Pakistan's car sales hit 3-year high in June ahead of tax hike

Passenger car sales in Pakistan soared to 21,773 units in June 2025, a 64% year-on-year increase and the highest monthly total in nearly three years.

The data was released by the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM).

The surge was largely due to consumers rushing to buy vehicles before a General Sales Tax (GST) hike from 12.5% to 18% took effect on July 1, 2025.

Pak Suzuki Motor Company (PSMC) led the spike. Sales of its Suzuki Alto hit a 39-month high at 9,497 units, helping the company grow 2.4 times month-on-month.

The strong June numbers pushed overall car sales for the 2024–25 fiscal year (FY25) to 148,023 units. That marks a 43% rise compared to 103,829 units sold in FY24.

Analysts credit the jump to a stable macroeconomic environment, lower interest rates, easing inflation, and an expanded range of available car models.

Sales of two- and three-wheelers totaled 138,509 units in June, up 54% YoY but down 9% compared to May. Total FY25 volume reached 1.5 million units, a 32% annual increase.

Tractor sales fell 32% YoY to 2,791 units in June, despite rising 28% month-on-month. Analysts attribute the decline to weak agricultural economics.

Truck and bus sales showed stronger momentum. Volumes rose 2.5 times YoY and 21% MoM to 737 units. For FY25, sales doubled to 5,232 units.

Topline Securities forecasts continued growth in FY26. The outlook is supported by lower interest rates, improving macroeconomic conditions, and a pipeline of hybrid and plug-in hybrid vehicles.

However, industry experts are raising concerns over new budgetary measures.

Abdul Rafay, a research analyst at Optimus Securities, said the FY26 budget has been largely negative for the auto sector.

He cited a 7.5% sales tax hike on vehicles up to 850cc and the imposition of a 1% to 3% levy on new energy vehicles (NEVs).

At the same time, he noted that regulatory duties on imported cars above 1800cc have been capped at 50% (down from 90%), and reduced by 5% to 10% for vehicles between 1300cc and 1800cc. The Additional Customs Duty (ACD) has also dropped from 7% to 6%.

“These changes are likely to make imported cars more competitive, putting pressure on local manufacturers’ growth,” Rafay said.

Industry analysts remain cautiously optimistic, expecting demand to stay strong across most vehicle categories but warning that local assemblers could lose ground if imports rise.