Pakistan’s passenger car market recorded strong growth in the first quarter of FY2026-27. Sales increased 43% year-on-year to 41,872 units between July and September, according to data from the Pakistan Automotive Manufacturers Association (PAMA).
However, uncertainty over the government’s auto policy and sales tax continues to affect the industry. Manufacturers and buyers remain cautious about investment decisions while they await clearer rules.
Car Sales Rise Despite September Slowdown
Passenger car sales fell 20% month-on-month in September to 10,939 units. Sales also declined 9.8% compared with September last year.
Despite the monthly slowdown, quarterly sales remained well above last year’s level. Passenger car production also increased 32% year-on-year during the first quarter.
PAMA Director General Razi ur Rahman said easing inflation and improved economic conditions had supported renewed customer interest. However, he noted that uncertainty continued to affect market confidence.
Automakers Report Mixed Results
Indus Motor Company recorded growth in September, with sales rising 31% year-on-year to 4,142 units. Its Corolla, Yaris and Cross models recorded combined sales of 3,563 units.
Honda Atlas Cars sold 2,128 units, down 8% year-on-year. Pak Suzuki Motor Company reported sales of 4,862 units, a 46% decline compared with September 2025. Hyundai Nishat Motors recorded 884 units, down 25% year-on-year.
Analysts linked some of the decline to delayed clarity over sales tax rules for hybrid and plug-in hybrid vehicles. The uncertainty reportedly restricted invoicing by some manufacturers.
Auto Policy Uncertainty Raises Concerns
PAMA has urged the government to provide a clear and predictable policy framework. The association warned that uncertainty could delay investment and affect long-term planning. It also raised concerns about rising imports of fully built vehicles and used cars. These imports could increase pressure on Pakistan’s balance of payments, according to the association.
Other vehicle categories showed stronger performance. Two- and three-wheeler sales rose 28% year-on-year during the quarter. Truck and bus sales increased 46%, while tractor sales grew 38%. Analysts expect new models and additional brands to support sales during FY27. However, sustained growth will depend partly on clearer policy decisions and stable market conditions.
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