Pakistan Used Car Imports Jump 58% in September as Local Industry Raises Concerns

Pakistan’s imports of used vehicles climbed sharply in September 2026, reigniting a long-running dispute between domestic automobile manufacturers and vehicle importers over competition, localisation and consumer choice.

According to Commerce Ministry data cited by Dawn, 2,276 used vehicles were imported during September, compared with 1,445 in August. That represents an increase of approximately 58% month on month.

The most striking detail is how the vehicles entered the country.

Of the September total, 2,238 vehicles were imported under the Gift Scheme, meaning that roughly 98% of the month’s used-car imports came through that route.

The rise has concerned local assemblers and auto-parts manufacturers, who argue that increasing imports reduce demand for locally manufactured components and weaken incentives for domestic production.

Importers dispute that interpretation.

They argue that properly inspected used vehicles are legal under Pakistan’s import framework and provide consumers with greater choice while increasing competitive pressure on domestic assemblers.

The debate is becoming more important as Pakistan simultaneously reforms its used-vehicle import rules, reduces trade barriers and attempts to expand local automotive manufacturing.

Used Car Imports Rose Sharply in September

Commerce Ministry figures reported by Dawn show a pronounced rebound in monthly used-vehicle arrivals.

The recent trend is:

September’s 2,276 vehicles were about 57.5% higher than August.

The figure was also almost three times June’s total.

However, the monthly numbers remain volatile because Pakistan has been changing the rules governing different import schemes throughout 2026.

That makes one month’s increase insufficient on its own to establish a permanent long-term trend.

Gift Scheme Dominates September Imports

The Gift Scheme was overwhelmingly the largest source of used vehicles.

Dawn reported that:

• 2,238 vehicles arrived through the Gift Scheme in September.
• Total used imports were 2,276 vehicles.
• Only a small remainder came through other eligible channels.

That distinction is particularly important because Pakistan abolished the Personal Baggage Scheme in January 2026.

The Ministry of Commerce issued S.R.O. 61(I)/2026 on January 15, removing references to personal baggage from the vehicle-import provisions of the Import Policy Order.

Therefore, the latest increase does not mean the old baggage route has returned.

What Happened to the Personal Baggage Scheme?

For years, overseas Pakistanis could bring used vehicles into the country under three principal schemes:

• Personal Baggage
• Gift
• Transfer of Residence

The government removed the Personal Baggage option in January.

S.R.O. 61(I)/2026 also tightened other conditions, including extending the eligibility period for another import and introducing a requirement that vehicles brought in under the Gift or Transfer of Residence schemes remain non-transferable for one year from the date of importation.

The policy was intended in part to restrict the commercial use of schemes designed primarily for overseas Pakistanis.

Imports Initially Fell After the Changes

The immediate impact of the tighter rules was substantial.

Only 48 used cars were imported in May, according to Commerce Ministry data cited by Dawn.

Imports then climbed to:

• 843 in June
• 1,938 in July
• 1,445 in August
• 2,276 in September

The rebound shows that the remaining legal import channels are still capable of supplying significant numbers of vehicles.

The Gift Scheme has become particularly important.

Local Parts Manufacturers Are Worried

Pakistan’s auto-parts industry argues that imported completely built vehicles directly compete with locally assembled cars.

Pakistan Association of Automotive Parts and Accessories Manufacturers Chairman Abdul Rehman Aizaz told Dawn that locally produced vehicles can contain up to 60% locally manufactured parts by value.

He estimated an average local-parts contribution of around Rs1.5 million per vehicle.

Using that assumption, PAAPAM calculated that September’s 2,276 used imports represented about Rs3.4 billion of potential local parts production.

That figure is an industry estimate rather than an independently verified measure of actual economic loss.

It assumes that imported vehicles directly replace sales of locally assembled vehicles and that each displaced local vehicle would have contained roughly Rs1.5 million in domestic components.

Those assumptions may not hold equally across every vehicle segment.

Imported Car Does Not Necessarily Equal One Lost Local Sale

This is an important economic distinction.

Local manufacturers tend to treat imported vehicles as competing directly with domestic production.

But not every imported used car necessarily replaces a locally assembled vehicle.

Some buyers may want:

• A model not manufactured in Pakistan
• A small Japanese kei car
• A hybrid unavailable locally
• A specific safety or comfort feature
• A vehicle within a particular price range

In such cases, the imported vehicle may compete with a different product segment.

Therefore, PAAPAM’s Rs3.4 billion figure is best understood as an industry calculation of potential displaced parts demand, not a confirmed measurement of economic loss.

Local Industry Says Production Was Recovering

Parts manufacturers say the timing of the import increase is especially important because domestic auto production has recently started recovering after several difficult years.

Dawn reported that vendors linked this recovery with improvement in Pakistan’s large-scale manufacturing sector.

The local automobile industry suffered significantly during periods of:

• Import restrictions
• Foreign-exchange shortages
• High interest rates
• Inflation
• Expensive auto financing
• Supply-chain disruption

More recent production and financing indicators have shown some improvement.

