Introduction: Pakistan’s Auto Sector in Perspective
Pakistan’s automobile industry is one of the country’s most visible barometers of economic health. It sits at the intersection of manufacturing, trade, and consumer demand, employing hundreds of thousands directly and indirectly through assembly plants, parts suppliers, dealerships, and ancillary services. The sector spans a wide range of products from passenger cars, motorcycles, and tractors to commercial vehicles and specialized transport equipment catering to both urban mobility needs and rural economic activity.
Historically, the auto sector has relied heavily on imported inputs. Most passenger cars and motorcycles sold in Pakistan are assembled locally from completely knocked down (CKD) kits sourced from global suppliers, while higher-end vehicles often arrive as completely built units (CBUs). This import dependency makes the sector highly sensitive to exchange rate volatility, foreign exchange reserve levels, and trade policy shifts.
Over the past decade, the auto sector has experienced sharp cycles of expansion and contraction, driven by macroeconomic conditions, interest rate movements, and government policy. Periods of rapid sales growth often fueled by low financing costs and rising disposable incomes have been interrupted by downturns linked to currency depreciation, inflation spikes, and supply chain disruptions.
The period from 2022 to 2024 was especially challenging. Facing a severe balance-of-payments crisis, the government imposed restrictions on certain imports, particularly CBUs, to conserve foreign reserves. While this policy initially constrained market availability, it also accelerated a structural shift toward deeper localization and greater reliance on domestic assembly lines. By 2025, as financing conditions eased and supply chains stabilized, the sector was showing signs of a robust recovery — one that investors are now watching closely for both cyclical and structural opportunities.
Historical Backdrop; the Silent Showrooms of 2023
In an effort to safeguard its rapidly depleting foreign exchange reserves during the 2022–23 balance-of-payments crisis, Pakistan’s government implemented a set of targeted import restrictions. Among the most affected were Completely Built-Up (CBU) vehicles, which suddenly required special government approvals and were often subjected to lengthy delays or, in many cases, outright rejections when applying for letters of credit (LCs). By contrast, imports of CKD kits and individual auto parts moved through with comparatively fewer hurdles, underscoring the authorities’ strategy to protect domestic manufacturing capacity and preserve jobs. This two-pronged approach sharply curtailed the arrival of fully assembled cars in showrooms, while ensuring that local assembly plants could continue operating with the components they needed.
From Ports to Production Lines: How Import Patterns Are Reshaping Pakistan’s Auto Sector
The steep drop in CBU imports over one-third lower than a year ago is the clearest sign yet of the government’s tightened import policies. Yet the increase in parts and other vehicle-related imports tells the other half of the story: domestic assemblers are still sourcing what they need to keep production lines running, and local parts suppliers are well positioned to capture more of this demand.
When Pakistan clamped down on CBU imports, showroom floors emptied faster than expected but assembly lines never fell silent. June 2025 SBP data shows CBU imports plunging from USD 210.5 million in June 2024 to USD 138.4 million, a sharp 34.2% YoY drop.
Yet the wider “Vehicles, Aircraft, and Vessels” category which includes CKD kits and other vehicle-related imports proved far more resilient. The proxy for “parts & other vehicle imports” actually climbed by 46.9%. In other words, while finished cars are arriving in smaller numbers, the inflow of components is rising, allowing local manufacturing to take center stage.
This is more than just a short-term adaptation — it’s a structural supply chain shift, shifting value creation from imported inventory to local assembly floors, improving capacity utilization, and potentially boosting margins.
Fresh figures from the State Bank of Pakistan’s June 2025 “Import of Goods & Services” report shown a marked divergence between fully built vehicle imports and the inflow of parts and related transport goods.
Pakistan’s vehicle imports: 2024 vs. 2025
| Category / HS Code | June 2024 (USD ‘000) | June 2025 (USD ‘000) | YoY Change (%) |
| Category 17 – Vehicles, Aircraft, Vessels & Associated Transport | 245,958 | 190,503 | −22.5% |
| HS Code 87 – Vehicles other than Railway/Tramway Rolling Stock (CBU proxy) | 210,513 | 138,412 | −34.2% |
| Parts & Other Vehicle Imports (Category 17 − HS 87) | 35,445 | 52,091 | 46.90% |
Engines Roaring: FY25 Starts with a Production Surge
The latest Pakistan Automotive Manufacturers Association (PAMA) figures for July 2025 reveal a robust start to the fiscal year, with most vehicle categories showing double-digit year-on-year growth. Passenger car production surged by 49% compared to July 2024, while jeeps & pick-ups climbed 34% and trucks & buses rose 40%.
Two- and three-wheelers, a key indicator of essential transport demand, recorded a 44% jump, reflecting strong consumer uptake in affordable mobility options. The only category in decline was farm tractors, which fell 22%, highlighting continued headwinds in the agriculture sector.
