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Author | Niu Ma Bai Ri Kuang Xiang
Editor | Zhu Yilin Reviewer | Shan Minmin
Image source: WeChat official account "Niu Ma Bai Ri Kuang Xiang"
After 4 p.m., the town of Aliabad in Hunza, Pakistan gradually becomes lively, with students taking double-deckers, local residents sitting in covered tricycles, and truck drivers transporting goods back and forth on the streets. Traffic police direct vehicles at the intersection, and the sound of whistles occasionally echoes.
This bustling scene continues into the night, with traffic jams still occurring in Karimabad, a town on the mountain in Hunza, at 9:30 p.m.
Image source: WeChat official account "Niu Ma Bai Ri Kuang Xiang"
Many of these cars are Japanese Suzuki (Suzuki).
Suzuki holds special significance for Pakistan. This situation even predates the establishment of Pak Suzuki Motor Company Limited (PSMCL) in 1982.
To this day, Suzuki remains the best-selling brand in Pakistan. In September, its sales reached 8,997 units, an increase of 79% year-on-year, more than twice that of the second place. In the first quarter of the 2025-26 fiscal year (July to September 2025), the company's sales increased to 19,831 units, up 51% year-on-year.
There are also many modified used cars, such as new glass replacing the original broken glass on the windows.
Used cars also play an important role in Pakistan, being the second-largest segment in the country's car market, surpassing the combined sales of Toyota, Honda, Hyundai, Kia, Haval, MG, and Changan.
I. Relaxation of Used Car Imports
However, the import of used cars has had a turbulent history in Pakistan.
In the early 1990s, to protect local car assembly companies, Pakistan completely banned commercial vehicle imports. This policy led to a reduction in the number of cars on the market and high prices.
At the beginning of the 21st century, with increasing demand for affordable cars, the Pakistani government implemented special policies such as the Gift Scheme, Baggage Scheme, and Transfer of Residence Scheme for overseas Pakistanis, allowing them to import cars.
Although these cars were intended for personal use, a large number of vehicles flowed into the domestic market through dealers. Consumers had more choices, and car prices slightly decreased, but local car manufacturers protested, claiming that imported cars harmed their sales and investments.
In 2005, Pakistan reduced tariffs and simplified the process for importing used cars. Consumers could buy small, fuel-efficient Japanese cars, and the import of used cars rapidly increased.
In 2008, local car manufacturers lobbied the government to strengthen restrictions, leading to higher import tariffs and tighter age limits on imported vehicles. This adjustment reduced the import of used cars, providing more protection for local manufacturers.
In 2012, Pakistan reduced the maximum allowed age for imported used cars from 5 years to 3 years, causing a significant decrease in imports. At the same time, the Automotive Development Policy (ADP) was introduced, encouraging investment in the local car assembly industry. Although new companies entered the market, car prices remained high, and consumer choices were still limited.
By 2020, the ongoing struggle continued: consumers complained about high car prices, limited choices, and lower safety standards compared to regional neighbors; industry organizations warned that excessive imports would reduce local investment, slow down the production of auto parts, and exacerbate foreign exchange pressures. The government repeatedly adjusted import policies between relaxation and tightening, creating a cycle of policy fluctuations.
Nevertheless, the number of used car imports in Pakistan remains higher than in other regional countries. According to a report by the Institute of Cost and Management Accountants (ICMA), Pakistan's annual average used car imports are 34,000 units, followed by Thailand (21,802 units), Vietnam (532 units), and India (235 units).
In September 2025, there was a major change in the used car import policy. It allowed the import of used commercial vehicles with an age not exceeding 5 years. To give local car companies a buffer period, an additional 40% regulatory tariff was imposed on imported used cars on top of the existing tariffs. All imported vehicles must meet safety and emission standards to prevent old, unsafe, or inefficient vehicles from entering the market.
After June 30, 2026, the age limit for imported used cars will be removed, and the regulatory tariff will decrease by 10% annually until it reaches zero in the 2030 fiscal year.
II. Local Auto Industry "Lying Down"
Previously, the protective policies for local car manufacturers did not create strong competitiveness, but instead led the industry to "lie down."
The Research and Publication Department of the Institute of Cost and Management Accountants (ICMA) pointed out that for a long time, the automotive industry benefited from high tariffs and regulatory barriers, allowing local assemblers to dominate the market with less pressure to improve product quality or lower prices.
Due to the high price of new cars, many people choose to buy cheaper motorcycles (two or three wheels).
