Broken Gears: Decline in Pakistan’s Automotive Industry

By Muhammad Ali Ozain

Intern – GDAP Summer Program 2025

In the broader landscape of Pakistan’s industrial sector, the automobile industry has long served
as a barometer of economic momentum. The quantum index shows how industrial activity
changes month to month. The Quantum Index of Large-Scale Manufacturing (QIM) for
automobiles shows a steady climb until 2019, peaking at 152. But by 2020, that figure had
nosedived to 0, following global supply chain shocks due to COVID-19. While a temporary
recovery pushed the index back to 130 in 2021, and peaked in the second quarter of 2022 at 170 –
the highest figure across 2015-25.

The overall trend has remained downward, with the 2025
value at a modest 67. At its core, this decline reflects shrinking production capacity, declining
consumer demand, rising input costs, and potentially even regulatory or import policy
constraints. For an industry that depends on imported parts and foreign technology, currency
devaluation and import restrictions likely exacerbated production hurdles. The volatility in
monthly output further suggests supply chain instability, inconsistent raw material availability, or
erratic demand cycles. Although President Trump has reduced the tariffs imposed on Pakistani
goods to 19% from 29% as a gesture of goodwill, the global tariffs are bound to create
shockwaves across the global supply chain, potentially increasing the cost of technology,
exacerbating Pakistan’s shrinking production capacity of automobiles.

For More Information:
https://galluppakistandigitalanalytics.com/quantum-index-large-scale-manufacturing/