Pakistan possesses huge potential to become a manufacturing and exporting hub of the auto industry for renowned original equipment manufacturers (OEMs) of the world. By 2013, there were 3,200 units of automotive industry with the investment of Rs 92 billion, employing 3.5 million people and producing annually 1.8 million motorcycles and 200,000 vehicles. Vehicle Sales correlated with interest rate regime, especially for small-low and economy segments, whilst purchases in small-high (1300 CC and above) correlated with rising income level.
The support of local automobile companies and the auto-part vendors has attained excellence in some fields at par with the global standard but there is a room for further development for vendors to scale up their production with the cutting edge technology and emerging trends in the international automobile market.
- Pakistan has a low motorization rate of 18 vehicles per 1000 persons compared to a global average of 341. The low motorization rate along with rapid urbanization, there is significant potential for growth in this sector. With rising income levels and standards of living, vehicle purchases across all segments are expected to increase significantly, rationalizing investment in the sector.
- The sector contributes 3% to the GDP
- The sector recorded significant positive growth of 17% during financial year 2012-2013
- The auto-part Industry is generating exports of Rs 128
The first Investment Policy by Board of Investment (BOI) was given in 1997 which opened services, social, infrastructure and agriculture sectors for foreign and local investors. It was a major step forward for integration of Pakistan’s economy into international markets as prior to this policy; foreign investment was restricted to manufacturing sector only. The 1997 Policy laid a solid foundation for the gains in FDI inflows experienced over the subsequent decade.
Foreign Direct Investment in Pakistan increased by 2761.10 USD Million in 2016. Foreign Direct Investment in Pakistan averaged 2651.26 USD Million from 2010 until 2016, reaching an all time high of 3184.30 USD Million in 2010 and a record low of 2099.10 USD Million in 2012.