Karachi, August 12, 2025 – The automotive sector faced a sharp slowdown in July 2025 as the government’s new fiscal measures for FY 2025-26 took a heavy toll on consumer demand.
Official data from the Pakistan Automotive Manufacturers Association (PAMA) revealed that car sales dropped by a staggering 60% on a month-on-month (MoM) basis, falling to just 7,111 passenger vehicles in July compared to 17,629 units in June.
Market analysts at Arif Habib Limited linked the steep MoM drop to the “high base effect” from June 2025, when buyers rushed to make purchases ahead of tax hikes. Key policy changes included the introduction of the EV adoption levy and a rise in sales tax on 850cc vehicles from 12.5% to 18%, which discouraged fresh buying.
Including jeeps, total car sales fell to 11,034 units in July — a 49% MoM decline. However, on a year-on-year (YoY) basis, this figure still represented a 28% increase compared to July 2024, thanks to last year’s lower production levels. Segment-wise, the 1,300cc and above category posted a 37% MoM drop to 4,290 units. The 1,000cc category suffered a 61% MoM decline to 264 units, while vehicles below 1,000cc recorded a 75% MoM fall, down to 2,557 units.
Indus Motor Company Ltd (INDU) saw a 9% MoM decline in volumetric sales to 3,337 units in July, mainly due to a 17% drop in Corolla, Yaris, and Corolla Cross demand. Fortuner and Hilux models, however, posted a 17% MoM sales increase. Pak Suzuki Motor Company Ltd (PSMC) experienced the most significant hit, with a 72% MoM slump to 3,450 units as all models — including Swift, Cultus, Wagon R, Alto, Ravi, and Every — recorded double-digit declines.
Honda Atlas Cars (HCAR) reported a 17% MoM fall, driven by a sharp 33% drop in Civic/City volumes, though BR-V/HR-V sales surged by 3.6 times MoM. Sazgar Engineering (SAZEW) faced a 20% MoM decline, selling 1,079 units due to weaker demand for Haval models.
The downturn extended beyond passenger vehicles. Two-wheeler sales dropped 11% MoM to 104,276 units, while three-wheeler sales plunged 47% MoM to 1,414 units. Tractor demand also weakened, with AGTL and MTL seeing declines of 41% and 61% MoM, respectively.
Industry experts warn that if the government does not review its tax measures, the slump in car sales could deepen further in the coming months, potentially impacting the overall auto manufacturing supply chain and employment in the sector.