CCP seeks overhaul of Auto Sector policies

March 04, 2026 (MLN): The Competition Commission of Pakistan (CCP) has unveiled a comprehensive report urging major structural and regulatory reforms in Pakistan’s automobile industry, recommends a long-term policy roadmap, expanded vehicle financing, removal of regulatory distortions, and a coordinated shift toward electric vehicles to foster competition and efficiency in the sector.

Titled “The Road to Fair Competition A Study of Pakistan’s Automobile Industry,” the report examines persistent structural challenges despite successive policy interventions.

It notes that while protectionist measures helped establish domestic manufacturing, especially in passenger cars, prolonged tariff protections and localization policies have not consistently produced competitive outcomes or export-led growth.

The CCP finds that the passenger car market remains concentrated across several engine categories due to high entry barriers, capital-intensive requirements, and regulatory complexities.

It also highlights fragmentation in the regulatory framework, policy inconsistencies, and weak implementation as factors limiting the effectiveness of past auto policies.

The automobile industry contributes about 2.8% to Pakistan’s GDP and directly employs more than 215,000 people, making it a key component of Large-Scale Manufacturing.

The CCP stressed that improving competition in the sector could lead to lower prices, better quality, increased consumer choice, and enhanced export potential, APP reported.

To improve affordability and stimulate demand, the Commission has recommended expanding access to auto financing by reviewing restrictive limits and introducing targeted, subsidized schemes for first-time buyers in coordination with financial regulators.

The report highlights the need for a predictable and coordinated transition to electric vehicles (EVs), citing inadequate charging infrastructure, limited domestic production capacity, and reliance on fossil fuel-based electricity as major barriers.

It emphasizes that sustained policy consistency and infrastructure investment will be crucial to attracting long-term private investment in the EV ecosystem.

Additionally, the CCP recommends introducing a comprehensive vehicle scrappage and phase-out policy to address environmental concerns, improve road safety, and stimulate demand by gradually removing obsolete and high-emission vehicles from roads.

The Commission also called for strengthening domestic vendor development through transparent and non-discriminatory localization policies to better integrate Pakistan’s auto sector into global supply chains.

It proposed gradual rationalization of distortive protections and removal of regulatory asymmetries to create a level playing field and encourage investment, innovation, and efficiency.

The CCP expressed hope that the study will guide policymakers, regulators, and industry stakeholders in building a modern, competitive, and globally integrated automobile sector.

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