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ISLAMABAD, Nov 5 (APP): The Pakistan Institute of Development Economics (PIDE), under its RASTA Competitive Grants Programme, on Wednesday organized a seminar titled “Automotive Value Chains in Pakistan”, featuring RASTA Fellow and Fulbright Scholar Dr. Muhammad Shafaat Nawaz.
The session was moderated by Dr Usman Qadir, Senior Research Economist and Director (CITDE), PIDE, a news release said.
Presenting findings from his doctoral research on OEM-mediated Global Production Networks (GPNs) in Pakistan’s automotive industry, Dr Nawaz explored how the country integrates into global value chains.
His study, jointly funded by the Fulbright Program, PIDE’s RASTA CGP Round 4, and the American Association of Geographers, introduced the concept of OEM-mediated GPNs – where Original Equipment Manufacturers act as intermediaries between global lead firms and local suppliers, influencing technological upgrading and industrial outcomes.
Based on 72 interviews, a survey of 319 local firms, and network analysis, Dr Nawaz revealed that three Japanese firms dominate Pakistan’s auto market -holding 99 percent of passenger car and 89 percent of light commercial vehicle shares – creating an oligopolistic structure.
The tractor segment, controlled by two major firms, and the motorcycle market, where Atlas Honda holds about 67 percent, show similar concentration. While these OEMs have enabled Pakistan’s participation in global value chains, they have also limited innovation, export capacity, and research autonomy.
Unlike peer economies that attract high-value suppliers such as Bosch or Denso, Pakistan’s auto sector remains weak in indigenous R&D and technology transfer. Dr Nawaz categorized local firms into three groups: captive vendors tied to low-value contracts, emerging suppliers gaining autonomy through international certifications, and aftermarket producers engaged in low-tech subcontracting.
His findings indicated that while OEM-linked business can spur growth, most firms remain dependent unless they diversify and upgrade technologically.
Reviewing policy evolution from 1947 to 2026, Dr. Nawaz traced the shift from nationalization to privatization, localization, and tariff liberalization.
Although the Automotive Industry Development and Export Plan (AIDEP 2021–26) promotes electric and hybrid vehicles, the dominance of the “Big Three” persists.
He stressed that Pakistan’s challenge lies not merely in joining global value chains but in negotiating better terms – calling for revised OEM contracts, greater design and export rights, and support for globally certified suppliers.
During the discussion, Dr Mahmood Khalid, Acting Project Director at COE-CPEC, PIDE, questioned whether outsourcing by two-wheeler manufacturers to China posed risks or opportunities for local industrialization.
Dr Nawaz responded that while such collaborations can enhance competitiveness, they risk deindustrialization without proper safeguards.
Citing India and Brazil, he highlighted how those countries developed domestic lead firms and attracted global suppliers to strengthen innovation ecosystems.
Muhammad Shaaf Najib added that despite new assemblers, local value addition remains limited, warning that the transition to electric vehicles could disrupt domestic parts manufacturers.
Dr Nawaz concurred, noting that Pakistan’s localization has historically centered on low-value components.
Concluding the session, Dr Usman Qadir emphasized that Pakistan’s industrial future depends on shifting “from dependence to competitiveness,” empowering local firms to innovate, develop indigenous R&D, and integrate into global markets on stronger, more sustainable terms.