KARACHI: The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has raised alarm over mounting challenges facing the country’s auto parts industry, warning that without urgent policy support, the sector risks irreversible decline.
In its policy document ‘Road to Glory’, PAAPAM outlined key threats undermining the industry and presented a series of recommendations to safeguard its future.
The 230-page report, available with The News, highlights that the auto parts industry, once a vital contributor to Pakistan’s manufacturing base, is grappling with chronic issues ranging from policy inconsistencies to unfair competition.
Among the foremost challenges is the government’s fluctuating policy framework, which PAAPAM argues has eroded investor confidence. The association points out that frequent regulatory changes, particularly in tariff and import regimes, have created uncertainty for local manufacturers, making long-term planning nearly impossible.
Another critical concern is the increasing reliance on imports, which poses a dual threat. Not only does it stifle the growth of local production, but it also widens the trade deficit and undermines Pakistan’s already fragile economy.
PAAPAM warned that if current trends persist, local manufacturers could be forced out of business, resulting in job losses across a sector that employs hundreds of thousands directly and indirectly.
The association also identified structural weaknesses within the industry itself. Low productivity, limited research and development, and the absence of cutting-edge technology adoption have left local manufacturers vulnerable.
Furthermore, a lack of skilled labour, coupled with minimal government investment in vocational training, has hindered the sector’s ability to scale up and compete internationally.
External threats also loom large. Global competition from low-cost producers, particularly in neighbouring countries, has intensified pressure on Pakistan’s auto parts industry. Additionally, the anticipated shift towards electric vehicles (EVs) is seen as both an opportunity and a looming challenge, as local firms remain unprepared to adapt to the technological transition.
To counter these threats, PAAPAM has issued a series of strong policy recommendations. Chief among them is the urgent need for a consistent and long-term automotive policy aligned with the Auto Industry Development and Export Plan (AIDEP) 2026. Such a framework, PAAPAM stressed, must prioritise localisation, value addition, and export orientation to secure the industry’s future.
The association also called for stringent measures against under-invoicing and smuggling of imported auto parts, which continue to cripple domestic producers. Investment in research and development, alongside partnerships with universities and technical institutes, was recommended to foster innovation and prepare for the EV revolution.
On the human capital front, PAAPAM urged the government to expand vocational training programmes to bridge the skills gap and enhance workforce competitiveness.
In addition, the association pressed for export incentives, infrastructure improvements, and fiscal support to enable Pakistani firms to penetrate global markets.
Concluding its policy appeal, PAAPAM posed critical questions for policymakers: Should Pakistan continue to depend on imports, or should it build self-reliance through localisation? Should the industry be allowed to shrink under external pressures, or should it be protected and prepared for global competition?