The Competition Commission of Pakistan (CCP) has urged the government to rationalise long-standing protections and remove regulatory distortions in the automobile sector, warning that high entry barriers and policy inconsistencies continue to limit competition and consumer benefits.
In a report titled “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” the commission outlined structural challenges in the sector and recommended a coordinated, long-term reform agenda. The study calls for a stable policy roadmap, improved vehicle financing mechanisms and gradual removal of distortive protections to create a more competitive market environment.
According to the CCP, the automobile industry contributes about 2.8 percent to Pakistan’s GDP and provides direct employment to more than 215,000 people. As a major component of Large-Scale Manufacturing, the sector plays a significant role in industrial output, technology transfer and domestic value addition, particularly in passenger vehicles and emerging electric vehicle segments.
Market concentration and policy gaps
The report finds that the passenger car market remains concentrated in several engine categories due to capital-intensive requirements, complex regulations and high entry barriers. While earlier protectionist policies helped establish local manufacturing, prolonged tariff protections and localisation measures have not consistently led to competitive pricing or export growth.
The CCP also highlighted fragmentation in the regulatory framework, noting overlapping mandates and policy reversals that have affected investor confidence and industry development. It said that past auto policies aimed at localisation, new entrants and exports were constrained by structural rigidities and weak implementation.
Financing and EV transition
To improve affordability and stimulate demand, the commission recommended expanding access to auto financing. It suggested reviewing restrictive financing limits and introducing targeted, subsidised schemes for first-time buyers in coordination with financial regulators.
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The report also stresses the need for a predictable transition to electric vehicles. It identified limited charging infrastructure, insufficient domestic production capacity and reliance on fossil fuel-based electricity as key challenges. The CCP said sustained policy consistency and infrastructure investment would be essential to attract long-term private investment in the EV ecosystem.
Scrappage policy and vendor development
The study notes the absence of a comprehensive vehicle scrappage policy and recommends introducing a structured disposal programme to address environmental concerns, improve road safety and stimulate demand by phasing out obsolete and high-emission vehicles.
The commission further called for strengthening domestic vendor development through transparent and non-discriminatory localisation policies. It said better integration into global supply chains could enhance competitiveness and industrial linkages.
The CCP concluded that a more competitive automobile industry could lower prices, improve quality and expand consumer choice while supporting export potential. It expressed hope that the study would guide policymakers and industry stakeholders toward a modern and globally integrated auto sector.
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