The Pakistan Automotive Manufacturers Association (PAMA) has warned that the country’s auto industry is at risk of further decline if the government does not urgently revise its current policies, following Yamaha’s decision to exit the market.
Abdul Waheed Khan, Director General of PAMA, said foreign direct investment in Pakistan remains “negligible” and pointed to the recent departures of global firms, including Shell, Uber, Careem, Microsoft, and Telenor, as alarming signals of a deteriorating business climate. He criticized the prevailing policy framework as “regressive and exploitative,” arguing that it hampers localization, technology transfer, and employment opportunities.
A major point of contention is the newly enacted Motor Vehicle Development Act 2025, which, according to PAMA, imposes unrealistic export requirements for manufacturers to qualify for raw material and component imports. Khan argued that these conditions ignore market realities and burden an industry already struggling with high costs and supply chain disruptions. He further warned that provisions criminalizing routine business practices, with heavy fines and potential jail terms, risk driving away investors.
Yamaha’s case was highlighted as a stark example. The company, which re-entered Pakistan in 2015 with a $100 million investment, localized engine production, transferred technology, and created jobs. Despite these efforts, Yamaha has now exited, exposing systemic flaws in policy and governance, PAMA noted.
Adding to industry woes, Indus Motor Company (IMC) reported that recent floods have severely disrupted operations, with sales likely to decline in the coming months. The company estimated that without these setbacks, total auto sales could have exceeded 300,000 units in FY2025-26, compared to 223,799 units in the previous fiscal year.
Industry observers caution that unless corrective measures are implemented, including policy consistency, investor-friendly regulations, and practical export targets, Pakistan risks losing more investment and weakening its already fragile automotive sector.
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