Auto sales plunge 49% post-budget
nalysts are anticipating the automobile sector to keep its pace in the near future owing to improving macroeconomic situation and new production lines introduced by the players. photo: file
Pakistan's automobile industry experienced a sharp slowdown in July 2025, with sales tumbling 49% month-on-month (MoM) to 11,034 units, according to data from the Pakistan Automotive Manufacturers Association (PAMA). Despite the steep monthly decline, volumes were up 28% year-on-year (YoY) due to a low base in July 2024.
Industry experts attribute the MoM slump primarily to the high base of June 2025, when a rush of pre-buying occurred ahead of tax hikes in the FY26 federal budget. The budget introduced an Electric Vehicle (EV) adoption levy and raised the sales tax on 850cc vehicles from 12.5% to 18%, prompting customers to advance purchases before the changes took effect.
"The MoM decline is mainly attributed to the high base effect from Jun'25, when sales spiked due to a surge in pre-buying ahead of the increase in vehicle taxes, namely the imposition of the EV adoption levy and the increase in ST on 850cc vehicles from 12.5% to 18% under the FY26 federal budget," wrote AHL Research.
The YoY growth is due to a more stable macroeconomic environment with lower interest rates and easing inflation, which has improved consumer sentiment, noted Myesha Sohail of Topline Securities.
Breaking down the segments, the 1,300cc and above category saw a 37% MoM decline, with sales dropping to 4,290 units. The 1,000cc segment experienced a 61% MoM decrease, totalling 264 units. Additionally, the below 1,000cc segment recorded a 75% MoM decline, with sales reaching 2,557 units, according to AHL.
Among assemblers, Indus Motor Company Ltd (INDU) posted a relatively modest 9% MoM drop to 3,337 units, as gains in Fortuner and Hilux sales (+17% MoM) partly offset declines in Corolla, Yaris, and Corolla Cross (-17% MoM). Pak Suzuki Motor Company Ltd (PSMC) suffered the steepest decline, with volumes shrinking 72% MoM to 3,450 units across all models, led by Alto (-75%) and Wagon R (-84%). Honda Atlas Cars (HCAR) saw sales fall 17% MoM, driven by a 33% slide in Civic/City, though BR-V/HR-V sales surged 3.6 times MoM.
In the SUV segment, Sazgar Engineering (SAZEW) recorded a 20% MoM drop to 1,079 units due to weaker Haval demand (-19%).
The slowdown was not limited to passenger cars. Two-wheeler sales fell 11% MoM, with Atlas Honda (ATLH) selling 104,276 units (-10%). Three-wheeler volumes plunged 47% MoM, while tractor sales collapsed 57% MoM, with both AGTL (-41%) and MTL (-61%) reporting significant losses.
Analysts are anticipating the automobile sector to keep its pace in the near future owing to improving macroeconomic situation and new production lines introduced by the players.
"We expect the momentum in auto sales to continue in FY26, supported by lower interest rates and a strong pipeline of new model launches across various engine types, including hybrid and plug-in hybrid," said Sohail.