ON the face of it, the commerce ministry’s decision to constitute a ‘dedicated’ committee to address the critical challenges facing Pakistan’s struggling car industry is a welcome step. An official statement said that the body, set up after the commerce minister’s meeting with industry representatives, will consist of officials from the commerce and industries ministries and FBR. Though it remains unclear whether the government has notified the committee members, the commerce minister has already ‘tasked’ it with crafting a strategy that protects domestic car assemblers from a potential influx of imported used cars — in case the government allows their commercial import — encourages exports and aligns the industry with national industrial aims. Given the limited autonomy enjoyed by the ministries in a highly centralised governance system in Pakistan, the industry rightly believes that the new body is unlikely to help the local assemblers address their issues.

The commerce minister’s plan to add cars to the country’s list of auto exports, alongside motorcycles and tractors, is ambitious at best and unrealistic at worst owing to the government’s own policy inconsistencies and contradictions. Rhetoric aside, Budget 2026 has already made imported luxury vehicles a lot cheaper, and pushed up the prices of locally assembled cars. Similarly, the planned withdrawal of tariff protections for local carmakers — although a welcome move — risks tilting the playing field against local assemblers because of the very high cost of doing business, driven primarily by government taxes and energy prices. Unless the taxes on locally assembled cars are significantly slashed and the costs of doing business are brought down, the market will be swarming with imported cars, both old and new. It will not matter whether the protections are phased out or dismantled at once. The car industry’s journey through the last four decades underlines the reasons — policy uncertainty, high production costs, tariff and policy protections to powerful lobbies, etc — why Pakistan has failed to industrialise itself, spur market competition, encourage innovation and provide consumers with greater choices. No wonder that few think that the formation of yet another committee can help tackle the structural weaknesses that continue to hobble the auto industry. Without credible long-term policies that reduce crippling production costs and prioritise competitiveness over protectionism, the auto sector will continue to proceed at a sluggish pace.

Published in Dawn, August 17th, 2025