Chapter 05

The Puzzle

Some 252 million people, 4.9 million registered cars, and more than twenty brands arriving. On the official income figures almost nobody can afford what is in the showrooms. It sells anyway. This chapter does the arithmetic, then says what we think it hides. Where it is our opinion, it says so.

Question one

Is the market really that big? No. It is small, and thin.

A hundred households.

Each square is one household in a hundred. Car ownership is from the 2019-20 living-standards survey, the latest we could find with this question; the buying rate is our arithmetic.

94 own no carabout 6 own oneof those, fewer than 1 buys a new or imported car in a year
About 306,000 new and imported cars in FY26 (pieced together in The Market chapter) against roughly 32 million households in that survey is just under one household in a hundred. There are more households now, so the true share is smaller.

What is actually on the register.

Vehicles ever registered, in millions. The car band is the thin one on top.

Registers are cumulative: scrapped vehicles are rarely removed, so vehicles in use are fewer.
Our arithmeticPeople for every new car sold by members in a year≈1,200206,445 cars, 252 million people.
Our arithmeticRegistered cars per 1,000 people≈19Reported for India 33, Vietnam 46, Thailand 147.
ClaimCar owners per 1,000 people, says Toyota's assembler11Down from 18, its chief executive said in February 2026.
ConfirmedMotorcycles for every registered car6.230.5 million against 4.9 million.

Question two

On paper, who can afford one? Almost no one.

The 2024-25 household survey puts the average household's income at Rs82,179 a month and the richest fifth's at Rs139,317. Set that against the price list.

Years of a household's whole income to buy it outright.

Cheapest variant, ex-factory. No food, no rent, no school fees: every rupee earned.

Our arithmetic. Incomes are for 2024-25; prices are October 2026, so the true gap is a little narrower.
Our arithmetic
5.3years

of the richest fifth's entire average income buys the cheapest Haval H6. Pakistan bought 19,111 Havals last year, 8,815 Fortuners and Hiluxes, and about 306,000 new and imported cars found buyers in all.

Either the survey is wrong about incomes, or cars are not bought out of income. It is some of both.

Confirmed

The survey's own caveat.

Incomes are grouped by what households spend per head, in five equal slices of the population. The top slice is some fifty million people averaged together. The few hundred thousand households that buy new cars are a sliver inside it, and the ones least likely to open the door to a survey.

Try it: the instalment test.

Pick a car and move the sliders. The sum is the standard loan formula; the interest rate is yours to set, since banks price each customer differently. Insurance, registration and tracker fees are not included.

a month, after paying up front
Share of the average household's monthly income (Rs82,179):
Share of the richest fifth's monthly income (Rs139,317):

Assumption for the last line: a lender lets instalments take 40% of income. That figure is ours, for illustration.

Question three

So who is buying? Follow the cash.

There is something the income numbers do not show, and the car market is one of the few places it becomes visible. Six pieces of evidence, then our reading.

Confirmed · our arithmetic

Paid in cash.

All the car loans in the country added up to Rs382 billion in June 2026, Rs105 billion more than a year earlier. Three listed makers alone took Rs573 billion in sales. Net new borrowing was under a fifth of what just those three sold.

Confirmed

Paid in advance.

Booking a new model means handing over Rs1.2 million for an MG ZS, Rs1.7 million for an ORA 5, Rs2 million for a Haval H6 plug-in, Rs2.5 million for the GT, months before delivery. Kia wants full payment to lock a price.

Confirmed · PIDE

And a premium on top.

Buyers have paid 7% to 15% above the list price, in cash and off the books, to jump the queue. A market where people pay extra for speed is not short of money.

Confirmed

Outside the tax net.

Every official price list carries two tax columns: filer and non-filer. The non-filer pays three times as much advance tax. The column exists because enough buyers of new cars file no tax return for it to be worth printing.

Reported estimates

An economy half in the dark.

The central bank has put the informal economy at 30–40% of the measured one; a 2025 think-tank study says 59%. Income from trade, property and farming is lightly recorded and lightly taxed.

Confirmed

Money from abroad.

Remittances were 7.8% of household income in the 2024-25 survey, up from 5.0% six years earlier, and they arrive in lumps: the kind of money that buys a car outright.

The Rs573bn is our addition of the revenues in the three companies' own reports (Indus Motor, Sazgar, Honda Atlas); their financial years differ slightly.

