Islamabad: The Pakistan Institute of Development Economics (PIDE), under its RASTA Competitive Grants Programme, organized a seminar titled ¬Automotive Value Chains in Pakistan® featuring Dr. Muhammad Shafaat Nawaz, RASTA Fellow and Fulbright Scholar, and moderated by Dr. Usman Qadir, Senior Research Economist and Director (CITDE), PIDE. The event explored how Pakistans automotive sector can move from dependence toward global competitiveness through value chain integration and industrial upgrading.
Dr. Nawaz presented findings from his Fulbright-funded doctoral research on OEM-mediated Global Production Networks (GPNs) in Pakistans automotive industry. His study, also supported by PIDEs RASTA CGP Round 4 and the American Association of Geographers, redefines how Pakistan connects to global value chains by introducing the concept of OEM-mediated GPNs³where Original Equipment Manufacturers act as intermediaries between global lead firms and local suppliers, influencing technological advancement, industrial performance, and regional development.
Drawing on 72 interviews, a survey of 319 firms, and advanced network analysis, Dr. Nawaz highlighted that three Japanese companies³known as the ¬Big Three®³control 99% of Pakistans passenger car market and 89% of light commercial vehicles, creating a highly oligopolistic market structure. Similarly, two firms dominate 99% of tractor production, while Atlas Honda holds 67% of the motorcycle market. While these OEMs have connected Pakistan to global networks, their dominance has restricted innovation, exports, and research autonomy. Unlike countries such as India or Thailand, Pakistans auto sector lacks linkages with high-value global suppliers like Bosch or Denso, and its indigenous RandD remains weak.
Dr. Nawaz categorized local firms as captive vendors, emerging suppliers, and aftermarket producers. His analysis revealed that a one-unit increase in OEM business share corresponds to a 0.09-unit rise in annual business growth, though this primarily benefits firms that diversify and upgrade technologically.
Reviewing industrial policy from 1947 to 2026, Dr. Nawaz explained that Pakistans auto strategy has shifted from state-led nationalization to privatization, localization, and tariff liberalization through CKD imports. While the Automotive Industry Development and Export Plan (AIDEP 2021±26) encourages electric and hybrid vehicles, structural oligopolies remain entrenched. He urged policymakers to renegotiate OEM contracts, expand design and export rights, and strengthen emerging suppliers through certification and global integration.
During the discussion, Dr. Mahmood Khalid, Acting Project Director at COE-CPEC, PIDE, questioned whether outsourcing motorcycle manufacturing to China represents an opportunity or a threat to local industry. Dr. Nawaz responded that cross-border production can enhance competitiveness but risks deindustrialization if unregulated, noting that Brazil and India succeeded by attracting global suppliers and fostering local autonomy.
Adding to the debate, Mr. Muhammad Shaaf Najib observed that despite new assemblers, value addition remains minimal due to reliance on imported CKDs. He warned that the electric vehicle shift could marginalize local parts producers unless they adopt high-tech manufacturing. Dr. Nawaz concurred, pointing out that Pakistans localization policies historically targeted low-value components, limiting innovation.
Concluding the session, moderator Dr. Usman Qadir emphasized that Pakistan must transition ¬from dependence to competitiveness,® empowering local firms to innovate, diversify, and integrate directly into global markets. He noted that while OEM-mediated networks open access, sustainable growth depends on fostering indigenous RandD, technology partnerships, and coherent industrial and spatial policies aligned with global production realities.