Pakistan, now over seven decades into its journey as materials import reliant, remains at a critical economic crossroads. One of its most persistent challenges is the inability to boost exports and remaining ignorant of working for imports substitution and reduce dependency on foreign loans. Among the many sectors with unrealized potential, the auto parts manufacturing industry stands out.
As of 2024, the global automotive aftermarket is worth nearly USD 468.91 billion, with projections indicating a climb to USD 589.01 billion by 2030. This market includes everything from bumpers to sensors and batteries—products in increasing demand due to growing vehicle ownership and the transition to electric vehicles (EVs). This trajectory offers Pakistan a timely opportunity. However, to seize it, we must revisit and radically transform our policy framework, execution capacity, and industrial vision, drawing upon lessons from nations that have successfully navigated the same path.
Taiwan: Precision, Policy, and Performance
Taiwan’s strategy is equally adoptable. Initially employing import substitution to nurture its domestic industry, Taiwan soon realized the value of global competitiveness. It transitioned to export-oriented growth, supported by currency devaluation and export rebates. This shift enabled Taiwanese manufacturers to become price competitive globally.
One of Taiwan’s most effective moves was the creation of Export Processing Zones (EPZs). These zones offered tax holidays, streamlined customs, and support for exporters. Taiwan promoted joint ventures with international players, mandating technology transfers and pushing for a 70% localization target in manufacturing—a strategy that elevated local capabilities dramatically.
What sets Taiwan apart today is its specialization in high-tech automotive components. By aligning industrial growth with advancements in electronics and IT, Taiwan became a reliable supplier for EV giants, including Tesla. In fact, 75% of Tesla’s supply chain vendors include Taiwanese firms—a testimony to its high-quality, innovation-driven ecosystem.
Taiwan also dominates the global aftermarket for components like bumpers, lights, sensors, and electronics, exporting over 90% of its total auto parts output. Its government actively promotes the auto sector through global branding, regular participation in international expos, and direct facilitation of B2B linkages.
Why Pakistan Lags—and What Must Be Done
Pakistan has had a stop-start approach. While some policies have aimed at local manufacturing, many lacked continuity, clarity, or execution. Export zones remain underdeveloped and miss-utilized or inaccessible to SMEs. Tariff-based localization policies have often lacked consistency, pushing assemblers to import rather than localize. Moreover, our trade agreements remain underutilized, and public-private collaboration is weak.
The unfortunate reality is that despite decades of effort, Pakistan’s exports haven’t crossed the USD 35 billion mark, while Taiwan— mush less of our size in population —has surpassed USD 475 billion annually. The underlying difference is a focused commitment to industrialization and global integration.
A Way Forward: A National Export Blueprint
It is imperative for Pakistan to recognize that growing the auto parts industry is not merely about assembling vehicles. It is about developing a parts ecosystem that is competitive, exportable, and aligned with future global demand—especially in electrification and digital mobility. The first step is to phase out blanket import tariffs and replace them with export-performance-linked incentives. This will shift the mindset from protection to competition.
The government must develop Auto Parts Export Clusters with shared R&D facilities, testing labs, low-cost leasing for SMEs, and a single-window clearance system for exporters. A national campaign—“Pakistan Auto Parts Export Mission (PAPEM)”—should be launched, backed by the Ministry of Commerce and Engineering Development Board, to promote Pakistan’s manufacturers at global exhibitions and secure B2B connections abroad.
We need policy coherence. Ministries such as Industries, Commerce, Finance, and Science & Technology must align their objectives to reduce bureaucratic delays and eliminate overlapping jurisdictions that frustrate businesses.
Technology remains a major hurdle. Pakistan must incentivize R&D in vehicle electronics, EV components, and digital control systems.
Finally, it is crucial to tap into diaspora networks and digital trade platforms to link local SMEs to global demand—especially in the U.S., EU, and GCC markets.
Pakistan must now decide whether it wants to remain stuck in survival mode or move boldly toward export-led growth.
Published in Automark’s July-2025 printed and digital edition.
By Mashood Khan – Director – Mehran Commercial Enterprises – Expert Auto Sector / Former Chairman PAAPAM