Pakistan's automotive sector is staring down a policy crossroads that its leaders say could determine whether the country retains any domestic vehicle manufacturing at all. Industry bodies have now formally petitioned Prime Minister Shehbaz Sharif, warning that a proposed tariff reduction on imported cars, combined with a stalled new auto policy, risks dismantling a sector that supports millions of livelihoods. The Pakistan Automotive Manufacturers Association (PAMA) and the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) sent separate letters to the premier, each requesting urgent stakeholder meetings. Their unified message: the current policy trajectory threatens permanent deindustrialisation, not just a temporary downturn. Main Developments PAMA Director General Abdul Waheed Khan's letter to the prime minister zeroes in on the National Tariff Policy (NTP) 2026-31, which proposes cutting completely built-up (CBU) import tariffs to 15 percent. That figure, he argues, rests on unrealistic assumptions about Pakistan's export capacity and competitiveness in the global automotive market. Read also: 3 Ways Pakistan's Competition Chief Aims to Boost Economic Growth Waheed contends that a 15 percent tariff would make imported vehicles significantly more attractive than locally assembled ones, accelerating rather than preventing industrial decline. He points to international benchmarks where major manufacturing nations shield their domestic industries—Vietnam maintains tariffs up to 70 percent, while Thailand goes as high as 80 percent on imported vehicles. The numbers behind the industry's alarm are stark. Roughly 45,000 CBU vehicles enter Pakistan annually, siphoning off about 18 percent of the domestic market that local manufacturers would otherwise serve. The sector currently operates at less than half its installed annual capacity of 500,000 units, a direct consequence of repeated policy shifts and demand-suppressing measures, according to the association. Background The current impasse follows years of policy turbulence that has left the industry in a holding pattern. Pakistan's two previous auto policies were largely assembly-centric, creating incentives that led to a proliferation of assembly plants without meaningful industrial deepening, PAAPAM Chairman Usman Aslam Malik noted in his letter. That historical tilt toward assembly operations left the vendor sector—which accounts for roughly 80 percent of the auto industry's total employment—with little substantive support. The consequences of that neglect are now compounding with the tariff uncertainty and the prolonged delay in finalising a new Auto Policy. Malik told the prime minister that the delay has created significant uncertainty for parts manufacturers, stalling investment decisions, capacity planning, and technology upgrades. Capital is increasingly flowing toward more predictable markets, he warned, as continued ambiguity erodes investor confidence. Why It Matters If the automotive sector is not carved out from the proposed tariff reductions, the industry projects the permanent closure of vehicle manufacturing plants. That scenario would put roughly 1,324 auto parts manufacturers out of business and jeopardise more than $5 billion in industrial investment. The human cost extends far beyond factory workers. Direct unemployment in the sector would ripple outward, affecting the livelihoods of approximately 2.5 million people tied to the automotive ecosystem. For a country already grappling with economic headwinds, losing an industrial anchor of this scale would carry consequences well beyond the showroom floor. What's Next Both industry bodies are pressing for immediate meetings with the prime minister to present their case before any final decisions are made on the NTP. PAMA is specifically urging that the automotive sector be excluded from the proposed tariff reductions entirely. Beyond the tariff question, the industry wants a stable, long-term automotive policy framework with predictable tariff structures. PAMA has proposed maintaining a minimum 40 percent tariff differential between CBU imports and locally manufactured vehicles to sustain production volumes and encourage deep localisation. PAAPAM, for its part, is seeking a policy built on deepening localisation, strengthening the vendor base, promoting technology transfer, and enabling economies of scale for parts manufacturers. Whether the government heeds these calls before finalising the NTP remains the open question that will shape the sector's trajectory for years to come.