Car sales in Pakistan rose by 80% during the first two months (July-August) of the current fiscal year in comparison with the same period of the previous fiscal year because of better economic conditions, stable interest rate, and more leasing schemes, according to auto experts and analysts. Car sales increased by 80% to 30, 933 units, while sales of jeeps and pickups fell by 44% to 4, 443 units. Sales of trucks and buses rose by 81% to 1, 656 units and 9% to 138 units, respectively. Sales of two- and three-wheelers, including motorbikes and rickshaws, increased by 29% to 351, 492 units, according to Pakistan Automotive Manufacturers Association (PAMA) data released on Monday evening. Moreover, sales of farm tractors gained momentum and rose by 5% to 2, 294 units. Talking to Business Recorder, auto expert Muhammad Sabir Shaikh said improved economic conditions, favourable leasing schemes and stable interest rates have pushed up vehicle sales. PAMA Director General Razi-ur-Rehman, in a write-up on Monday on the production and sales figures of its member companies for August 2026, said the picture that emerges is checkered. While cumulative data from the start of the fiscal year indicates a strong year-on-year recovery, sharp month-on-month contractions paint a very different picture of an industry hanging by a thread due to a prolonged regulatory vacuum. The cumulative data for July-August 2026 initially suggests a robust revival across major sectors. Passenger cars registered an impressive 36% growth in production and a stellar 80% surge in sales compared to the same period last year. Propelled by strong domestic demand for commercial vehicles, trucks and buses recorded an impressive growth of 84% in production and 73% in sales. Two- and three-wheeler categories also posted steady 29% expansion in both production and sales volumes compared with last year. Meanwhile, farm tractors recorded a modest 5% year-on-year growth in sales, even as their production declined by 17%. Farm tractor sales have been moving in choppy waters as the government support scheme for purchasing tractors has ended. The government has announced the launch of a new scheme, but its implementation is still awaited, and potential buyers are now waiting for its announcement. Until then, new buyers are likely to keep their purchase decisions on hold. The overall annual growth reflects easing inflationary pressures, better credit availability and improving macroeconomic indicators. However, the increase in volumes is largely a reflection of the low base effect from preceding years, leaving total industry volumes far behind the historic peaks achieved during fiscal year 2022. This year, sales of HR-V have been hampered due to policy uncertainty over the sales tax treatment for hybrid vehicles. Hybrid and plug-in hybrid variants continue to face challenges due to the lack of clear policy direction. Models offered by Hyundai Nishat Motors will also benefit from a clear policy announcement. On the other hand, the relaunch of Elantra has garnered strong interest from customers and recorded impressive growth, almost doubling production and sales both month-on-month and year-on-year. However, the optimism reflected in the annual data is sharply contradicted by the immediate month-on-month decline recorded in August 2026 compared with July 2026, signaling that market momentum has abruptly halted. During August, passenger cars recorded a steep decline of 23% in production and 20% in sales. The contraction was even more pronounced in the commercial vehicles, jeeps and pickups category, where production fell by 40% and sales plummeted by 29%. Farm tractor production decreased by 23%, while sales declined by 15%. The core catalyst behind this sudden monthly slowdown is the severe policy uncertainty gripping the industry. With the Automotive Industry Development & Export Plan (AIDEP 2021-26) having matured in June 2026, manufacturers and consumers have been left navigating a complete regulatory vacuum. The lack of a clear follow-up framework has created bottlenecks, particularly regarding the sales tax treatment for green vehicles. Total ambiguity surrounding tax rates for hybrid vehicles, plug-in hybrids and range-extended electric vehicles has brought trading to a virtual standstill. This ongoing deadlock has already caused billions of rupees in lost sales as consumers pause their buying decisions. The delay in the policy announcement has engineered a lose-lose situation. Manufacturers are stuck with inventory they cannot sell, while the government is actively losing out on critical tax revenue. The sudden double-digit drop in monthly car and jeep sales directly reflects a consumer base that has gone into a paralysed “wait-and-see” mode, hesitant to buy vehicles today when prices could shift drastically under a new policy framework. As the auto sector remains a vital part of the national economy, PAMA urgently appealed to the government to announce the next auto policy to clear the fiscal fog, protect manufacturing capital and restore consumer confidence before these monthly declines turn into a permanent recessionary trend.
Auto sales up 80% for FY27 so far, but August slips 20% from July
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