In September 2025, despite Yamaha Motorcycles exiting the Pakistani market, motorcycle sales in the country still reached 158,941 units, an increase of 21% year-on-year; in the first quarter of the 2025-26 fiscal year, sales reached 431,542 units, an increase of 35% year-on-year.
Among them, Atlas Honda Limited (AHL), known for the popular CD70 motorcycle model, sold 135,603 units in September, setting a new monthly sales record.
Domestic car sales. Data source: Auto sector kicks off FY26 on strong note DAWN; Image source: WeChat official account "Niu Ma Bai Ri Kuang Xiang"
Pakistani car exports are weak, according to recent data published by the Senate, the export volume of locally assembled cars over the past three fiscal years was only 434 units. Export models include Toyota Corolla Altis, Suzuki Alto, Suzuki Swift, Honda City, mini vans, SUVs, and electric tricycles.
Local car reputation is also low. Pakistani consumers generally believe that imported used cars usually come with upgraded safety and energy efficiency features, such as airbags, anti-lock braking systems (ABS), hybrid engines, and better fuel economy.
Long-term restrictions on used car imports have led to active underground transactions. The required foreign exchange for imports circulates through the hawala channel, and local sales are mostly cash-based, bypassing formal channels.
Importation of cars for overseas Pakistanis has also been misused. Most cars are first imported through the UAE or other Gulf Cooperation Council (GCC) countries, then transported to Pakistan, circumventing normal regulatory procedures.
Recently, Pakistan and the International Monetary Fund (IMF) have reached a consensus to cancel the Baggage Scheme and Gift Scheme, allowing the Transfer of Residence for overseas Pakistanis to bring private cars back to Pakistan, but with stricter qualification review conditions.
III. Industrial Elimination and Integration
However, in the short term, car prices are unlikely to drop significantly. The 40% regulatory tariff combined with exchange rate fluctuations and importers' premiums will keep the cost of imported used cars high.
Therefore, many people may choose to delay buying a car, waiting for lower prices and better quality imported used cars.
In an ideal scenario, as the tariff decreases by 10% each year, the competitiveness of imported cars will gradually increase.
The most affected will likely be locally manufactured Suzuki.
Compared to sedans/SUVs, hatchback manufacturers are more affected, as the mainstay of the used car import market is 1000cc and below displacement models, which are dominated by Pak Suzuki Motor Company Limited.
Data from July 2024 shows that 1000cc and below models accounted for more than 65% of locally produced car sales in Pakistan, with Pak Suzuki Motor Company Limited's Alto and Swift models maintaining dominance for a long time.
According to Top Line Securities, another major company in the country, Honda Atlas Cars Limited (HACL), stated in mid-July that the rationalization of tariffs and the increase in used car imports would not affect its business operations.
By the 2028 fiscal year (FY28), when the tariff is reduced to 20%, the affordability of cars will improve, expanding consumer choices, especially in the mainstream small and medium-sized passenger car segment. Popular Japanese models such as Toyota Vitz, Honda Fit, and Suzuki Swift are expected to directly compete with locally produced models.
By the 2030 fiscal year (FY30), when the tariff is completely abolished, the Pakistani domestic market will face global competition.
Assemblers who cannot adapt to the competition may lose market share, or even exit. Suppliers and small and medium enterprises (SMEs) providing various components such as seats, batteries, tires, and engines may face insufficient demand.
However, this competition may prompt local assemblers to modernize their production lines, improve safety standards, and introduce fuel efficiency technologies. Suppliers and SMEs that expand into after-sales service markets or invest in R&D for electric and hybrid vehicle components may find new opportunities. Fields related to imports, such as certification, inspection, logistics, and after-sales services, may see the emergence of new job opportunities.
References:
1. Pakistan leads region in used car imports
2. ECC green-lights proposals for commercial import of used vehicles
3. Industry faces threat from influx of used vehicles
4. Used vehicles’ import poses long-term risks
5. Misuse: Pakistan, IMF agree to scrap car import schemes for overseas Pakistanis
6. CORPORATE WINDOW: Muted impact of import of used cars
7. Duty exemption for small used cars irks auto industry
8. Govt urged to curb imports of used vehicles
9. Auto sector kicks off FY26 on strong note
10. Made in Pakistan Cars Exported to 20 Countries
This article is reprinted from the WeChat official account "Niu Ma Bai Ri Kuang Xiang" on October 12, 2025, titled "Old Model Suzuki, Modified Second-hand Cars, Pakistan's Used Car Imports Face Major Shifts."
Editor of this issue: Zhu Yilin
Reviewer of this issue: Shan Minmin
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