Our reading

The honest answer.

Yes: urban Pakistan is richer than its income statistics say. New cars are bought by a narrow, mostly city-based group, perhaps one to three households in a hundred, out of savings and business cash rather than salaries or loans. In a country this size that is still several hundred thousand households at the least, enough to clear 300,000 cars a year.

But it is a pool, not a river. It refills slowly, it buys when prices and taxes are settled, and it waits when they are not. It is the right size for the market Pakistan has. It is not the size the factories were built for.

What we could not find

The blind spots.

No official survey of household wealth. No car registrations by city. No sales by city from any maker. No count of company and government fleet purchases, which may be a meaningful slice of the dearer SUVs. No published sales at all from about half the brands.

Anyone who claims to know exactly how rich Karachi or Lahore's car buyers are is guessing. So, on the size of that top group, are we.

Question four

How can so many survive on so few buyers? Eight plays.

This section is our reading throughout. Each play is tied to a fact from the other chapters.

Sell price, not volume.

A Rs10 million hybrid SUV earns what four small cars cannot. Sazgar kept 12 rupees of profit from every 100 of sales; Honda, selling mostly a Rs4.9 million sedan, kept under 3. Nobody new is trying to build an Alto.

Let a local group own the factory.

The Chinese maker supplies kits and a badge. The Pakistani partner supplies land, a shed, dealers and the risk. If it fails, the foreign brand loses a distributor, not a plant.

Keep the line small.

These plants are sized for a few thousand cars a year. A kit line breaks even at volumes that would bankrupt a real car factory, which is why capacity could double without sales growing.

Stack badges under one roof.

One group, three or four brands, one paint shop. When Haval sells and BAIC does not, the line keeps running. The partner survives even when a brand does not.

Import first, build later, or never.

BYD has sold imported cars for two years and starts assembly only now. Geely and Xpeng begin the same way. If the cars sell, build; if not, leave quietly. Vendors say 1,500 to 2,000 fully built new-energy cars arrive a month.

Use the customer's money.

Deposits of Rs1–3.5 million, taken months ahead, finance the kits. The buyer carries the working capital and the exchange-rate risk: price lists say taxes and duties at delivery are the customer's problem.

Ride the tax gap.

Hybrids paid 8.5% sales tax against 18–25% for petrol; electric cars are reported to pay about 1%. So 87% of this year's launches plug in or self-charge. When the gap closed on 1 July, the hybrid business all but stopped.

Export China's spare capacity.

Petrol-only car sales in China fell 26% in the first half of 2026. Factories there need somewhere to send cars. Pakistan is a right-hand-drive market with willing partners and a cheap way in.

Question five

Does the flood work for Pakistan?

What it has bought
  • Choice. Fifteen models now start between Rs7 million and Rs10 million. Twelve of them come from brands other than Suzuki, Toyota and Honda.
  • A broken cartel. Three makers held about 80% of the market at the last peak; they hold 56% now.
  • Newer technology. Hybrids, plug-ins and driver aids arrived years before the incumbents would have brought them.
  • Price pressure at the top. 2026 has seen repeated cuts and discounts on SUVs and sedans as the newcomers fight each other.
What it has cost
  • Dollars. Kit imports doubled to $2.12 billion in FY26. The association now warns the State Bank may have to step in, as it did in 2022.
  • Scale. Car plants ran at 46%. No maker is large enough to export; the rule that 5% of output be exported "did not bear any fruit".
  • No wider ownership. The newcomers cut each brand's share without growing the market, the government's own think-tank says.
  • Orphan risk. Buyers of brands that fade are left with thin service networks and weak resale. It has happened already.
Our reading: it works for the household with Rs8 million. It has not yet worked for the country. The same narrow group is being offered more and more ways to spend the same money, on cars that arrive in boxes and are paid for in dollars.
What would change it · 1

A cheap small car.

The think-tank proposes the lowest duties for the smallest electric and hybrid cars. Nothing else reaches the household that owns a motorcycle today.

What would change it · 2

Fewer, bigger plants.

Its first recommendation is a five-year freeze on new assembly licences. Scale, not more badges, is what lowers cost and makes exports possible.

What would change it · 3

A tax table that stays still.

Three hybrid tax rates in ten weeks froze a whole segment for a quarter. The draft policy's car-loan ceiling of Rs10 million for electric cars helps only buyers who already qualify.