Update (Feb 7, 2023): When is Volkswagen coming to Pakistan? Click on the link to find out!
Accounting for 4% of the country’s total gross domestic product (GDP), the local automobile manufacturing sector has a major role to play in the progress and stability of the national economy. This is one of the major reasons why the federal government is making all possible efforts to facilitate the industries manufacturing vehicles locally
The public and private stakeholders of the automobile industry are currently focusing on the production of low-cost hatchbacks and mid-size sedans, which are two of the most in-demand car types in Pakistan. There is also a huge demand for vans and minivans in the country, most of which are used as commercial and utility vehicles in the country.
Market Saturation and Local Auto Industry
With so many imported options available these days, Pakistan’s auto sector is now based on a saturated market. The increasing amount of imported vehicles is definitely not good for the country’s economy, but it is constantly pushing the local automobile assemblers and manufacturers to offer products that are affordable yet innovative.
New Entrants to Pakistan’s Auto Market
We are all aware of the fact that the automobile industry of Pakistan has been dominated by Japanese players, namely Suzuki, Toyota, and Honda. Due to their partnership with local companies, they are locally known as Pak Suzuki, Toyota Indus, and Honda Atlas Cars.
However, with new entrants tapping into Pakistan’s automotive market, things are expected to change within the near future. Keeping in view the incredible potential of the local auto industry, which is based on the rapidly-increasing consumer buying power, other world-famous brands are also planning to capitalise on the available opportunities.
South Korean brands like Kia Corporation and Hyundai Motor Company have recently introduced their vehicles in Pakistan. Another very famous Chinese-owned British automotive manufacturer, MG, has recently debuted in the Pakistani auto market with their subcompact crossover vehicles.
You may also have heard about Changan. It is a Chinese brand, which has only been selling minivans and many other types of utility vehicles in the local market ever since it was introduced — up until 2021 — when it finally announced its very first sedan by the name of ‘Alsvin’.
It was a groundbreaking move for a company like Changan, which put it in direct competition with many other leading automotive brands in the market.
The Affordability Factor
Changan’s Alsvin is a compact sedan, which directly competes with Toyota Yaris and Honda City. Comparing the features side by side, Alsvin has more to offer than the latter options. Changan is currently putting in efforts to establish its name in the market, which is why it is now more focused on affordability without compromising on the features it offers. It is one of the main reasons why Changan is a few lacs cheaper than many other compact sedans that are directly in its competition.
Entirely ‘Made in Pakistan’ Cars
Along with international players entering the automotive market to provide more options to car buyers in Pakistan, there are also a few local brands that are producing and selling their own vehicles in the country. Companies like United Auto Industries and Regal Automobiles are two noteworthy examples in this regard.
Both of these local manufacturers have launched 800cc small hatchback cars by the name of United Bravo and Prince Pearl, respectively. Costing around PKR 10 lakh, these cars are even more affordable than the cheapest variant of Suzuki Alto in Pakistan.
What is Pakistan Automotive Manufacturers Association (PAMA)?
As the name implies, the Pakistan Automotive Manufacturers Association (PAMA) is a leading advocacy group for the Pakistani auto industry formed by automobile manufacturing companies, entities, and firms that operate locally.
Licensed by the Ministry of Commerce, the group operates and functions according to the Trade Organisations Ordinance 2007. The primary objective of this association is the growth and development of the local auto industry. The group has also been formed to safeguard the interests of the local automobile manufacturers and assemblers. Following is the list of the members of PAMA:
- Pak Suzuki Motor Co. Ltd
- Indus Motor Co. Ltd.
- Sigma Motors Ltd.
- Hinopak Motors Ltd.
- Ghandhara Nissan Ltd.
- Master Motor Corporation Ltd.
- Millat Tractors Ltd.
- Atlas Honda Ltd.
- Plum Qingqi Motors Ltd.
- Fateh Motors Ltd.
- Ravi Automobile Pvt. Ltd.
- Sazgar Engineering Works Ltd.
- Orient Automotive Industries Pvt. Ltd.
- Eiffel Industries Ltd.
- Yamaha Motor Pakistan Pvt. Ltd.
- Al-Ghazi Tractors Ltd.
- United Auto Industries Pvt. Ltd.
- Hyundai Nishat Motor Pvt. Ltd.
Projected Growth of Pakistan’s Automobile Industry
Keeping in view the upcoming policies, incentives and various other initiatives by the federal government, the automobile sector of the country is about to witness exponential growth. The local assembling and manufacturing of vehicles, which now account for 250,000 units annually, will increase by many folds in the next few years. The authorities are currently working to achieve the target of 1 million locally produced vehicles per year.
According to Pakistan’s Ambassador to China Moinul Haque, the country is also currently working on its auto policy for the next five years, which will also include special incentives and waivers for hybrid and electric vehicles in the country to promote the concept of eco-friendly transportation means nationally.
EV Policy in Pakistan
With the approval and initiation of the framework related to an auto policy promoting the concept of electric vehicles (EVs), Pakistan joined the global EV revolution last year. So far, the federal government has introduced many taxation and monetary policies in favour of EV and hybrid vehicle owners by announcing a reduction in taxes and charges. A comprehensive auto policy for the next five years, which is currently in the works, is expected to bring further leverages for the hybrid and electric vehicle industry in the country.
