Karachi: The auto sector reported a record-breaking quarter in terms of profitability for June 2026, with earnings surging by 44% compared to the previous year. This growth was propelled by a 34% increase in topline revenue and a 29% rise in sales volumes. The improved financial performance was further supported by a substantial increase in other income, which rose by 54% due to gains from SIDC.

According to JS Global, while the year-on-year growth was substantial, quarter-on-quarter earnings growth was relatively modest at around 4%. This was primarily due to a 3 percentage point decline in gross margins, attributed to increased shipping and freight costs resulting from the ongoing conflict in the Middle East. These higher costs offset the positive impact of a 10% increase in net sales on a quarterly basis.

The sector is also anticipating the finalization of a new auto policy, which has been drafted but still requires consultation with the International Monetary Fund (IMF) expected in October. The policy aims to benefit new energy vehicle (NEV) producers by reducing duties and sales taxes, while gradually lowering tariffs on imported vehicles to decrease protection for local manufacturers. Cabinet approval remains pending for the draft policy.