The Pakistan Association of Automotive Parts and Accessories Manufacturers has written directly to Prime Minister Shehbaz Sharif, warning that the draft Auto Policy 2026 to 2031 could put around 1.5 million jobs and about Rs 700 billion of local parts business at risk. The letter, dated 23 October 2026 and signed by PAAPAM Chairman Abdul Rehman Aizaz, asks for a meeting with the Prime Minister before the policy is finalised.
The letter comes three days after the Prime Minister gave the draft in principle approval on 20 October. Our earlier report on PAAPAM's warning over the 15 percent parts tariff covered the tariffs the vendors want. This story looks at what the letter adds, the size of the industry it claims to speak for, and what could happen next.
The short version
- PAAPAM says the local parts sector includes more than 1,200 companies
- It puts direct and indirect employment at around 1.5 million people
- Vendors supply about Rs 700 billion of locally made components to car and bike assemblers every year
- The sector says it saves Pakistan about USD 1.8 billion a year in imports, roughly Rs 498 billion at the current exchange rate
- The letter objects to three things in the draft, lower duties on fully built cars, concessions for new energy vehicles and lower duties on parts
- PAAPAM wants a meeting with the Prime Minister before the policy goes any further
What the letter says
The association argues that the draft, as written, would make it cheaper to import finished cars and ready made parts than to build them in Pakistan. It says local vendors have spent decades investing in tooling, dies, moulds and skilled workers on the promise of stable protection, and that a sudden cut would leave much of that investment idle.
The letter makes three main objections.
- Tariff cuts on completely built up cars. The draft brings duties on imported cars down step by step to 15 percent by 2030 to 2031. PAAPAM says that removes the price gap that keeps local assembly viable.
- Concessions for new energy vehicles. The draft offers low sales tax and cheaper kit imports for electric and hybrid cars. PAAPAM says these benefits are not tied to enough local content, so they mainly reward imports.
- Lower duties on parts. Cheaper imported components would compete head on with parts already made in Pakistan, from seats and wiring harnesses to plastics and sheet metal.
The numbers behind the warning
| Item | PAAPAM figure | Roughly in rupees |
|---|---|---|
| Companies in the parts sector | More than 1,200 | Not applicable |
| Jobs, direct and indirect | About 1.5 million | Not applicable |
| Local parts supplied to assemblers each year | About Rs 700 billion | Rs 700 billion |
| Import substitution each year | About USD 1.8 billion | About Rs 498 billion |
The rupee conversion uses the interbank rate of about Rs 276.8 to the US dollar on 23 October 2026. The figures are PAAPAM's own and have not been independently audited. The 1.5 million estimate counts indirect jobs in raw material supply, logistics, dealerships and workshops, so it is far larger than the number of people working on factory floors.
Why the parts makers are worried now
The timing matters. The Prime Minister cleared the draft in principle on 20 October, and the Engineering Development Board says it will go to the IMF within days. Once the IMF and cabinet sign off, changes become much harder.
The draft also sets new rules that vendors say do not go far enough on local content. In September the association objected that electric cars would need only 10 percent domestic value addition in their first four years, rising to 15 percent in year five, while localisation for petrol and diesel cars would restart at 20 percent and climb to 40 percent by the fifth year. The industry says local content in many conventional cars is already above 50 percent, and vendors had expected a target closer to 70 percent.
PAAPAM has also warned that a 1 percent sales tax on new energy vehicles could cost the treasury heavily if volumes grow, and it has pointed to a structural cost disadvantage of about 34 percent against regional producers because of energy prices, financing costs and imported raw materials.
How this fits the wider fight over the policy
The parts makers are not alone in lobbying, but they are no longer on the same side as everyone else. Japanese brands that built Pakistan's assembly base face new Chinese entrants that want lower duties and faster approvals for electric and hybrid models. Importers want lower tariffs on finished cars. Vendors want the opposite.
Inside government, the policy is also caught between the Commerce Ministry, which backs the National Tariff Policy and lower duties, and the Ministry of Industries and Production, which wants more protection. The IMF has its own concerns about the tax breaks, as we explained in our report on IMF objections to the auto policy.
Other parts of the draft that affect vendors include the mandatory export targets and penalties for carmakers and the new development levy on cars, part of which is meant to fund vendor upgrades.
What it means for car buyers
In the short run, nothing changes. Prices, taxes and duties stay where they are until the policy is approved and notified. Our model by model price estimates show how much the draft could cut prices if it passes unchanged.
If PAAPAM wins more protection, those cuts could be smaller, especially for imported cars and electric vehicles. If the draft passes as it is, buyers may see cheaper imports, but local vendors warn that spare parts supply, after sales support and resale values could suffer if smaller suppliers close.
Rising imports are already a concern. Pakistan brought in 2,407 new and 2,454 used cars in September alone, as we reported in our September car imports story.
What happens next
- No response from the Prime Minister's office had been reported by 24 October
- The draft is expected to be shared with the IMF within days
- It then needs approval from the Economic Coordination Committee and the federal cabinet, and some measures need a bill in parliament
- The PAMA carmakers' association has also asked to see the reviewed draft, as covered in our report on PAMA's request to the Industries Ministry
We will update this story when the government responds. For the latest prices of locally assembled and imported cars, see our new cars section.