Karachi: Indus Motor Company (INDU) has reported a 33% year-on-year increase in total sales, reaching 45,035 units, according to its latest annual report. The company saw a significant 56% rise in passenger car sales while commercial vehicle volumes remained stable. However, the report highlights concerns about policy uncertainty affecting future growth in Pakistan's automotive sector.
According to JS Global, the increase in Goods and Services Tax (GST) on Hybrid Electric Vehicles (HEVs) and Plug-in Hybrid Electric Vehicles (PHEVs) from 8.5% to 25% has led to price adjustments effective from July 2026. In contrast, tax rates for Internal Combustion Engine (ICE) vehicles and Battery Electric Vehicles (BEVs) remained unchanged. Despite these changes, the domestic auto industry continues to operate at less than 50% of its installed capacity, indicating a potential for further growth and localization.
The government's decision to abolish the Baggage Scheme for used-vehicle imports in January 2026, coupled with the introduction of mandatory pre-shipment inspection requirements under the Gift and Transfer of Residence schemes, has been viewed positively. This initiative has contributed to a reduction in used-vehicle imports to approximately 38,000 units in the fiscal year 2026, down from 42,000 units in the previous fiscal year, although used vehicles still represent 19% of total sales reported by the Pakistan Automotive Manufacturers Association (PAMA).
The report also noted that the Automotive Industry Development Policy (AIDP) 2021-26 expired in June 2026, with a successor policy yet to be announced. This delay has created uncertainty around production planning, investment, and sector growth. Indus Motor Company anticipates a moderation in automotive sector growth in fiscal year 2027 due to the policy delays.
Furthermore, the National Tariff Policy 2025-30 is expected to narrow the price differential between locally assembled vehicles and Completely Built Units (CBU) imports, which could impact local manufacturing competitiveness and future localization efforts. Consumer financing continues to drive growth, with financing penetration improving to 26% from 21%. However, the company suggests that higher financing limits and longer loan tenures could further enhance vehicle affordability and demand.