Pakistan’s Auto Sector Shows Significant Growth in FY25

Pakistan’s automotive industry experienced considerable expansion during the initial eleven months of fiscal year 2024-25. Car sales, motorcycle sales, and three-wheeler sales all saw substantial increases, which indicates greater economic soundness, strengthened consumer assurance, and decreasing inflationary forces.

Figures gathered by the Pakistan Automotive Manufacturers Association (PAMA) reveal that total car sales reached 14,762 units in May 2025, representing a 35 percent increase compared to the previous year and a 39 percent rise over April 2025.

Factors Contributing to Growth

The substantial month-on-month rebound can largely be attributed to sluggish sales performance in April 2025. Road closures in Sindh triggered by strikes and logistical difficulties caused shipment delays, which stifled vehicle sales. As these problems subsided, demand rebounded dramatically in May, spurred by a generally stable macroeconomic environment, reduced borrowing costs, and enhanced consumer confidence in anticipation of budgetary incentives.

Company-Wise Performance
  • Sazgar Engineering Works (SAZEW): Demonstrated the most notable growth, reporting a 67 percent month-on-month increase and an 18 percent year-on-year increase. The launch of a new HAVAL model in April was a significant factor in these impressive results. SAZEW’s total sales for 11MFY25 increased by 111 percent to 9,495 units, compared to 4,503 units during the same period last year.
  • Indus Motor Company (INDU): Reported solid results, with sales increasing 2.4 times year-on-year and 48 percent month-on-month to 4,829 units, representing the highest monthly sales in nearly three years. The rise was fueled by rising demand for well-known models such as Corolla, Yaris, and Cross, which together reached a new three-year high in sales.
  • Honda Atlas Cars (HCAR): Saw a 69 percent year-on-year and a 17 percent month-on-month increase in sales to 2,005 units.
  • Pak Suzuki Motor Company (PSMC): Had mixed results, with a 38 percent month-on-month increase but an 8 percent decrease from the same month last year. May sales totaled 5,519 units.
  • Hyundai Nishat Motors: Saw robust growth, with sales rising 58 percent year-on-year and 45 percent month-on-month to 1,307 units in May 2025.
Two- and Three-Wheeler Segment

The two- and three-wheeler sector maintained its impressive expansion, with total sales rising 26 percent year-on-year and 11 percent month-on-month to 150,175 units in May 2025, the highest monthly sales in three years. This increased cumulative 11MFY25 sales to 1.378 million units, up 30 percent year on year, as affordability and core transportation demands fueled demand in this sector.

Tractor Industry Trends

Pakistan’s tractor industry, however, showed varied patterns. Total tractor sales in May 2025 were 2,184 units, a 29 percent decrease year-on-year but a 36 percent increase month-on-month, as weak farm economics impacted new purchase choices. Millat Tractors sold 1,569 units in May 2025, down 34 percent from the previous year, while Al-Ghazi Tractors Limited (AGTL) sold 615 units, a 17 percent decrease year-on-year.

Truck and Bus Segment

Meanwhile, Pakistan’s truck and bus sector saw considerable expansion, with May 2025 sales rising 147 percent year-on-year and 17 percent month-on-month to 610 units. Hino, Master, JAC, and Isuzu vehicles all saw growth, bringing total 11MFY25 sales to 4,495 units, a 92 percent increase from 2,345 units in the same period last fiscal year.

Analyst Perspectives

Market analysts linked the auto sector’s broad-based recovery to decreasing inflation, lower interest rates, and improved finance alternatives, as well as a stable macroeconomic environment. The favorable momentum was especially noticeable in passenger cars and two- and three-wheeler categories, where pent-up demand from prior months converted into actual sales as operational disruptions reduced.

Future Outlook

Topline Securities anticipates that the momentum will continue into the next fiscal year, owing to a combination of lower interest rates, improved vehicle financing alternatives, and the introduction of new models with upgraded engines, including hybrid and plug-in hybrid vehicles. Market observers anticipate that as macroeconomic stability improves and consumer affordability rises, automobile sales volumes will continue their growth trend in FY26.

Expert Warnings

Auto expert Mashood Khan has cautioned that the government’s planned downward trend in Additional Custom Duty, Regulatory Duty, and Custom Duty for easing the import of used vehicles is likely to harm local production rather than boost exports in the future. He predicts dire implications for the local manufacturing sector. Import bills will climb and foreign reserves will suffer without a thriving domestic industry, he added. The auto parts and other manufacturing sectors will encounter considerable obstacles. He questioned how exports would rise without a strong domestic sector.