KARACHI: Pakistan’s auto sector has raised alarm over a wave of foreign company exits, warning that more international investors could pull out if the government does not revisit what industry leaders call “regressive and exploitative” policies.
The warning comes after Yamaha abruptly wrapped up operations in Pakistan, nearly a decade after re-entering the market with a $100 million investment. The Japanese automaker had achieved milestones in localisation, technology transfer, and job creation, even becoming the only company besides Honda to localise engine production. Yet, it left citing policies that industry officials say suffocate growth.
According to Abdul Waheed Khan, Director General of the Pakistan Automotive Manufacturers Association (PAMA), the government’s rule that forces automakers to achieve strict export targets before being allowed to import raw materials and components is unrealistic. “This law is completely detached from ground realities and has proved the last nail in the coffin for an already struggling auto sector,” he said.
Khan further criticised the newly introduced Motor Vehicle Development Act 2025, which classifies civil business disputes as criminal offenses, with potential arrests and long sentences. “Treating routine commercial issues as criminal matters is catastrophic for foreign investors,” he cautioned.
The broader investment climate is already under strain. Global companies such as Shell, Uber, Careem, Microsoft, and Telenor have exited Pakistan in recent years, underscoring concerns about the country’s ability to retain foreign direct investment.
Meanwhile, Indus Motor Company (IMC) told analysts that recent floods have slowed sales and the full impact will be felt in the coming months. Without the disruption, Pakistan’s car market, including used imports, could have exceeded 300,000 units in FY26, up from 223,799 in FY25.
