Auto Parts Industry Warns 1.8M Jobs at Risk Over Used-Car Imports in Auto Policy 2026-31.
✧ GENERATE BRIEFING +
The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has issued an urgent appeal to Prime Minister Shehbaz Sharif and federal economic authorities, warning that 1.8 million livelihoods in the domestic auto-components value chain face severe risks if proposed import safeguards are removed from the upcoming Auto Policy 2026–31. PAAPAM Chairman Usman Aslam Malik urged the government to retain a proposed mandatory one-year non-transfer condition on vehicles imported under overseas facilitation schemes. The association contends that removing this restriction enables commercial dealers to systematically exploit schemes meant for overseas Pakistanis, creating an estimated Rs200 billion black-money ecosystem while undercutting domestic engineering and manufacturing investments.
The Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has petitioned Prime Minister Shehbaz Sharif, the Ministry of Finance, and the Ministry of Industries & Production to preserve essential regulatory protections against used-car imports during the finalization of the Auto & Auto Parts Policy 2026–31.
PAAPAM Chairman Usman Aslam Malik stated that the local auto-components manufacturing sector—which contributes nearly 3% to national GDP and forms a core pillar of Large-Scale Manufacturing (LSM)—supports 1.8 million direct and indirect jobs that are vulnerable to unregulated vehicle imports.
Market Displacement & Economic Scale
According to PAAPAM’s industry assessment, used-car imports reached approximately 50,000 units in the prior year, capturing nearly 30% of Pakistan’s domestic vehicle market.
- Component Displacement: PAAPAM estimates that every imported used vehicle directly displaces close to PKR 1.5 million worth of locally engineered and manufactured components.
- Informal Financial Flows: The trade surrounding used-car imports has established an informal ecosystem estimated at PKR 200 billion, diverting capital away from formal banking channels into undocumented hundi and hawala networks.
- Local Supply Base: Domestic parts vendors currently supply up to 65% of components by value to local vehicle assemblers. Unregulated imported complete units threaten to collapse these local supply chains and small-and-medium enterprise (SME) vendor networks.
Compounding Tariff Pressures & Policy Demands
PAAPAM highlighted that local parts manufacturers already contend with an estimated 34% structural cost disadvantage compared to regional competitors due to high energy tariffs, financing costs, logistics inefficiencies, and duties on raw materials.
The association warned against compounding these challenges through aggressive duty rollbacks under the National Tariff Policy (NTP) 2025–30—where import duty premiums on used cars are scheduled to drop from 40% down to zero by FY30. Coupled with recent customs duty reductions to 30% on small CBU vehicles (850cc or below) and depreciation allowances up to 36%, imported used cars have become increasingly lucrative for commercial trading networks at the expense of domestic industrial capacity.
PAAPAM urged the Prime Minister and cabinet officials to enforce the one-year mandatory non-transfer condition in the final Auto Policy 2026-31, ensuring overseas vehicle facilitation schemes serve genuine expatriates rather than commercial importers operating outside the formal tax net.
