Pakistan auto industry urges PM over tariff cuts

Pakistan’s auto sector has appealed to Prime Minister Shehbaz Sharif for urgent talks as concerns mount over proposed cuts in completely built-up, or CBU, import tariffs and delays in the new auto policy. In a letter highlighted by Dawn Business, the Pakistan Automotive Manufacturers Association and its vendors said the combination of policy uncertainty and tariff reform could deepen pressure on the local industry.

The industry group says the domestic auto market is already under strain. According to the letter, the sector is operating at less than 50 per cent of its installed annual capacity of 500,000 units. PAMA argues that repeated policy changes and measures that have suppressed demand have left assemblers with limited room to recover.

The association has asked the prime minister to call an immediate meeting with stakeholders. Its main concern is the proposed reduction in CBU tariffs under the National Tariff Policy 2026-31. PAMA Director General Abdul Waheed Khan said in the letter that the plan could place Pakistan’s automotive manufacturing base at serious risk of deindustrialisation.

The group also pointed to the scale of imported vehicle sales. It said around 45,000 CBU vehicles are imported each year, taking nearly 18 per cent of the domestic market away from local manufacturers. PAMA warned that a lower tariff rate of 15 per cent would be based on assumptions about exports and competitiveness that do not reflect current conditions.

In the letter, the association said the policy would make imported vehicles more competitive than locally assembled ones and could therefore accelerate the shift away from domestic production. It argued that this would run counter to international practice, where major vehicle-producing countries continue to support their industries through tariff protection.

The letter cited Vietnam and Thailand as examples, saying Vietnam maintains tariffs of up to 70 per cent on imported vehicles and Thailand applies tariffs of up to 80 per cent. PAMA used those comparisons to argue that Pakistan should not expose its manufacturers to sharp tariff reductions while the sector remains under capacity and policy direction remains unsettled.

The auto sector’s appeal comes at a sensitive time for manufacturing and trade policy. With the new auto policy still pending, the industry says it needs clarity before major tariff changes are implemented. Its warning, as reported by Dawn Business, is that without intervention, the current approach could weaken local manufacturing further rather than support long-term industrial growth.

For now, the industry is pressing Islamabad for a direct conversation. PAMA wants the government to reconsider the tariff proposal and move quickly on policy decisions that it says are critical to the future of Pakistan’s auto manufacturing base.

FAQ

Why is Pakistan’s auto sector asking for PM intervention?

The industry says proposed CBU tariff cuts and delays in the new auto policy could hurt local manufacturing and accelerate deindustrialisation.

What is CBU in the auto context?

CBU stands for completely built-up vehicles, meaning fully assembled cars imported into Pakistan.

What capacity level is the local auto industry operating at?

PAMA says the sector is operating at less than 50 per cent of its installed annual capacity of 500,000 units.