Used Car Imports Cost Pakistan Auto Industry Rs. 60 Billion, 40,000 Jobs in FY25: CCP

Imported used vehicles inflicted an estimated Rs. 60 billion loss on Pakistan’s domestic auto industry in FY25 and displaced more than 40,000 potential jobs, according to the Competition Commission of Pakistan.

The findings form part of the Commission’s latest study on the automobile sector, which raises concerns about the long term sustainability of local manufacturing in the face of rising imports.

During FY2025, more than 38,000 used cars entered the country, making up nearly one-fourth of total passenger vehicle sales. The CCP observed that schemes originally introduced for overseas Pakistanis under Gift, Transfer of Residence, and Baggage categories are increasingly being used for commercial purposes. This shift, the Commission noted, has weakened local assembly operations and disrupted efforts to increase localization.

The report states that each imported used vehicle effectively replaces demand for a locally assembled car, along with its domestically manufactured components. It warns that sustained dependence on such imports risks eroding Pakistan’s industrial base.

Beyond industrial impact, the CCP highlighted broader macroeconomic risks. A sustained drop in local production would expand the structural import bill, place additional strain on foreign exchange reserves, and heighten overall economic vulnerability.

The study underlined that Pakistan’s auto parts industry currently shields the economy by saving roughly USD 1.25 billion each year through import substitution, a cushion that could weaken if used vehicle inflows remain unchecked.

It also flagged the revenue risk, as the broader automobile value chain contributes nearly Rs. 302 billion annually in taxes spanning sales tax, customs duties, and income tax, a base that would gradually erode if imports replace domestic production.

The Commission attributed the present distortion to earlier policy liberalization, recalling that while auto manufacturing expanded rapidly between 1999 and 2007, relaxed used car imports reversed those gains, resulting in factory shutdowns, idle capacity, and the departure of global players such as Hyundai Motor Company, Nissan Motor Corporation, Chevrolet, and Fiat, with five plants closing between 2005 and 2010 and almost 40 percent of installed capacity left unused.

To rebalance the sector, the CCP has proposed stricter oversight of personal import schemes to prevent commercial misuse, stronger enforcement, a regulated import channel via authorized dealers, and a consistent policy allowing only environmentally compliant vehicles.