The latest figures released by the Pakistan Auto Manufacturers Association (PAMA) have sparked renewed debate over the country’s growing economic inequality, as car sales data reveals a stark contrast in consumer behavior across income groups.
Sales of luxury vehicles in Pakistan — those with engine capacities of 1300 CC and above — soared by 47% in the first 10 months (July–April) of fiscal year 2024–25, reaching 40,369 units compared to 27,429 units sold during the same period last year.
This surge in high-end vehicle sales underscores a significant shift of purchasing power toward Pakistan’s affluent class, raising questions about the nation’s uneven economic recovery and persistent income disparity. In contrast to the booming luxury car segment, sales of mid-range cars (1000 CC) plummeted by 36%, dropping from 6,093 to just 3,919 units. The lower-end car segment — vehicles with engine capacities below 1000 CC — saw a 32% increase in sales, from 29,440 to 38,981 units, reflecting an opposite trend among cost-conscious consumers.
The diverging sales figures paint a clear picture of class polarization in Pakistan’s automotive market. While the elite class continues to spend on luxury items, including imported and locally assembled high-end cars, middle-income groups are being squeezed out of the market, shifting instead to smaller, more affordable vehicles — or giving up car ownership altogether.
Analysts point to this disparity as evidence of a widening class divide in Pakistan, where a segment of the population has remained largely insulated from economic pressures, while the majority faces shrinking purchasing power and rising inflation.
The situation has also caught the attention of tax authorities. The Federal Board of Revenue (FBR) is being urged to enhance scrutiny of luxury car sales in Pakistan, as the trend may also reflect underreported wealth and potential tax evasion. Car manufacturers and dealers are legally required to provide detailed buyer information — including Computerized National Identity Card (CNIC) or National Tax Number (NTN) — and to collect withholding tax at designated rates.
According to Section 165 of the Income Tax Ordinance, 2001, withholding agents must submit quarterly statements detailing the identity of buyers, total payments made, tax collected, and any other relevant details.
As luxury car sales boom while middle-class car ownership declines, the automotive sector now stands as a visible symbol of Pakistan’s deepening class divide — one that policymakers can no longer afford to ignore.