The Competition Commission of Pakistan (CCP) has issued a comprehensive report titled “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” identifying structural and regulatory weaknesses in the sector and proposing broad reforms. These include a long-term policy roadmap, easier vehicle financing, and the elimination of protectionist rules to promote competition and efficiency.
The automobile industry remains a key pillar of Pakistan’s economy, contributing approximately 2.8 percent to GDP and providing direct employment to more than 215,000 people. As a major component of Large-Scale Manufacturing, the sector supports industrial expansion, technology transfer, and domestic value addition, particularly in the passenger car segment, including emerging electric vehicles (EVs).
Too Congested, Too Expensive
According to the CCP study, despite successive policy measures, the passenger car market continues to exhibit concentration across several engine categories due to high entry barriers, capital-intensive requirements, and regulatory complexities. Although earlier protectionist policies facilitated the development of domestic manufacturing, extended tariff protections and localization requirements have not consistently resulted in greater competition or export-led growth.
The report also points to fragmentation within the regulatory framework, citing overlapping institutional mandates and policy inconsistencies that have hindered investment and sectoral development. While previous auto policies aimed to enhance localization, attract new entrants, and boost exports, structural rigidities, policy reversals, and weak implementation limited their overall impact.
To improve affordability and stimulate demand, the CCP has recommended expanding access to auto financing by reassessing restrictive lending caps and introducing targeted, subsidized schemes for first-time buyers in coordination with financial regulators.
EVs Encouraged
The study underscores the importance of a predictable and coordinated transition to electric vehicles, noting that inadequate charging infrastructure, limited domestic production capacity, and dependence on fossil fuel-based electricity remain major obstacles. It emphasizes that consistent policies and sustained infrastructure investment will be essential to attract long-term private investment in the EV ecosystem.
The report further highlights the absence of a comprehensive vehicle scrappage and phase-out policy and recommends introducing a structured disposal program to address environmental concerns, enhance road safety, and stimulate demand by gradually removing obsolete and high-emission vehicles from circulation.
Ending Distortionary Protections
In addition, the CCP has called for strengthening domestic vendor development through transparent and non-discriminatory localization policies to improve industrial linkages and integrate Pakistan’s auto sector into global supply chains. To ensure a level playing field, the Commission has proposed the gradual rationalization of distortionary protections, the removal of regulatory asymmetries, and the adoption of stable, pro-competition policies to encourage investment, innovation, and efficiency.
The CCP noted that a more competitive automobile industry could yield significant benefits for consumers and the broader economy, including lower prices, improved quality, greater product variety, and stronger export potential.
The Commission expressed hope that the study will guide policymakers, regulators, and industry stakeholders in building a modern, competitive, and globally integrated automobile sector. The report has been uploaded to the CCP’s website for public comments and feedback.
