Pakistan’s proposed Auto Policy 2026–31 could make several vehicles more affordable by reducing taxes and import duties. The plan also aims to strengthen exports and encourage competition in the automobile industry.
Prime Minister Shehbaz Sharif has approved the draft policy. However, it still requires further approvals before the proposed changes can take effect.
Proposed Tax Cuts Could Lower Car Prices
The draft proposes a 1% sales tax on battery electric vehicles (BEVs). Meanwhile, range-extended electric vehicles would face a 6% rate, while plug-in hybrids would pay 9%.
These changes could reduce prices across several vehicle categories. Industry estimates suggest conventional petrol cars could become around 8–10% cheaper. Hybrid vehicles may see reductions of approximately 9%, while some plug-in hybrids could become more than 20% cheaper.
However, the actual savings will depend on the final tax rules and manufacturers’ pricing decisions.
The government also plans to reduce tariffs on imported vehicles and assembly kits. Under the proposal, tariffs could fall to 15% by 2030–31.
Electric Vehicle Financing to Become Easier
The draft also proposes better financing options for electric vehicle buyers. It would raise the financing limit from Rs3 million to Rs10 million.
Additionally, the repayment period would increase from three years to five years. These changes could help more consumers afford electric vehicles through instalment plans.
The government hopes these measures will encourage cleaner transport and expand electric vehicle adoption across Pakistan.
Local Manufacturers Raise Concerns
Despite the potential benefits for consumers, the proposal has raised concerns among local auto parts manufacturers. Industry representatives warn that lower import tariffs could increase competition from foreign vehicles and components.
They fear cheaper imports could weaken domestic suppliers and threaten jobs across the local manufacturing chain.
The draft also introduces export targets for vehicle manufacturers. Companies that meet their targets could receive financial incentives, while repeated failures could lead to penalties.
Policy Still Awaits Further Approval
The government aims to increase automobile and auto parts exports to around $6 billion over five years. It also plans to strengthen vehicle safety standards and encourage local production.
Nevertheless, the proposed policy is not yet final. Further approvals and legislative changes must take place before buyers can benefit from the new tax rates.
For now, consumers will need to wait for the government to confirm the final measures and their implementation date.
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