Islamabad, March 2, 2026 – The Competition Commission of Pakistan (CCP) has called for comprehensive structural reforms in the country’s automobile sector, warning that high entry barriers, regulatory distortions, and inconsistent policies continue to stifle competition and limit consumer benefits despite decades of protective support.
In its latest report, “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” the CCP highlighted challenges in the sector and proposed wide-ranging reforms. Recommendations include a long-term policy roadmap, improved vehicle financing, removal of regulatory distortions, and measures to foster competition, efficiency, and innovation.
Automobile Industry: A Key Economic Contributor
Pakistan’s automobile industry contributes around 2.8% to GDP and employs over 215,000 people directly, playing a crucial role in industrial growth, technology transfer, and domestic value addition. The sector, particularly in passenger cars and emerging electric vehicles (EVs), remains central to Large-Scale Manufacturing.
However, the CCP study reveals that the passenger car market is concentrated in a few engine categories due to high capital requirements, regulatory complexities, and entry barriers. While past protectionist policies helped establish domestic manufacturing, prolonged tariffs and localisation measures have not consistently led to competitive pricing, quality improvements, or export-led growth.
Regulatory Challenges and Policy Gaps
The report identifies fragmentation in the regulatory framework, overlapping institutional mandates, and inconsistent policies that hinder investment and industry development. Previous auto policies aimed to boost localisation, attract new entrants, and promote exports, but structural rigidities, policy reversals, and weak implementation limited their effectiveness.
Recommendations for Reform
To boost affordability and stimulate demand, the CCP recommends expanding access to vehicle financing through revised credit limits and targeted, subsidised schemes for first-time buyers.
The report also emphasizes a coordinated transition to electric vehicles, noting that limited charging infrastructure, domestic production capacity, and dependence on fossil fuel-based electricity are major obstacles. Sustained policy consistency and infrastructure investment are essential to attract long-term private investment in Pakistan’s EV ecosystem.
Additionally, the CCP suggests introducing a vehicle scrappage and phase-out policy to remove obsolete, high-emission vehicles, improving environmental standards and road safety, while stimulating demand.
Strengthening domestic vendor development through transparent localisation policies and rationalising distortive protections will also integrate Pakistan’s auto sector into global supply chains and create a level playing field for investors.
Benefits of a Competitive Auto Industry
The CCP concludes that a competitive automobile sector can deliver significant advantages, including lower prices, better quality, increased consumer choice, and higher export potential. The commission hopes the study will guide policymakers, regulators, and industry stakeholders in developing a modern, globally integrated, and competitive automobile industry in Pakistan.