share — meaning one out of every two cars sold in Pakistan would be imported. This could render local assembly lines inefficient and lead to a sharp decline in production capacity.
Experts warn that the rapid growth in used car imports has disrupted Pakistan’s auto parts manufacturing sector, which forms the backbone of the country’s industrial base. Each imported vehicle, they note, replaces around Rs 1.5 million worth of local components, putting severe pressure on small and medium-sized enterprises (SMEs) that supply parts to automakers. Many are now facing financial strain, production losses, and possible shutdowns, threatening decades of progress in localization and technology transfer.
The human cost of this policy imbalance is also mounting. The auto parts industry directly employs around 300,000 workers and indirectly supports another 2 million, more than any other manufacturing subsector. According to one industrial official, “Every used car imported means dozens of local jobs lost.”
Furthermore, the misuse of import channels such as the gift, baggage, and transfer of residence schemes has fueled under-invoicing, misdeclaration, and tax evasion on a large scale. Officials have also voiced concern that a portion of payments for these imports is being sent through hawala/hundi networks, contributing to illicit capital outflows and violating the standards of international watchdogs like the Financial Action Task Force (FATF).
Despite the government imposing a 40% regulatory duty on commercial used car imports — a levy scheduled to be gradually reduced to zero by FY2028–29 — experts fear this could trigger a new wave of large-scale imports.
Reportedly, efforts to consolidate various import schemes into a single, tightly monitored framework aimed at curbing misuse have not yet been approved.
Industrial representatives insist that structural reforms are essential to protect domestic industry and safeguard employment. As PAAPAM sources put it:
“Pakistan must decide whether it wants to remain a dumping ground for other nations’ used cars — or build a strong, self-reliant automotive manufacturing base.”