Outstanding automobile financing reached Rs393.3 billion in August, marking the 21st consecutive monthly increase, while sales of cars, light commercial vehicles, pickups and vans reached 35,376 units during the first two months of FY2026-27, up 41% year on year.

That helps explain why domestic manufacturers want to protect the current recovery.

Used Imports Were Lower Over the Full Previous Fiscal Year

The monthly rebound should also be viewed against the annual trend.

Indus Motor Company said in its FY2025-26 annual report that used-vehicle imports declined to around 38,000 units, compared with approximately 42,000 in FY2024-25.

So September’s increase does not mean annual imports have already exceeded previous levels.

The market has moved through several policy changes over the past year.

Imported Vehicles Still Represent a Significant Market Share

Indus Motor, citing Pakistan Automotive Manufacturers Association data, said imported used vehicles represented around 19% of total vehicle sales in the relevant market context.

That helps explain why the domestic industry pays close attention to used imports.

A share approaching one-fifth of the market can materially influence:

• Pricing
• Product specifications
• Waiting periods
• Resale values
• Local production volumes

For consumers, however, imported vehicles can also pressure assemblers to improve features, safety equipment and pricing.

The impact is therefore different depending on whether the issue is viewed from the perspective of manufacturers, workers or buyers.

Importers Say Competition Benefits Consumers

The All Pakistan Car Dealers and Importers Association takes the opposite position from domestic manufacturers.

Association chairman Mian Shoaib Ahmed told Dawn that used imports are legal when conducted under government rules and that there is clear market demand for them.

He argued that Pakistan needs a more competitive automotive market.

Importers have historically maintained that used Japanese vehicles often offer features, fuel efficiency and safety equipment that buyers value.

They also argue that competition can force local companies to improve.

Those are industry claims rather than established conclusions about the overall economic effect.

Pre-Shipment Inspection Is Now an Important Requirement

Pakistan has tightened the technical standards applied to imported used vehicles.

Dawn reported that vehicles are being subjected to pre-shipment inspection by accredited companies, particularly in Japan, where many Pakistani used-car imports originate.

The broader regulatory framework requires compliance with safety, environmental and quality requirements.

Recent EDB criteria have referred to international UNECE WP.29 vehicle standards covering areas such as:

• Braking systems
• Seat belts
• Airbags
• Lighting
• Tyres
• Steering
• Crash safety
• Emissions
• Electric-vehicle safety

These requirements are intended to prevent heavily damaged, unsafe or improperly documented vehicles from entering the market.

Commercial Import of Used Vehicles Is a Separate Route

Another important development is Pakistan’s move toward commercial imports of used vehicles.

The Economic Coordination Committee approved commercial imports in September 2025.

The Ministry of Commerce subsequently issued S.R.O. 1895(I)/2025, adding commercial import of used vehicles to the Import Policy Order.

Initially, vehicles had to be less than five years old through June 30, 2026.

The commercial-import regime was also tied to environmental, safety, quality, testing and certification requirements.

This route is separate from the Gift and Transfer of Residence schemes used by overseas Pakistanis.

Commercial Imports Also Carry Additional Duty

When the government approved the commercial framework in 2025, it imposed an additional 40% regulatory duty on commercially imported used vehicles.

The plan was for that additional duty to decline gradually by 10 percentage points annually until reaching zero in FY2029-30.

More recent industry guidance says the additional regulatory duty applicable during the current phase has fallen to around 30%, on top of other applicable taxes and duties.

That means commercial imports are legal, but they are not duty-free.

September 30 Rules Have Generated Fresh Debate

Dawn reported that a September 30 EDB notification further altered the framework for used-vehicle imports.

According to the newspaper, the revised criteria removed certain restrictions on who can participate and shifted aspects of the inspection framework toward PSQCA-registered inspection agencies.

However, public reporting about the exact legal status and wording of the September 30 notification has not been completely consistent.

Some reports describe proprietorships and partnerships as eligible, while others refer to registered companies.

Because the final notification was not readily available through the official EDB notification archive reviewed by Info-Matix, those details should be treated cautiously until the responsible authority publishes or clarifies the definitive text.

One-Year Transfer Restriction Remains Important

For Gift and Transfer of Residence vehicles, one major anti-misuse provision is clear.

The January Commerce Ministry order states that imported vehicles under those schemes must remain non-transferable for one year from the date of importation.

The purpose is to make it harder for traders to use overseas Pakistanis merely as nominal importers before immediately selling the car to a commercial buyer.

Dawn cited an unnamed auto-industry executive as claiming that the restriction was not being implemented consistently in some cities.

That allegation has not been independently established in the material reviewed by Info-Matix.

It should therefore remain attributed to the industry source.

Why Imported Japanese Cars Remain Popular

Used Japanese vehicles have maintained strong demand in Pakistan for several reasons.

Depending on the model, buyers may find:

• Hybrid powertrains
• Smaller engines
• Advanced driver-assistance features
• Multiple airbags
• Compact dimensions
• Good fuel economy
• Higher equipment levels

The local market has expanded considerably, particularly with new Chinese brands and locally assembled hybrids and EVs, but imported models still occupy niches that domestic assembly does not always cover.

