Auto sales rise, ownership drops

Stakeholders in Pakistan's automotive sector have renewed calls for a ten-year policy roadmap, warning that investors will continue to hesitate unless the government commits to long-term policy continuity in a capital-intensive industry that requires years to recoup investment. The demand comes as the sector closes fiscal year 2025-26 on a strong note. According to data released by the Pakistan Automotive Manufacturers Association (PAMA), passenger car sales for FY2025-26 reached roughly 156,002 units, a 39% increase over the previous year.

Industry analysts attribute the rebound to improving macroeconomic conditions, including a fall in the central bank's policy rate from 22% in mid-2024 to 11-12% in 2025-26, which brought down the cost of auto financing and revived consumer demand. Yet stakeholders caution that the recovery masks a deeper structural problem: chronically low vehicle ownership. Car ownership in Pakistan has fallen further, from 18 to just 11 owners per 1,000 residents.

Stakeholders linked the decline to affordability constraints, weak income growth, volatile policies and a distorted tax structure that continue to keep Pakistan among the lowest car-ownership markets in the region. They added that Pakistan's per capita income of around $1,700 remains well below the roughly $3,000 threshold typically associated with a meaningful jump in car demand, contrasting this with India, where rising incomes now support annual sales exceeding four million vehicles. Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) Chairman Usman Aslam Malik, on Wednesday, also expressed deep concern over the prolonged delay in finalising Pakistan's new Auto Industry Development Policy, warning that continued uncertainty is adversely affecting the country's automotive manufacturing ecosystem.

Malik said the delay has created significant uncertainty among member industries, many of which are already facing considerable financial and operational challenges. "The new Auto Industry Development Policy must prioritise the development and strengthening of Pakistan's auto parts and components manufacturing base, which is the backbone of the country's automotive value chain," said Malik. He noted that the last two auto policies focused primarily on attracting new vehicle assemblers.

While this approach expanded the number of automotive brands in the mar…