CCP Study Puts Pakistan’s Auto Sector Under the Microscope
The Competition Commission of Pakistan (CCP) has released a detailed report titled “The Road to Fair Competition – A Study of Pakistan’s Automobile Industry,” laying bare deep structural and regulatory flaws in the sector. The study calls for a long-term policy roadmap, easier vehicle financing and the gradual removal of distortionary protections to promote fair competition and efficiency.
The automobile industry is a key pillar of Pakistan’s economy. It contributes around 2.8 percent to GDP and provides direct employment to more than 215,000 people. As an important part of Large-Scale Manufacturing, the sector supports industrial growth, technology transfer and domestic value addition, especially in the passenger car segment, including emerging electric vehicles (EVs).
High Prices, Market Concentration and Policy Fragmentation
Despite multiple auto policies over the years, the CCP study finds that Pakistan’s passenger car market remains highly concentrated across several engine categories. High entry barriers, capital-intensive investment needs and complex regulations have made it difficult for new players to enter and compete on equal footing.
Earlier protectionist policies, including high tariffs and strict localisation rules, were meant to nurture domestic manufacturing. While they did help establish local assembly, the CCP notes that extended tariff protection has not translated into strong competition, lower prices or export-led growth. Instead, consumers face limited choice and expensive vehicles compared to many regional markets.
The report also highlights fragmentation in the regulatory framework. Overlapping institutional mandates and inconsistent policies have discouraged long-term investment. Structural rigidities, frequent reversals and weak implementation have reduced the impact of previous auto policies that aimed to boost localisation, attract new entrants and expand exports.
Improving Affordability: Easier Auto Financing and First-Time Buyers
One of the CCP’s key recommendations is to improve access to vehicle financing in order to make cars more affordable for middle-income households. The report suggests reassessing restrictive lending caps and exploring targeted, subsidised schemes for first-time buyers in coordination with financial regulators.
By easing financing constraints, the Commission believes that overall demand could increase in a more sustainable way, especially if combined with stronger competition among manufacturers. Better access to credit, when paired with clear rules and responsible lending standards, could also help formalise transactions and support a healthier, more transparent auto market.
The study emphasises that affordability reforms must go hand in hand with a more competitive structure; otherwise, cheaper financing alone could simply feed into higher prices rather than better deals for consumers.
EV Transition, Scrappage Policy and Environmental Goals
Looking ahead, the CCP underscores the importance of a predictable and coordinated transition toward electric vehicles. At present, inadequate charging infrastructure, limited domestic production capacity and reliance on fossil fuel–based electricity are major obstacles to large-scale EV adoption.
The report argues that consistent policy signals, long-term incentives and sustained investment in charging networks will be needed to attract serious private investment into the EV ecosystem. Without these, Pakistan risks falling behind regional peers that are moving faster on clean mobility.
The CCP also points to a major gap: the absence of a comprehensive vehicle scrappage and phase-out policy. It recommends introducing a structured disposal programme to gradually remove obsolete and high-emission vehicles from the roads. Such a policy could improve air quality, enhance road safety and stimulate demand for newer, more efficient cars by encouraging owners to retire old vehicles in an orderly way.
Phasing Out Distortionary Protections and Supporting Local Vendors
Beyond consumer financing and EVs, the CCP calls for strengthening domestic vendor development through transparent, non-discriminatory localisation policies. The goal is to deepen industrial linkages and eventually integrate Pakistan’s auto sector into global supply chains, rather than keeping it insulated behind long-running protections.
To ensure a level playing field, the Commission has proposed the gradual rationalisation of distortionary protections, the removal of regulatory asymmetries and the adoption of stable, pro-competition policies. In the CCP’s view, this is essential for encouraging fresh investment, innovation and operational efficiency.
A more competitive automobile industry, the report concludes, would deliver clear benefits for consumers and the broader economy: lower prices, better quality, greater product variety and stronger export potential. The CCP hopes that its study will guide policymakers, regulators and industry stakeholders as they work toward a modern, competitive and globally integrated auto sector. The full report has been uploaded to the CCP website for public comments and feedback.
