By Qudsia Bano

Pakistan’s automobile industry recorded strong production growth in July 2026, with output of trucks and buses more than doubling and car production rising over 75%, extending the momentum of a broader recovery in large-scale manufacturing.

According to the Finance Division’s Monthly Economic Update & Outlook – August 2026, available with Wealth Pakistan, production of trucks and buses surged 100.4% year-on-year in July, while car production rose 75.6% and output of two- and three-wheelers increased 40.7%.

The sharp increases in automobile production came after the Large-Scale Manufacturing (LSM) sector returned to growth in FY2026 following a contraction in the preceding year.

LSM production expanded 4.98% during FY2026, compared with a contraction of 0.7% in the previous fiscal year, with 16 of the 22 industrial sectors covered by the index recording growth.

The Finance Division identified automobiles among the sectors making the largest contributions to overall LSM growth during the year. Food, wearing apparel and coke and petroleum products were also among the major contributors.

The full-year improvement indicates that the manufacturing recovery was spread across a majority of the sectors covered by the LSM index rather than being confined to a small number of industries.

The latest automobile figures suggest that strong production activity in the sector continued into the first month of FY2027, with all three vehicle categories highlighted in the report posting sizeable year-on-year increases.

The industrial recovery, however, has not been uniform from month to month. In June 2026, LSM production declined 3.5% year-on-year and 6.1% month-on-month.

The June decline was largely driven by contractions in wearing apparel, textiles and pharmaceuticals. Together, the three sectors contributed about 4.6 percentage points to the decline and accounted for more than three-fourths of the overall monthly contraction.

Despite that monthly weakness, the 4.98% expansion recorded for FY2026 marked a clear turnaround from the contraction in the previous fiscal year.

The Finance Division expects Pakistan’s economy to maintain its recovery momentum in the coming months, supported by stronger macroeconomic fundamentals, continued fiscal discipline and a stable financial environment.

The strong July automobile production figures provide an early indication of continued activity in an important manufacturing segment at the start of FY2027, following the broader recovery recorded by large-scale manufacturing during FY2026.

Credit: INP-WealthPk