In the federal budget 2021-22, the value-added tax on the import of electric vehicles (EVs) has also been waived for the current fiscal year. The authorities are currently working on a long-term plan, according to which they are aiming to convert at least 30% of the total vehicles in the country to electric vehicles within the next 15 to 20 years.
EV charging stations are being established all over the country. Prime Minister Imran Khan has recently introduced Pakistan’s first electric motorbike, which is manufactured and distributed by Jolta Electric. Considering all the aforementioned factors, the number of electric vehicles is expected to grow exponentially, which will further diversify the scope of the local auto sector. If you want to learn more about EV Policy in Pakistan, click on the highlighted text.
Latest Updates on Auto Industry in Pakistan
Volkswagen and Skoda to Enter Pakistani Auto Market
Volkswagen AG, in collaboration with Pakistan’s highly acclaimed Premier Motors Ltd, is setting up its manufacturing plant in Balochistan. Designed as a world-class facility, once operational, it would have the capacity to assemble 30,000 vehicles of Volkswagen and Skoda per month.
According to the details, the facility is expected to be completed by 2024. The groundbreaking development would give the local auto sector a much-needed economic boom, opening a new stream of revenue and creating employment opportunities.
Up to 1000cc Vehicles May Finally Get Cheaper
The customs duty levied on the machinery imported for assembling small vehicles with up to 1000cc engines has been cut down by up to 15%. The reduction in duties was announced by an amendment notification issued by the government’s revenue division.
The notification further clarified that the 15% reduction in duties is only valid for the latest models of vehicles certified by the Engineering Development Board (EDB). The concession will be valid for the next three years.
Pakistan Is Getting Its First Locally Assembled Hybrid SUV
In a recent development, Sazgar Engineering Works has joined hands with Haval, a Chinese auto manufacturer, to introduce the first Pakistan-made hybrid SUV. The official launch of the Haval H6 SUV is a massive breakthrough for the local automotive industry.
During the launch event of the SUV, some specifics and details were shared by company officials. The newly-introduced Hybrid-Electric Vehicle (HEV) is a C-segment crossover SUV with a 1.5-litre turbocharged petrol engine. It produces a torque of 530 Newton-metres with 240 horsepower.
According to the official claims, Haval H6 is capable of going from 0 to 100 kilometres in around 7.5 seconds. The car will be directly competing with Toyota RAV-4 Hybrid, MG HS PHEV, and Honda CR-V, among other vehicles falling in the same category.
Adaptive Cruise Control, Smart Infotainment Features, Traction Control System, and 360º cameras with Collision Warning System are some advanced features of this crossover SUV. The price of the Haval H6 HEV top-of-the-line variant is around PKR 9.75 million.
Update Aug 05, 2022:
Pakistan Auto Show Expo 2022
Showcasing EVs and tons of other new vehicle options, Pakistan Auto Show (PAS) Expo 2022 was recently held in Expo Centre Lahore. The event was organised by the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) in collaboration with the Federal Ministry of Industries and Production.
Many leading local and international automotive manufacturers took part in this event. Pak Suzuki Motors introduced three new cars: Every (Wagon), XL-7 (Midsize SUV) and Wagon R Stingray (Hatchback) at Pakistan Auto Show Expo this year.
Besides big industry players, many small companies also showcased their locally manufactured products. Given the rising trend of EVs in Pakistan, the exhibition featured three-wheelers EVs with advanced specs and the country’s first-ever all-electric loader motorcycle and E-bike designed for women. PAS Expo 2022 turned out to be one of the biggest crowd-puller events of the year for auto enthusiasts and industry stakeholders.
Big-time Increase Recorded in Car Sales in FY22
The fiscal year 2021-22 turned out to be a game changer for the auto industry in Pakistan. With the federal government discouraging imports and encouraging local manufacturing, many international automakers entered the Pakistani market and set up their manufacturing plants here.
There are more options available to buyers in the local car market than ever before. The sales of different types of vehicles, such as hatchbacks, sedans, CUVs, SUVs, pickup trucks, buses and heavy-duty trucks, all went up in FY22. These details were released by the Pakistan Automotive Manufacturers Association (PAMA).
Pak Suzuki, which is Pakistan’s most well-known auto industry giant and Hyundai Nishat set a new in monthly car sales by selling 16,009 units and 1,871 units, respectively, last month. On the other hand, the sales of rickshaws and motorcycles were slightly lower than in the previous fiscal year.
Locally Manufactured SUV
The very famous Chinese automotive brand Changan Motors has partnered with Master Motors Ltd. to set up its manufacturing plant in Pakistan. In a recent development, Master Changan Motors have successfully exported the very first locally manufactured version of the Changan Oshan X7, an SUV-class vehicle.
Besides China, Pakistan is the only country that is currently manufacturing the latest model of the Changan Oshan X7. In line with the new auto policy, all Original Equipment Manufacturers or OEMs would require to take the necessary steps to initiate vehicle exports.
This would significantly help strengthen the local manufacturing industry and boost the scope of the country’s export industry. These details were shared in the recent press release by Master Changan Motors.
Now that we have given you all the latest updates and key information about the automobile industry in Pakistan, it’s time for us to wrap up. If you have any questions or feedback related to the topic, you can drop us an email at blog@zameen.com.
On a side note, if you want to learn more about car financing in Pakistan, then you may like reading our detailed blog on the current auto loan rates in the country. Also, if you are living abroad, you can check out our piece on the Roshan Apni Car Scheme, which reduces the overall cost of car financing by up to 20% for non-resident Pakistanis.
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