Is Pakistan's auto industry assembling or manufacturing?

Pakistan's auto industry is often touted as a manufacturing success story, but recent trade data paints a far less encouraging picture. During FY2025-26, the country spent a record $2.12 billion importing CKD and SKD kits—nearly double the previous year's import bill.

At the same time, surging imports of fully built vehicles continue to strain Pakistan's foreign exchange reserves, raising fundamental questions about the sector's trajectory.

In the latest episode of On My Radar, Kamran Khan is joined by Ali Asghar Jamali, CEO of Indus Motor Company, and Shahbaz Ashraf, Head of Research at Nukta, to examine whether Pakistan is building a genuine automotive manufacturing industry or becoming increasingly dependent on imported vehicles and components.

The growing volume of imported cars and parts carries significant consequences for Pakistan's broader economy. Beyond the direct drain on foreign exchange reserves, these imports widen the current account deficit and add to inflationary pressures by increasing demand for dollars. Moreover, the reliance on foreign-made components limits the growth of the local vendor industry, stifles job creation in the domestic supply chain, and reduces the value retention of each vehicle sold in the country—meaning a greater share of every rupee spent on a car flows out of Pakistan rather than circulating within its economy.

The discussion also delves into why Pakistan's auto imports reached a record high, what CKD, SKD, and CBU vehicles actually mean, and why EV policies have inadvertently encouraged CBU imports. The panel examines the real level of localization in Pakistan's auto industry, questioning whether Japanese, Korean, and Chinese brands are genuinely manufacturing in the country or simply assembling imported parts. They also explore how rising imports are affecting local auto parts manufacturers and, ultimately, whether Pakistan can ever build a genuine "Made in Pakistan" automotive industry.