On the surface, the commerce ministry’s choice to form a “dedicated” committee to tackle the pressing issues confronting Pakistan’s faltering automobile sector is a positive move. The body, which will be formed following the commerce minister’s meeting with industry representatives, will be made up of representatives from the FBR and the ministries of industries and commerce, according to an official release. The commerce minister has already “tasked” the committee with developing a plan that safeguards domestic automakers from a possible flood of imported used cars, should the government permit their commercial import, promote exports, and harmonize the sector with national industrial goals, though it is still unclear if the government has informed the committee members.
The industry accurately thinks that the new body is unlikely to assist the local assemblers in resolving their problems, given the little autonomy possessed by the ministries under Pakistan’s highly centralized governance system. Because of the government’s own policy inconsistencies and contradictions, the commerce minister’s proposal to include cars, along with motorbikes and tractors, in the nation’s list of auto exports is, at best, ambitious and, at worst, unachievable. Despite its rhetoric, Budget 2026 has already increased the cost of domestically built cars and significantly reduced the cost of imported luxury vehicles. Similar to this, the proposed removal of tariff protections for regional automakers is a positive step, but it runs the risk of creating an unfair playing field for local assemblers due to the extremely high cost of doing business, which is mostly caused by energy prices and government levies. The market will be overrun with imported cars, both new and old, unless taxes on domestically produced cars are drastically reduced and operating costs are reduced. Whether the protections are rolled out or abolished all at once won’t matter.
The history of the automobile industry over the past forty years highlights the reasons Pakistan has not been able to industrialize, promote market competition, foster innovation, and give consumers more options, including policy uncertainty, high production costs, tariffs, and policy protections to influential lobbyists. It is understandable why few believe that the establishment of yet another committee will be helpful in addressing the structural flaws that still plague the car industry. The car industry will continue to move slowly in the absence of believable long-term policies that lower crippling production costs and put competition ahead of protectionism.
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