Imports of new and used cars rose sharply in the first two months of fiscal year 2026-27. New entrants expanded vehicle imports ahead of local assembly during this period. Meanwhile, auto vendors raised concerns over continued used car imports despite the government’s decision to abolish the baggage scheme.

According to Pakistan Bureau of Statistics data, car imports, including both new and used vehicles, increased 36 percent to $81.4 million in July and August 2026. This compares to $59 million recorded during the same period a year earlier. Therefore, the jump marks a significant shift from last year’s figures.

The government abolished the baggage scheme for used car imports in January. It also made pre-shipment inspections mandatory for vehicles imported under the gift and transfer of residence schemes. Indus Motor Company said in its FY26 annual report that used vehicle imports fell to around 38,000 units in FY26. This marked a drop from 42,000 units in FY25 after the baggage scheme ended.

However, former Pakistan Association of Automotive Parts and Accessories Manufacturers Chairman Aamir Allawala said vendors believed used car dealers were still managing imports through different schemes. He noted that imports totaled 48 vehicles in May, followed by 843 in June, 1,938 in July and 1,445 in August. Additionally, the gift scheme accounted for most imports across June, July and August.

Allawala said leading Chinese companies were importing between 1,500 and 2,000 new energy vehicles per month. Meanwhile, used car imports totaled around 3,200 units across July and August combined. He also noted that several locally assembled vehicles carried more than 50 percent local content by value, averaging around Rs. 1.5 million per vehicle.

Furthermore, Allawala said imports of completely built-up vehicles, whether new or used, reduced demand for locally produced auto parts. This trend has also affected employment across the vendor industry. Still, Allawala stressed that job creation and the preservation of Pakistan’s industrial base should remain government priorities. Finally, his comments point to growing tension between import expansion and local manufacturing interests.