ISLAMABAD: Prices of locally assembled cars and electric vehicles (EVs) in Pakistan are expected to decline following proposed tax relief measures in the upcoming Budget 2026–27. The government is reviewing policies aimed at supporting the domestic auto industry and making vehicles more affordable for consumers.
According to sources, authorities are considering reducing taxes on raw materials used in vehicle production. A key proposal includes lowering customs duty on completely knocked down (CKD) kits, with rates likely set at 5% for non-localised parts and 10% for localised components. This move is expected to cut manufacturing costs and ultimately reduce car prices in Pakistan.
The new auto policy, expected to take effect from July 1, will introduce incentives to boost local production, encourage investment, and create employment opportunities in the automotive sector. Officials say the policy aligns with long-term goals of reducing reliance on imports while strengthening local supply chains.
A major focus of the upcoming budget is the promotion of electric and new energy vehicles (NEVs). The policy is likely to expand beyond battery electric vehicles to include hybrid, plug-in hybrid, range-extended, and fuel cell vehicles. These categories are expected to benefit from concessional tariffs and tax incentives, making EV adoption more attractive in Pakistan.
Locally assembled EVs may receive preferential treatment over imported units, while companies could be allowed limited concessions to assemble electric bikes, rickshaws, and cars. Each manufacturer may be granted duty benefits on up to 100 vehicles, with incentives expected to continue until June 30, 2027.
In addition, the government is considering tariff reforms under the National Tariff Policy, including the elimination of Additional Customs Duty (ACD) and reduction of Regulatory Duty (RD). The average tariff on local vehicles may be kept below 6%, while gradual cuts on imported petrol vehicles are also under discussion.
Industry stakeholders, including the Pakistan Association of Automotive Parts and Accessories Manufacturers, have welcomed these proposals, stating they could significantly boost local manufacturing and lower vehicle prices.
