KEY POINTS
- Pakistan’s competition regulator flags concentration in the passenger car market
- Recommends long-term auto policy and expanded vehicle financing
- Calls for a coordinated electric vehicle transition and scrappage scheme
- Seeks removal of regulatory distortions to enhance competition
ISLAMABAD: The Competition Commission of Pakistan on Monday released a comprehensive study urging the government to adopt a long-term automobile policy, reform vehicle financing rules, and remove regulatory distortions to foster competition and efficiency in the country’s car market.
The report, titled “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” examines structural and regulatory challenges in the sector and proposes wide-ranging reforms aimed at improving affordability, attracting investment and integrating Pakistan into global automotive supply chains.
According to the Commission, the automobile industry contributes about 2.8 per cent to Pakistan’s gross domestic product and directly employs more than 215,000 people.
As a major component of large-scale manufacturing, it plays a significant role in industrial growth, technology transfer and domestic value addition, particularly in passenger cars, including emerging electric vehicles.
The study finds that despite successive policy interventions, the passenger car market remains concentrated across several engine categories due to high entry barriers, capital-intensive requirements and regulatory complexities.
It notes that earlier protectionist policies helped establish domestic assembly and manufacturing capacity.
However, prolonged tariff protections and localisation requirements have not consistently translated into competitive outcomes or export-led growth.
The regulator also points to fragmentation in the policy and regulatory framework, citing overlapping institutional mandates and policy inconsistencies that have affected investment decisions and long-term industry development.
Previous auto policies sought to increase local production, attract new entrants and promote exports, but structural rigidities and policy reversals limited their effectiveness.
To address affordability constraints, the Commission recommends expanding access to vehicle financing by reviewing restrictive lending limits and introducing targeted, subsidised schemes for first-time buyers in coordination with financial regulators.
It argues that broader access to financing could stimulate demand and improve market competition.
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On electric vehicles, the report calls for a predictable and coordinated transition strategy. It highlights inadequate charging infrastructure, limited domestic production capacity and reliance on electricity generated by fossil fuels as key barriers to growth in the segment.
Sustained policy consistency and infrastructure investment, it says, will be critical to attract long-term private investment in the electric vehicle ecosystem.
The study further notes the absence of a comprehensive vehicle scrappage and phase-out policy.
The study authors propose a structured disposal scheme to address environmental concerns, improve road safety and stimulate demand through the gradual removal of obsolete and high-emission vehicles.
To create a level playing field, the Commission recommends rationalising distortive protections, removing regulatory asymmetries and adopting stable, pro-competition policies to encourage investment, innovation and efficiency.
It expresses hope that the study will guide policymakers and industry stakeholders in developing a modern, competitive and globally integrated automobile sector.
The full report has been made available on the Commission’s website for public comments and suggestions.
