In Pakistan, the government does not regulate the prices of auto sector through a price fixation policy.
The policy of government has been to promote industrial activities through competition among local auto manufacturers leaving market forces to determine open market value in the automotive industry.
The intention of government has been manifested through the Automotive Development policy 2016-2021 and same principal was maintained in the Auto Industry Development and Export Policy 2021-2026 with enhanced emphasis on localization of parts.
The Automotive Development Policy 2016-21 offers tax incentives to new automakers to establish manufacturing plants. In response various car manufacturers have expressed their interest in entering the market.
Also Read: Why prices of cars in Pakistan are higher than in India?
In the history, Pakistan car market was dominated by three players. to overcome the monopoly of key players and address consumer welfare in terms of price, choice, and quality and after sales services, the government has successfully implemented certain policy measures to attract new investors and create competition in local market by lowering the threshold for new investment.
The Auto Development Policy (2016-21) was announced in 2016 which created competition in the local market and resulted in start of assembly operations of cars and SUVs by Korean Brands (KIA, Hyundai), Chinese Brands (Master Motors, United Motors, Sazgar Engineering, Regal Automobile), Malaysian Brand (Proton) etc.
It was success of ADP 2016-21 that the government of Pakistan approved the new auto policy i.e. Auto Industrial Development and Export Policy (AIDEP) 2021-26 which was continuation to the ADP 2016-21.
The AIDEP (2021-26) was introduced to further strengthen the auto sector and provide significant support to economy of Pakistan by ensuring import substitution, export enhancement and creation for local workforce.
