Pakistan’s automobile industry is undergoing an intriguing transformation. During the last financial year, total locally assembled car sales were one-third of the industry’s capacity, around 175,000 units sold against an installed capacity of roughly 550,000. Meanwhile, used car imports are opening, yet new assemblers are entering the market (including BYD and others), and existing players are introducing new brands. On the surface, this defies economic logic, but there is method to the madness.

Demand is shifting toward NEVs (new energy vehicles) and crossovers, while most of the current production continues to cater to sedans in the internal combustion engine (ICE) segment. Consumers are increasingly preferring Chinese brands, which lead the NEV market, while most of the existing local assembly focuses on Japanese and Korean cars.

Korean players are now blending in Chinese crossovers and SUVs. Nishat Group has launched two new Chinese brands, and Lucky Motors is in talks with two others to introduce in Pakistan. Both groups are looking to utilize their existing capacities, as their Korean brands are struggling.

After the 2016–21 auto policy, one of the first crossover successes was MG, a British brand acquired by Chinese investors. However, supply disruptions due to Covid lockdowns, coupled with a lack of foresight from local partners, caused the brand to lose consumer confidence.

The trendsetter has been Haval, a Great Wall Motors brand introduced by........

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