Car sales jump 43pc in first quarter despite auto policy uncertainty

Passenger car sales in Pakistan rose 43 percent year-on-year in the first quarter of the 2026-27 fiscal year, but uncertainty over the auto policy and sales tax is weighing on investment decisions by manufacturers and buyers, according to the Pakistan Automotive Manufacturers Association (PAMA).

PAMA Director General Raziur Rahman said the July to September figures pointed to a revival of customer interest, with all categories except light commercial vehicles, jeeps and pickups rebounding, helped by easing inflation and an improving economy, Geo News reported, citing The News.

The quarter in numbers

• Passenger cars: sales up 43 percent, production up 32 percent
• LCVs, jeeps and pickups: production up about 1 percent, but sales down 34 percent
• Trucks and buses: production up 54 percent and sales up 46 percent on strong domestic demand
• Tractors: sales up 38 percent, though production fell 15 percent
• Two- and three-wheelers: production and sales both up 28 percent

A weaker September

Month-on-month figures were mixed. Car production rose 28 percent in September but sales fell 20 percent, which PAMA put down to continuing uncertainty over sales tax. Tractor production and sales jumped 72 and 73 percent after the Punjab Green Tractor Scheme was announced.

Company figures compiled by Topline Research showed a mixed picture:

• Indus Motor: the only assembler to grow, with sales up 31 percent year-on-year to 4,142 units, and Corolla, Yaris and Cross sales up 34 percent
• Honda Atlas: down 8 percent to 2,128 units
• Pak Suzuki: down 46 percent to 4,862 units, with the Alto down 29 percent and the Cultus down 68 percent
• Hyundai Nishat: down 25 percent year-on-year but up 19 percent on the month to 884 units

Two- and three-wheeler sales hit a record 202,502 units in September, up 27 percent.

Topline analyst Sania Irfan said weakness at several assemblers was linked to delays in clarity on sales tax for hybrid and plug-in hybrid vehicles, which held back invoicing.

Waiting on the policy

PAMA said the recovery was tempered by “perceptible hesitation” in the market because of the lack of policy clarity. The industry took heart from a Senate committee meeting on October 7, where Haroon Akhtar Khan, the prime minister’s adviser on industries, said the policy would be approved within two weeks. PAMA said it now expects a fair tax regime in that time.

Imports surge

PAMA warned of a surge in imports in the policy vacuum. Imports of completely built units appeared to have been brought forward ahead of the policy, and used car imports rose steeply, with 2,276 arriving in September alone. Both trends would add pressure on the balance of payments, could force the State Bank to act, and would hurt local value addition, it said.

Why it matters

The auto industry is recovering, but a long-delayed policy is holding back the investment it needs. Topline expects double-digit growth in auto sales this fiscal year, helped by new models and the entry of new brands. Read our report on the IMF’s forecast for Pakistan’s economy.

This article draws on reporting by Geo News, The News and Topline Research.