Pakistan’s automotive industry is once again in the spotlight as the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has formally urged Prime Minister Shehbaz Sharif to address the prolonged delay in announcing the country’s new auto policy.

In a letter sent to the Prime Minister’s Office on August 3, 2026, PAAPAM warned that the uncertainty surrounding the policy is affecting investment decisions, slowing industry growth, and weakening confidence among automotive manufacturers.

The association has also requested a meeting with the Prime Minister to discuss its recommendations for creating a more competitive, localized, and sustainable automotive sector in Pakistan.

Why Is Pakistan’s New Auto Policy Being Delayed?

According to PAAPAM, the continued delay in finalizing Pakistan’s new auto policy has created significant uncertainty across the automotive industry.

Without a clear policy framework, local auto parts manufacturers are finding it difficult to:

  • Make long-term investment decisions
  • Expand production capacity
  • Upgrade manufacturing technology
  • Plan future business strategies

The association believes that policy uncertainty discourages investors and could divert investment toward countries with more stable and predictable automotive policies.

How the Previous Auto Policies Affected Pakistan’s Auto Industry

PAAPAM argued that earlier automotive policies largely supported the import of vehicle components for assembly in Pakistan instead of encouraging local manufacturing.

While these policies helped establish more vehicle assembly plants, they did not provide enough incentives for developing Pakistan’s domestic auto parts industry.

As a result, the country increased vehicle assembly operations but failed to significantly strengthen local production of automotive components.

PAAPAM Calls for Greater Localization of Auto Parts

One of PAAPAM’s key recommendations is to make parts localization the central focus of Pakistan’s upcoming auto policy.

The association wants the government to introduce measures that enable local manufacturers to:

Increase Domestic Auto Parts Production

PAAPAM believes stronger support for local vendors will help expand Pakistan’s manufacturing base and improve industrial competitiveness.

Reduce Reliance on Imported CKD Kits

The association also emphasized reducing dependence on imported Completely Knocked Down (CKD) kits by increasing local production of automotive components.

Greater localization could strengthen Pakistan’s supply chain while supporting domestic manufacturing capabilities.

Automotive Vendors Play a Major Role in Employment

PAAPAM stated that automotive vendors account for approximately 80% of employment across Pakistan’s broader automotive industry.

Despite their significant contribution to jobs and industrial activity, the association says vendors have received limited meaningful support under previous automotive policies.

It believes the new policy should prioritize the needs of local manufacturers to encourage sustainable industrial growth and employment.

PAAPAM Requests Meeting With Prime Minister Shehbaz Sharif

In its letter, PAAPAM requested a meeting with Prime Minister Shehbaz Sharif to present recommendations aimed at building a stronger and more competitive automotive sector.

The association also asked to hold discussions with the government’s economic team, led by economist Stefan Dercon, regarding the National Tariff Policy and its impact on Pakistan’s local vehicle and auto parts manufacturing industry.

PAAPAM stressed that the concerns of the vendor industry should be considered before any tariff-related decisions affecting domestic manufacturing are finalized.

What PAAPAM Wants From the New Auto Policy

According to the association, Pakistan’s upcoming auto policy should focus on:

  • Encouraging greater localization of auto parts
  • Supporting investment in local manufacturing
  • Expanding production capacity
  • Reducing dependence on imported CKD kits
  • Promoting industrialization
  • Supporting import substitution
  • Creating sustainable employment opportunities
  • Strengthening Pakistan’s automotive supply chain

PAAPAM has reiterated its willingness to work with the government to develop policies that support long-term growth for Pakistan’s automotive industry.

Conclusion

PAAPAM’s appeal highlights the growing concern within Pakistan’s automotive sector over the delayed auto policy. The association believes that a clear and stable policy framework is essential to restore investor confidence, encourage local manufacturing, and reduce reliance on imported vehicle components.

As discussions with the government move forward, industry stakeholders will be closely watching whether the new policy delivers stronger support for localization, industrial development, and sustainable growth across Pakistan’s automotive sector.

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