Pak auto sector fails to meet export targets

ISLAMABAD: The auto manufacturers have failed to meet the government-assigned export targets under the Auto Industry Development and Export Policy (AIDEP) 2021-26; however, they have received court relief against the revocation of licenses, Secretary Industries Saif Anjum told the Senate Standing Committee on Industries and Production chaired by Senator Aon Abbas here on Friday.

The AIDEP had set export targets for the automotive sector: 2 percent of imported components by 2022-23, increasing to 4 percent in 2023-24, 7 percent in 2024-25, and 10 percent in 2025-26.

“The manufacturers have failed to meet these targets. The government did revoke the licenses temporarily, but the manufacturers secured relief through a court stay,” Anjum said.

The committee was briefed by the ministry and Engineering Development Board (EDB) on the Auto Policy and Electric Vehicle Policy.

The EDB officials reported that most car manufacturers complied with the international safety standards, specifically the WP-29 global regulations. However, some models and other new entrants were not meeting these standards and were working towards compliance by June 2025.

WP-29 standards, set by the World Forum for Harmonization of Vehicle Regulations, focus on vehicle safety, environmental performance, and energy efficiency.

While most manufacturers have adopted these standards, an automobile company announced that it will discontinue three variants and redesign the remaining three to meet the WP-29 regulations.

The safety standards include active safety (brakes, steering, tires, lighting), passive safety (safety belts, seats, airbags), and general safety (glazing, mirrors, anti-theft).

Senator Saifullah Sarwar Khan Nyazee questioned whether some vehicles were unsafe, to which officials acknowledged that certain models did not meet the safety standards.

Nyazee expressed concern about the safety of such vehicles, asking who would be responsible for the loss of lives in accidents involving them.

Senator Saleem Mandviwalla remarked that most cars produced in Pakistan did not meet the international standards, making it difficult to find suitable export markets.

“The car manufacturers say they cannot export because there are no incentives,” he added.

The committee also discussed cold storage in the industrial sector and providing affordable electricity rates.

Officials informed the committee that the Economic Coordination Committee (ECC) had approved this recommendation, which was now under the federal cabinet review.

The EDB official noted that the 2016-21 Auto Policy led to the entry of eight new car manufacturers, increasing the number from three to 13. These companies now have total production capacity of 500,000 units annually across more than 40 models and over 100 variants, contributing 4 percent to GDP, paying Rs300 billion in taxes, and generating over two million jobs.

Senator Aon Abbas highlighted the issue of reimbursement by the auto manufacturers to the customers for delayed vehicle deliveries exceeding 60 days.

He noted that eight major car manufacturers had paid around Rs5.32 billion in compensation to customers. Abbas directed that a detailed breakdown of the compensation paid, including car models and the extra days involved, be provided to determine if the compensation justified the delay.

He further directed provision of a detailed breakdown of these payments and suggested creating a universal mechanism for consumers to track car bookings and deliveries.

The committee also discussed the country’s electric vehicle (EV) policy.

Officials explained that the policy was aimed to address climate change and diversify the auto sector, with 1 percent customs duty on EV parts compared to 30 percent on traditional vehicle parts.

EV tariffs are set at 5-10 percent, versus 25-30 percent for traditional vehicles, to attract global EV manufacturers.

Senator Mandviwalla emphasized the need for EV-friendly infrastructure, warning that without it, the EV sector may struggle.

The committee formed a three-member sub-committee, chaired by Senator Nyazee, to review the EV policy.