Lead

Pakistan's next automobile policy — which was supposed to be announced before the expiry of the previous one on June 30 — will test the ability of policymakers to reconcile competing commercial interests while keeping the country's broader economic, industrial and environmental objectives in view, Dawn reports. Dawn describes the new policy as "the most consequential industrial policy document Pakistan has produced in years."

The paper writes that every major stakeholder is lobbying aggressively to protect its commercial interests. Legacy assemblers want protection for their existing internal combustion engine (ICE) portfolios. Hybrid and plug-in hybrid manufacturers are seeking an extension of the tax incentives that expired with the 2021-26 policy. Electric vehicle (EV) manufacturers want a policy that accelerates the adoption of electric mobility, in line with government commitments to raise the EV share of new sales to 30 per cent by 2030, 50 per cent by 2040 and 100 per cent by 2050, with a net-zero transport-fleet ambition by 2060.

Auto parts manufacturers are demanding stronger localisation requirements from new Chinese hybrid and EV brands, and an immediate reversal of the tariff liberalisation introduced in the current year's budget. Their argument, which Dawn says merits serious consideration, is that reduced protection for the local auto industry — assemblers and parts manufacturers alike — significantly slashes the incentive for localisation, encourages the import of completely built units, and drains foreign exchange.

The government must somehow accommodate these conflicting demands without losing sight of the larger objective, Dawn adds: building a competitive automobile industry capable of producing 500,000 vehicles annually. That target has appeared in successive auto policies but has never been achieved; Pakistan has come close only twice, producing slightly above 300,000 vehicles.

Coverage comparison

Dawn's reporting approaches the question from two angles. One piece examines the competing interests bearing down on the new policy and argues that the objective should be neither protection for its own sake nor liberalisation for ideological reasons. The other takes a more critical view of the industry's record, arguing that its main goals — saving foreign exchange through localisation and creating large-scale employment — were flawed from the start.

The critical piece credits the auto industry with having built assemblers and component suppliers, developed engineering skills, invested in vendors and created skilled jobs, despite expensive energy, costly finance, policy uncertainty, cumbersome regulation and weak logistics. But it identifies the industry's focus on localisation as a central misconception. Because Pakistan never built the deep upstream foundations — in automotive-grade steel, petrochemicals, specialised alloys, precision engineering and electronics — that modern vehicle production requires, localisation became a numerical target rather than a measure of real competitiveness, the paper argues.

Both pieces converge on the standard against which the industry should be judged. Except in strategically important sectors, Dawn writes, any industry seeking protection must offer consumers better value and move towards international competitiveness. "Protection should be a runway, not a refuge."

Key claims

  • The new automobile policy will test policymakers' ability to reconcile competing commercial interests while keeping economic, industrial and environmental objectives in view, Dawn reports.
  • Legacy assemblers want protection for their existing internal combustion engine portfolios.
  • Hybrid and plug-in hybrid manufacturers seek an extension of tax incentives that expired with the 2021-26 policy.
  • EV manufacturers want a policy that accelerates the adoption of electric mobility, consistent with government targets of 30 per cent of new sales by 2030, 50 per cent by 2040 and 100 per cent by 2050.
  • Auto parts manufacturers demand stronger localisation requirements from new Chinese hybrid and EV brands and an immediate reversal of the tariff liberalisation introduced in this year's budget.
  • The government aims to build a competitive automobile industry capable of producing 500,000 vehicles annually, a target that has never been achieved, Dawn notes.
  • The industry has built assemblers and component suppliers despite challenges, but the goals of saving foreign exchange and creating large-scale employment were flawed, Dawn's analysis holds.
  • Localisation numbers are misleading, the paper argues, because they count components assembled domestically rather than domestic value added.
  • The industry relies heavily on automation, and the global industry is moving from internal combustion engines to hybrids and EVs, Dawn adds.

Perspectives

Legacy assemblers: Want protection for their existing internal combustion engine portfolios.

Hybrid and plug-in hybrid manufacturers: Seek an extension of the tax incentives that expired with the 2021-26 policy.

Electric vehicle manufacturers: Want a policy that accelerates the adoption of electric mobility in line with government commitments to raise the EV share of new sales to 30 per cent by 2030, 50 per cent by 2040 and 100 per cent by 2050.

Auto parts manufacturers: Demand stronger localisation requirements from new Chinese hybrid and EV brands and an immediate reversal of the tariff liberalisation introduced in this year's budget.

Government: Aims to build a competitive automobile industry capable of producing 500,000 vehicles annually.