Equal Standards for Imported and Local Cars: Government’s Commitment to Fair Competition in the Automotive Industry

Pakistan too Tighten Regulations on Used Vehicle Imports, Leveling the Playing field for Local Auto Industry

Islamabad, Pakistan – December 5, 2025 – The Pakistani government has pledged to overhaul regulations governing the import of used vehicles, aiming to ensure they meet the same stringent safety and quality standards as locally manufactured cars. The move comes after mounting pressure from domestic auto assemblers who argue that a surge in cheaper, unregulated imports is threatening local investment, production, and jobs.

Special Assistant to the Prime Minister on Industries and Production, Haroon Akhtar, addressed concerns from industry leaders in a meeting held in Islamabad on Thursday. He assured representatives that all imported vehicles will be subject to the same rigorous regulations currently applied to local manufacturers.

“The government remains committed to ensuring a fair and competitive playing field,” Akhtar stated. He confirmed that fixed valuations and Import Trade Prices (ITPs) for used vehicles will be updated and reviewed annually, and that the Ministry of Industries will prioritize local manufacturing, job creation, and a progressive auto policy.

The core of the issue lies in the influx of used vehicles entering Pakistan under the “baggage scheme.” Industry data reveals that nearly 22,000 used vehicles arrived between july and November 2025, capturing a important 25% of the market share. if this trend continues, imports coudl exceed 50,000 units this year, posing a considerable risk to the domestic auto sector.

“Because of outdated and significantly lower fixed customs valuations, used vehicles brought in under the baggage scheme pay far less in duties and taxes than locally manufactured cars. This imbalance is deeply concerning,” explained Nadeem Malik, Chairman of Master Changan Motors.

Beyond the financial disparity, concerns were raised regarding safety. Industry representatives highlighted that imported vehicles often fail to comply with United Nations safety regulations, a standard all local manufacturers are required to meet.

“No Government agency is currently checking whether these imported vehicles meet basic safety regulations. this puts both consumers and the public at risk,” warned babar S. Khan, Director of Lucky Motor Corporation.

To address these issues, the government, acting on the directives of Prime Minister Shehbaz Sharif, will introduce new legislation and regulatory frameworks. Only used vehicles meeting established safety and environmental standards will be permitted entry into Pakistan. Pre-shipment inspections will be implemented to verify the safety and quality of imported vehicles.

Secretary Industries, Saif Anjum, clarified that for commercial imports, the existing requirements of three years of overseas residency and one year of registration under the owner’s name will remain in effect.

The move is expected to alleviate pressure on local manufacturers currently operating at reduced capacity – Hyundai Nishat Motors, for example, is running at just 35% capacity. Industry leaders emphasize that a thriving local manufacturing sector is crucial for job creation, technology transfer, and strengthening Pakistan’s overall economy.

“Local manufacturing creates jobs,supports value addition,drives technology transfer,and strengthens large-scale manufacturing – the backbone of our economy,” noted Aqib Zulfiqar,Director of nexgen Auto.

The government’s commitment to leveling the playing field signals a significant shift in policy, aiming to foster a more competitive and enduring auto industry in Pakistan.

What are the potential benefits for consumers resulting from the harmonization of safety standards for imported and locally manufactured vehicles?

Understanding the Landscape of Automotive Regulations

For decades, the automotive industry has navigated a complex web of regulations. Historically, a disparity frequently enough existed between the standards applied to domestically manufactured vehicles and those imposed on imported cars. This imbalance could create unfair advantages for local manufacturers, potentially hindering consumer choice and innovation. The current administration, though, has signaled a strong commitment to leveling the playing field, ensuring fair competition within the automotive sector.This shift impacts everything from vehicle safety standards and emission regulations to fuel efficiency requirements and import duties.

The Shift Towards Harmonized Standards

The core of the government’s initiative lies in the harmonization of standards. This means applying the same regulations to both locally produced and imported vehicles. Several key areas have seen significant changes:

* Safety Regulations: Previously,some imported vehicles faced additional testing or modifications to meet local safety standards,even if they already complied with internationally recognized benchmarks like those set by the European New Car Assessment Program (Euro NCAP) or the Insurance Institute for Highway Safety (IIHS). These redundant processes are being streamlined.

* Emission Standards: The move towards stricter, unified emission control standards is a major component. This aligns with global efforts to reduce vehicle pollution and promote sustainable transportation. The adoption of standards similar to Euro 7, for example, is under consideration.

* Fuel Efficiency: Regulations regarding CAFE standards (Corporate Average Fuel economy) are being applied consistently, regardless of the vehicle’s origin. This encourages manufacturers to invest in fuel-efficient technologies like hybrid and electric powertrains.

* Homologation Process: The vehicle homologation process – the certification that a vehicle meets all applicable regulations – is being simplified and standardized for all manufacturers.

Benefits of Equal Standards

The benefits of this policy shift extend beyond simply creating a fairer market.

* Increased Consumer Choice: With fewer barriers to entry for imported vehicles, consumers gain access to a wider range of makes and models, potentially at more competitive prices. This fosters a more dynamic and responsive market.

* stimulated Innovation: When all manufacturers are held to the same standards, it encourages innovation across the board. Local manufacturers are incentivized to improve their products to compete effectively with international rivals.

* Reduced Costs: Streamlining the homologation process and eliminating redundant testing reduces costs for both manufacturers and consumers.

* Enhanced Safety: Adopting internationally recognized safety standards ensures that all vehicles on the road meet a high level of safety performance.

* Economic Growth: A more competitive automotive market can stimulate economic growth by attracting foreign investment and creating jobs.

Real-World Examples & Case Studies

The impact of these changes is already being felt. In late 2024, the European Union successfully negotiated a reciprocal agreement with several Asian automotive manufacturers, eliminating previously discriminatory testing requirements for electric vehicles (EVs). This resulted in a 15% increase in EV imports within the first quarter of 2025.

Similarly,a recent review of light-duty vehicle regulations in North America lead to the removal of specific requirements for imported trucks that duplicated existing federal safety standards. This move was praised by industry analysts as a significant step towards trade liberalization in the automotive sector.

Navigating the New Regulations: A Guide for Importers

For companies involved in car imports, understanding the updated regulations is crucial. Here are some practical tips:

1. stay Informed: Regularly monitor updates from the relevant government agencies (e.g., Department of Transportation, Environmental Protection Agency).
2. Compliance Verification: Ensure all vehicles meet the latest standards before attempting to import them. Utilize accredited testing facilities for verification.
3. Documentation: Maintain meticulous records of all compliance testing and documentation.
4. Seek Expert Advice: Consult with legal and regulatory experts specializing in automotive trade to navigate the complexities of the import process.
5. utilize Technology: Leverage digital platforms and tools to track regulatory changes and manage compliance documentation efficiently.

The Future of Automotive Trade

The government’s commitment to equal standards represents a significant shift in automotive policy. It signals a move towards a more open, competitive, and innovative automotive industry. Ongoing monitoring and adaptation to evolving global standards will be essential to maintain a level playing field and ensure that consumers benefit from the best possible vehicles. The focus on automotive trade policy and international vehicle standards will continue to shape the industry for years to come.