Why car prices are higher in Pakistan? an expert explains

KARACHI: The chairman of the All Pakistan Motor Dealers Association (APMDA) has accused Pakistan’s local auto assemblers of maintaining a decades-long monopoly, alleging that protectionist policies have failed to deliver affordable locally manufactured vehicles while keeping consumers dependent on expensive imports.

Speaking in ARY News program The Story Behind,, APMDA Chairman HM Shahzad said the objective behind establishing Pakistan’s local automobile industry more than 40 years ago was to transfer technology, achieve localisation, manufacture affordable vehicles and eventually export them. However, he claimed the industry remains dependent on imported CKD and SKD kits, with genuine local manufacturing yet to materialise.

Shahzad alleged that successive governments and the Engineering Development Board (EDB) had protected major assemblers instead of promoting competition and localisation. He claimed consumers had paid the price through vehicle prices that are significantly higher than those in neighbouring countries.

Referring to restrictions imposed on vehicles imported under the Transfer of Residence (TR), Gift and Personal Baggage schemes, Shahzad said the measures were introduced at the behest of local assemblers, depriving overseas Pakistanis of sending affordable vehicles while reducing the government’s dollar-denominated import duty revenue.

While welcoming the government’s decision to relax some restrictions on used car imports, he criticised the requirement for imported vehicles to undergo an additional verification process despite already carrying pre-shipment inspection certificates issued abroad.

According to Shahzad, customs authorities can verify the authenticity of those certificates through barcode technology, making a second inspection unnecessary. He also questioned the decision to authorise two private companies to carry out the verification, alleging the move would create unnecessary costs and increase the risk of corruption. He called on the Ministries of Commerce, Finance and Industries to investigate the decision.

Commenting on new entrants to the market, Shahzad said Chinese and Korean automakers had introduced much-needed competition, offering consumers better value than traditional assemblers. However, he argued that Pakistan’s long-term solution lies in ending the dominance of assemblers and pursuing genuine localisation through “Made in Pakistan” manufacturing, including electric vehicles, to make cars affordable for middle-class families.