LAHORE:

The sudden influx of Chinese electric vehicles in the Pakistani auto market has raised alarm bells among industry stakeholders as they believe that the local auto industry is now likely to face another big challenge in the shape of imports of such variants, while it navigates through unbridled utility costs, import restrictions and regressive taxation measures.

According to them, the Chinese EV market, with almost 40% of the production capacity unutilised, will force its unsold stocks to other world markets.

In the present situation, Pakistan is one of the attractive destinations for “dumping of excess production of their domestic markets”, said industry experts, cautioning that it will further add to market distortions and cause destruction of the local industry.

They added that the impact on the industry, consumer and economy will be quite damaging since the local automotive landscape has been marred by several challenges for the last few years.

Demand has been dampened due to the limitations placed on financing facilities and shrinking disposable incomes of the potential customer base. The last straw on the camel’s back is the liberalisation of used car imports, which eat up around a quarter of the local market, they elaborated.

Besides, they added, the original equipment manufacturers (OEMs) in Pakistan are struggling with a limited consumer base as car ownership has come down to just 11 cars per 1,000 people (previously 18 cars per 1,000), which is one of the lowest in the region, while the Chinese domestic EV market comprises almost 70% of the world market and its direction has an impact on the global market too.

According to them, the overall sales of new EVs in China fell nearly 20% in January. Several factors were behind the slowdown in the Chinese EV industry, which included the re-imposition of 5% tax on new vehicle purchases (another 5% to be imposed in 2027), continuous influx of new models in the market (around 400 models vying for a limited customer base) and saturation at the level of potential domestic customers.

While affordable electric mobility is a welcome development, unchecked imports may undermine local assemblers and emerging manufacturers who are still building capacity, they said.

The number of auto manufacturers in Pakistan currently stands at 13, a majority of which are partnering with Chinese companies and producing hybrid electric vehicles. The variants, dominated by SUVs, which a couple of companies are currently assembling in Pakistan and some are directly importing from China, are now talk of the town, offering affordable pricing due to tax incentives.

This influx has put pressure on Japanese, Korean and British automakers and created a crisis sort of situation, especially in the SUV category. The experts added that Pakistan’s fragile industry cannot compete against a wave of subsidised or mass-produced imports without facing serious setbacks in investment, employment and technological growth. “Economic openness should not come at the cost of industrial decline and long-term sustainability,” they said.

The greater concern is that without strict quality controls and regulatory safeguards, Pakistan risks becoming a dumping ground for inferior products. Substandard batteries not only shorten vehicle life but also pose environmental and safety hazards, especially in the absence of a robust recycling infrastructure.

To protect consumers, safeguard the environment and nurture local industry, the government must enforce rigorous safety standards, certification requirements and calibrated import policies, they stressed.