That helps explain why imports can rebound even after tighter regulation.

New Car Imports Are Rising Too

The import debate is not limited to used vehicles.

Pakistan Bureau of Statistics data cited by Dawn showed the value of new and used motor-car imports combined rose 36% to $81.4 million during July-August 2026, from $59 million in the same period a year earlier.

Part of the increase came from manufacturers and new entrants importing completely built vehicles before beginning local assembly.

Chinese new-energy vehicle brands in particular have been using CBU imports to establish products and test demand.

So growth in vehicle imports should not automatically be interpreted as growth in used cars alone.

Local Assembly Still Matters for Employment

One of the strongest arguments from domestic manufacturers concerns the supplier chain.

Locally assembled vehicles support activity beyond the assembly plant itself.

The wider ecosystem can include:

• Plastic components
• Seats
• Batteries
• Wiring harnesses
• Tyres
• Glass
• Metal parts
• Rubber components
• Logistics
• Dealerships

Domestic manufacturers therefore argue that localisation produces more employment and industrial activity than importing a completely built vehicle.

PAAPAM’s chairman used this argument in calling for policies that encourage local manufacturing rather than increased dependence on imports.

Imports Can Also Create Economic Activity

The other side of the debate should not be overlooked.

Imported vehicles support businesses including:

• Vehicle dealers
• Inspection companies
• Shipping companies
• Ports
• Customs agents
• Repair workshops
• Spare-parts traders

They also generate customs duties and other taxes.

Therefore, the issue is not that imports generate no economic activity.

The policy question is how Pakistan balances consumer access and competition against its goal of developing a larger domestic manufacturing base.

Localisation Claims Need Context

The industry’s statement that local cars contain up to 60% local content by value should also be interpreted carefully.

Localisation differs significantly by vehicle.

Models assembled in Pakistan for many years generally contain more locally sourced components than recently introduced cars, hybrids and EVs.

A single percentage therefore cannot describe the entire market.

The Rs1.5 million local-parts figure cited by PAAPAM is an average used by the association in its argument.

It should not be assumed to apply identically to every locally assembled model.

Consumers Are Caught Between Two Policy Objectives

Pakistan’s automotive policy is attempting to achieve several goals at once.

The government wants:

• More domestic manufacturing
• Higher localisation
• Automotive exports
• Lower vehicle prices
• Better safety
• More consumer choice
• Increased competition
• Greater adoption of EVs
• Lower import dependence

Some of these objectives can conflict.

Restricting imports can support local factories but potentially reduce consumer choice.

Opening imports can improve competition but weaken production volumes for domestic assemblers.

The challenge is designing a framework that does not protect inefficient producers indefinitely while still giving manufacturers enough policy stability to invest in Pakistan.

What September’s Numbers Actually Show

September provides several clear conclusions.

First, used-car imports have recovered significantly from the unusually low levels seen earlier in 2026.

Second, the Gift Scheme currently dominates the remaining personal import channels.

Third, domestic manufacturers and parts makers are increasingly concerned about the renewed inflow.

Fourth, importers believe the new framework will expand competition.

What the numbers do not establish is whether used imports are already causing a measurable decline in domestic production.

That would require comparing longer-term production, sales, imports and segment-level consumer behaviour.

Important Clarification About the Headline

The source headline says:

“Local automakers voice concerns as imports of used cars surge in Sept.”

The “surge” description is supported on a month-on-month basis.

Imports rose from 1,445 vehicles in August to 2,276 in September — approximately 58%.

But the increase should be placed in context.

Imports had already reached 1,938 units in July, and FY2025-26 used-car imports were lower than the previous fiscal year overall.

Therefore, September represents a sharp monthly rebound rather than proof of an unprecedented long-term import boom.

A precise Info-Matix headline is:

“Pakistan Used Car Imports Jump 58% in September as Local Industry Raises Concerns.”

Bottom Line

Pakistan imported 2,276 used vehicles in September 2026, up roughly 58% from 1,445 units in August, according to Commerce Ministry data reported by Dawn.

Almost all of them — 2,238 vehicles, or about 98% — entered through the Gift Scheme.

The increase comes despite Pakistan abolishing the Personal Baggage Scheme in January.

The January order retained the Gift and Transfer of Residence routes but introduced tighter restrictions, including a requirement that imported vehicles remain non-transferable for one year.

Domestic auto-parts manufacturers argue the rising imports reduce demand for locally produced components and threaten employment and localisation.

Importers counter that legal used-car imports improve competition and give consumers access to vehicles and specifications not always available from domestic assemblers.

Meanwhile, Pakistan is also developing a separate commercial used-vehicle import regime, originally approved in 2025 and linked to international safety and environmental requirements.

The key policy question is therefore broader than September’s numbers.

Pakistan must decide how to balance consumer choice and competition with its objective of building a larger, more localised automotive manufacturing industry.

September’s figures show that tightening one import channel has not eliminated demand for used vehicles — it has largely shifted that demand toward the remaining legal routes.