Auto sales slump in August amid policy vacuum

KARACHI: The automobile sector recorded a sharp month-on-month (MoM) contraction in August 2026, with manufacturers and consumers caught in a policy vacuum over the taxation of hybrid and electric vehicles, the Pakistan Automotive Manufacturers Association (PAMA) said on Monday. 

Passenger car production fell 23 per cent and sales dropped 20 per cent in August compared to July, PAMA said. Commercial vehicles, jeeps and pickups posted a steeper decline, with production down 40 per cent and sales down 29 per cent over the same period. Farm tractor production fell 23 per cent and sales dropped 15 per cent MoM.

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According to PAMA’s data, total car production slipped to 13,267 units in August from 17,307 units in July, while sales fell to 13,717 units from 17,216 units. In the jeeps and pickups segment, production dropped to 2,636 units from 4,361 units, and sales fell to 1,841 units from 2,602 units over the same period.

In a statement, PAMA Director General Razi-ur-Rahman said the slowdown stemmed from prolonged regulatory uncertainty following the expiry of the Automotive Industry Development and Export Plan (AIDEP 2021-26) in June, which has left the industry without a follow-up policy framework. He said the lack of clarity on sales tax treatment for hybrid, plug-in hybrid and range-extended electric vehicles has brought trading to a near standstill, with billions of rupees in sales lost as buyers postpone purchase decisions.

“The delay in policy announcement has engineered a loss-loss situation,” Rahman said , “with manufacturers left holding unsold inventory while the government continues to forgo tax revenue.”

He said the sharp drop in monthly car and jeep sales reflects a consumer base in a “wait and see” mode, wary of prices shifting once a new policy is unveiled. PAMA urged the government to announce the next auto policy without further delay to protect manufacturing capital and restore consumer confidence before the monthly declines harden into a recessionary trend.

Despite the monthly slump, cumulative figures for the July-August period showed a strong year-on-year (YoY) recovery. Passenger car production rose 36 per cent and sales surged 80 per cent compared to the same period last year, while commercial vehicles, trucks and buses posted growth of 84 per cent in production and 73 per cent in sales. Two and three-wheelers expanded 29 per cent across both production and sales. Farm tractor sales grew 5.0 per cent YoY even as production fell 17 per cent, with the segment still adjusting to the end of a government tractor subsidy scheme; a replacement scheme has been announced but is yet to be rolled out, leaving buyers on hold.

PAMA said the annual growth largely reflected easing inflation, improved credit availability and a low base effect from previous years, with total industry volumes still well below the peaks recorded in fiscal year 2022.

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On company performance, Pak Suzuki led sales with Alto remaining the top-selling car, while Suzuki motorcycles also posted healthy growth. The company discontinued two variants of the 1000cc Cultus, leaving only the top-end variant in the market, which weighed on its overall figures. Suzuki Fronx, a compact SUV, became the newest addition to its lineup, while Swift performed in line with expectations. Indus Motor Company’s sales normalised in August after an unusually strong July, with the Fortuner and IMV range continuing to post steady growth.

Honda Atlas Cars extended its run in the sedan segment, though sales of the HR-V were hurt by uncertainty over hybrid vehicle taxation following the discontinuation of the BR-V in March. Hyundai Nishat Motors’ hybrid and plug-in hybrid models also await policy clarity, though the relaunched Elantra recorded strong demand, with production and sales nearly doubling both MoM and YoY.