Pakistan’s auto industry growth hampered by excessive taxation

KARACHI: High car taxes imposed by the government, ranging from 37 per cent to 43 per cent, are seriously impeding the growth of Pakistan’s auto industry, according to Abdul Rehman Aizaz, Chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM).  

Aizaz made these remarks during the opening of the Pakistan Auto Show 2023 at the Karachi Expo Centre. 

Aizaz said that Pakistan is home to around 300 auto part manufacturers who supply numerous components to domestic car assemblers, creating a significant number of jobs and making a substantial contribution to the country’s industrial production.

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Nevertheless, the auto industry’s localisation levels remain comparatively low due to limited production, non-tariff barriers, and international companies’ reluctance to share technology, particularly when compared to the motorcycle and tractor segments, where localisation levels are as high as 90–95 per cent. 

Aizaz encouraged car assemblers to collaborate with global auto part manufacturers and local producers to establish joint ventures, thereby unlocking the potential of the Pakistani market.  

He also highlighted that while passenger cars and SUVs receive significant attention, the auto industry encompasses highly competitive motorcycle and tractor segments.  

Pakistani manufacturers have been successful in exporting to international markets due to their high quality and cost competitiveness, driven by localization. 

Zain Shariq, Convener of the Pakistan Auto Show 2023, revealed that more than 150 companies, including Chinese and Iranian manufacturers, are participating in the show with the theme ‘Synergizing Pakistan.’  

The event’s goal is to showcase the manufacturing capabilities of the local auto industry, which also serves the defence, aviation, and healthcare sectors. 

Furthermore, during the event on October 28, a symposium titled ‘Synergizing Pakistan’ will bring together industry experts and academia to discuss strategies for enhancing competitiveness in the manufacturing sector and accessing both local and international markets.