The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has urged the federal government to expedite the finalisation of the new Auto Policy, warning that prolonged policy uncertainty is undermining investor confidence and diverting investment to more predictable markets.

In a letter addressed to the Prime Minister, PAAPAM said the continued delay in announcing the policy has stalled investment decisions, capacity expansion and technology upgrades across Pakistan's automotive vendor industry, creating uncertainty for manufacturers.

The association argued that the country's previous two Auto Policies were largely assembly-centric, with incentives primarily benefiting vehicle assemblers rather than promoting broader industrial development. It noted that while assembly operations expanded, the vendor industry—which accounts for around 80% of total employment generated by the automotive sector—received limited policy support.

PAAPAM stressed that the next Auto Policy should focus on localization, vendor development, technology transfer and strengthening domestic manufacturing capabilities. It said a sustainable automotive industry can only be achieved by building a competitive local parts manufacturing ecosystem and reducing dependence on imported components.

The association also requested a meeting with the Prime Minister to present its recommendations for developing a vendor-led, localization-driven automotive industry. In addition, it sought an opportunity to engage with the team of economists led by Stefan Dercon on the National Tariff Policy, ensuring that the concerns of local parts manufacturers are reflected in future tariff reforms.

Reaffirming its commitment to supporting Pakistan's industrial development, PAAPAM said it is ready to work closely with the government on a policy framework that promotes local manufacturing, import substitution, technology transfer and sustainable employment growth across the automotive sector.