Automotive manufacturing sector: Paapam says concerned at ‘renewed attempts’ to weaken policy measures

ISLAMABAD: The Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) has expressed serious concern over what it described as renewed attempts to weaken policy measures that have played a critical role in reviving and sustaining Pakistan’s automotive manufacturing sector. In a statement on Friday, the Association noted that despite overall vehicle volumes remaining close to levels seen in the mid-2000s, demand for automobiles in the country continues to show a steady upward trend. Industry stakeholders believe that the sector is now poised for significant expansion, supported by prudent government policies aimed at promoting local manufacturing, encouraging industrial investment, generating employment, and reducing reliance on imports. Paapam identified restrictions on the import of used vehicles as one of the most important policy interventions in recent years. These restrictions were introduced primarily to regulate schemes intended to facilitate overseas Pakistanis. However, the Association maintained that such schemes were widely misused and effectively became a channel for large-scale imports, distorting the domestic market and undermining the local industry. According to industry estimates, used vehicle imports became a repository for nearly Rs 200 billion of undocumented wealth. It was widely understood that passports of overseas Pakistanis, particularly those working in the Middle East, were used for importing vehicles in exchange for payments ranging between Rs 500, 000 and Rs 2 million. Despite these individuals residing in various countries, an overwhelming 95 percent of used vehicle imports originated from Japan. PAAPAM emphasized that such practices created an uneven playing field, placing domestic manufacturers at a disadvantage. Local auto parts manufacturers, the Association noted, have continued to invest heavily in upgrading technology, improving product quality, and expanding employment opportunities. However, the influx of used vehicles has posed serious challenges to their growth by introducing unfair competition. Highlighting the broader economic importance of the automotive sector, Paapam stated that it remains one of the key contributors to Pakistan’s industrial economy. The sector supports large-scale manufacturing, employment generation, engineering capability development, technology transfer, and the growth of allied industries. Recent data, it said, shows that automobile production accounted for nearly 60 percent of the overall 6. 2 percent growth in large-scale manufacturing (LSM), underlining its central role in industrial expansion. The Association also raised concerns regarding the safety and environmental implications of unrestricted used vehicle imports. It pointed out that many imported vehicles have already consumed a significant portion of their useful life and often enter Pakistan without being subjected to the same environmental and safety standards applicable to locally manufactured vehicles. Industry stakeholders have repeatedly warned about the risks associated with accident-damaged vehicles and those of uncertain condition entering the local market. PAAPAM stressed that consumer safety must remain a top priority and that all vehicles imported into Pakistan should comply with internationally recognized environmental and safety standards. In this regard, the Association appreciated the efforts of the Engineering Development Board (EDB) and the Ministry of Industries and Production (MoI&P) for extending such standards to imported used vehicles. It noted that Pakistani manufacturers have significantly upgraded their capabilities and are now producing components that meet the quality requirements of Japanese, Korean, Chinese, and increasingly European markets. However, Paapam expressed concern over what it termed as efforts by certain segments of the used vehicle import lobby to reverse these consumer protection measures. According to the Association, petitions have been filed in the Sindh High Court and Islamabad High Court seeking the removal of environmental and safety conditions imposed on imported used vehicles. The Association questioned the rationale behind such petitions, asking why any stakeholder would seek exemption from standards designed to protect consumers. It pointed out that similar regulatory requirements are enforced in many countries, including those without significant domestic automotive manufacturing bases. Countries such as Sri Lanka and several African nations have implemented comparable measures to ensure that imported vehicles meet basic safety and environmental benchmarks, the Association noted. Paapam also expressed surprise at proposals aimed at allowing commercial imports of used vehicles without meaningful age restrictions. It argued that such measures are inconsistent with Pakistan’s stated policy objectives of promoting local industry, enhancing industrial competitiveness, and achieving import substitution. Opening the door to unrestricted imports of aging and substandard vehicles, the Association warned, could jeopardize billions of rupees in industrial investment and threaten employment across the automotive value chain. It could also undermine Pakistan’s progress toward achieving industrial self-reliance. The Association urged policymakers, regulators, and the judiciary to carefully evaluate the long-term economic, industrial, environmental, and consumer safety implications of any decisions related to used vehicle import policies. Reaffirming its commitment to the development of Pakistan’s manufacturing sector, Paapam stated that it would continue to support policies that strengthen the domestic industrial base, protect consumer interests, promote technological advancement, and ensure sustainable economic growth. Copyright Business Recorder, 2026

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