This broad-based rebound in vehicle output underscores the sector’s resilience in the wake of import restrictions, with local assemblers scaling production to meet domestic demand and capture market share left vacant by reduced CBU imports.
The production growth rates from 2024-2025
| Category | Jul-24 | Jul-25 | YoY Change (%) |
| Passenger Cars (Total) | 6,614 | 9,856 | 49.00% |
| Jeeps & Pick-ups (Total) | 3,090 | 4,142 | 34.00% |
| Trucks & Buses (Total) | 347 | 486 | 40.10% |
| Farm Tractors (Total) | 2,239 | 1,753 | −21.7% |
| 2/3 Wheelers (Total) | 85,428 | 123,231 | 44.30% |
Market Leaders on the Move: FY25’s Valuation & Performance Standouts
The top-performing auto assemblers and parts manufacturers of FY2025 offer a snapshot of two clear trends: deep value opportunities among assemblers and high-growth momentum in selected parts makers.
Among assemblers, Indus Motor Company (INDU) delivered stellar earnings growth, with EPS soaring from PKR 122.96 in 2024 to PKR 282.71 (TTM), supported by an 8.19% dividend yield and a 26.35% price gain. Sazgar Engineering Works combined industry-leading margins (gross 30.16%, net 15.64%) with a rock-bottom P/E of 3.98, powering a 33.34% rally. Honda Atlas Cars, despite a modest 2.06% share price rise, staged a dramatic EPS recovery from PKR 1.82 to PKR 23.35, signalling a potential turnaround.
In the parts segment, Baluchistan Wheels outpaced all peers with a 65.79% jump in share price, backed by strong margins and a 6.61% dividend yield. Agriauto Industries and Loads Limited also impressed, posting gains of 59.25% and 58.59% respectively, even with modest net margins — a sign of investor belief in their recovery prospects.
The performance snapshot of auto assemblers and parts manufacturers of FY2025
| Automobile Assemblers | EPS (TTM) | EPS 2024 | P/E Ratio (TTM) | P/E Ratio 2024 | Dividend Yield | Gross Profit Margin | Net Profit Margin (%) | Price Change |
| Indus Motor Company Ltd (INDU) | 282.71 | 122.96 | 7.3 | 7.67 | 8.19 | 14.85 | 11.12 | 26.35% |
| Sazgar Engineering Works Limited | 270.36 | 270.36 | 3.98 | 3.09 | 4.09 | 30.16 | 15.64 | 33.34% |
| Honda Atlas Cars (Pakistan) Limited | 23.35 | 1.82 | 11.79 | 64.74 | – | 8.95 | 3.77 | 2.06% |
| Automobile Parts and Accessories | ||||||||
| Loads Limited | 4.24 | -5 | 4.24 | -1.27 | – | 23.06 | 18.36 | 58.59% |
| Agriauto Industries Limited | 3.26 | -1.23 | 36.6 | -52.89 | – | 4.55 | 1.66 | 59.25% |
| Baluchistan Wheels Limited | 22.52 | 10.23 | 6.05 | 6.45 | 6.61 | 22.3 | 12.89 | 65.79% |
Looking forward: Future value prediction
Budget 2025-26 introduced sweeping automotive reforms: regulatory duties on large imported vehicles were trimmed (e.g., those over 3000 cc saw reductions from 90% down to 50%), and new environmental levies such as a climate support charge were applied to combustion engine models, while electric vehicles (EVs) received generous incentives, including subsidies, reduced duties, and tax waivers. Meanwhile, the Pakistan Single Window (PSW) system continues to streamline import clearance through paperless, integrated processing, improving efficiency and reducing bureaucracy.
Collectively, these measures create a policy backdrop conducive to volume expansion, product diversification, and technology adoption, factors that could lift medium-term earnings multiples. Key risks remain in currency weakness, global supply chain disruptions, and possible policy shifts, but the overall direction favors a more competitive and investable auto sector.
Conclusion: A Sector Rebuilt from Within
Pakistan’s auto sector in 2025 is not simply recovering — it is evolving under the pressure of policy-driven change. Import restrictions that once threatened to choke supply have instead redirected value creation to domestic assembly lines and local parts suppliers. With CBUs largely sidelined, assemblers have adapted, parts manufacturers have seized new opportunities, and production volumes are rebounding across most categories.
The road ahead will depend on how consistently policymakers maintain a balance between protecting reserves and enabling industrial growth. If macroeconomic stability holds, this structural shift could cement a more resilient, locally anchored auto industry — one less vulnerable to import shocks and better positioned to capture long-term demand growth.
For investors, the takeaway is clear: with valuations in parts manufacturing still trailing assemblers, and a structural shift favoring domestic value addition, 2025 may offer a rare window to capture both recovery momentum and long-term growth in Pakistan’s auto sector.
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