KARACHI – Buying a new car in Pakistan could soon become slightly affordable, with some popular models potentially getting cheaper by Rs 5 million. From Suzuki Alto and Toyota Yaris to electric SUVs and plug-in hybrids, the government’s new Auto Policy 2026–31 sparked hopes of major relief for car buyers.
The auto policy seeks to make car ownership more affordable, reduce import duties, accelerate electric mobility and transform Pakistan into a competitive automobile manufacturing and export market. While consumers could benefit from cheaper vehicles, industry experts have warned that the same policy could threaten domestic manufacturers, encourage imports and create fresh uncertainty over spare parts and resale values.
Small vehicles could become over 10-12 percent cheaper, while selected electric vehicles may see price reductions ranging from 20 to 33 percent. Plug-in hybrid vehicles could also benefit from reductions of approximately 13 to 21 percent, although individual model estimates vary.
Suzuki Alto, currently estimated at Rs 3.2 million, could fall to Rs 2.8-3million, Cultus could decline from Rs 4.3 million to Rs 3.8 million, while the Toyota Yaris 1.5 could become approximately Rs 700,000 cheaper.
Complete List of Cars Expected to Become Cheaper in Pakistan
| Car Model | Current Price | Projected Price | Expected Change |
|---|---|---|---|
| Suzuki Alto | Rs 3.2m | Rs 2.8-3million | −Rs200000-4Lac |
| Suzuki Cultus | Rs 4.3m | Rs 3.8m | −Rs 500,000 |
| Toyota Yaris 1.5 | Rs 6m | Rs 5.3m | −Rs 700,000 |
| Wuling Bingu EV | Rs 4m | Rs 2.7m | −Rs 1.3m |
| Small EV (unspecified) | Rs 5.3m | Rs 3.6m | −Rs 1.7m |
| Baojun Yep Plus EV | Rs 6.3m | Rs 5m | −Rs 1.3m |
| MG HS Petrol | Rs 9.5m | Rs 9.2m | −Rs 300,000 |
| MG HS PHEV | Rs 10.3m | Rs 9m | −Rs 1.3m |
| Kia Sportage | Rs 12.2m | Rs 11.1m | −Rs 1.1m |
| Haval AWD PHEV | Rs 12.9m | Rs 11.1m | −Rs 1.8m |
| Toyota RAV4 PHEV | Rs 23.3m | Rs 18.3m | −Rs 5m |
| Toyota Fortuner | Rs 20.5m | Rs 21.7m | +Rs 1.2m |
Wuling Bingu EV could become Rs 1.3 million cheaper, and another small electric vehicle, not identified by model in the estimates, could see savings of approximately Rs 1.7 million. Other vehicles likely to benefit include the GAC Aion UT, whose estimated price could decline from Rs 6.4 million to Rs 5–5.2 million.
Jaecoo J7 PHEV could become approximately Rs 2 million cheaper, with its price potentially falling from Rs 10 million to Rs 8 million. Selected variants of the Honda HR-V e, Haval Jolion and Toyota Corolla Altis could also see reductions of Rs 600,000 to Rs 800,000.
Not every vehicle is expected to become cheaper. The Toyota Fortuner, among Pakistan’s prominent premium SUVs, could experience a price increase of approximately Rs 1.2 million, taking its estimated cost from Rs 20.5 million to Rs 21.7 million.
The potential increase is linked to the proposed taxation structure, which would impose higher levies on vehicles with engines exceeding 2,000cc. Under the policy, petrol vehicles with engines up to 1,000cc would be exempt from the Automotive Development Levy.
Cars with engines between 1,000cc and 2,000cc would face a 2 percent levy, while vehicles exceeding 2,000cc would attract a 10 percent levy. The government says this approach is intended to protect middle- and lower-income buyers while placing a greater tax burden on larger vehicles.
Electric Vehicles to Get Major Tax Relief
Eligible fully electric vehicles valued up to $50,000 would also receive exemptions from Capital Value Tax, withholding tax and Federal Excise Duty. More expensive electric vehicles would be treated as luxury models and remain subject to applicable taxes.
However, the proposed concessions are subject to approval from the International Monetary Fund, meaning their final implementation is not yet guaranteed.
Alongside tax relief, the government wants to make electric vehicles easier to purchase through bank financing. The proposed framework would raise the electric vehicle financing ceiling to Rs 10 million, compared with the Rs 3 million limit cited for conventional vehicles. The repayment period could also increase from three to five years, potentially reducing monthly instalments by spreading payments over a longer period, although total financing costs would depend on interest rates.
Imported petrol-powered commercial vehicles could see reductions of 10 to 12 percent. There is possible impact by explaining that a commercial vehicle currently costing Rs 2.8 million might become available for approximately Rs 2.5 million. Experts cautioned that the exact reductions cannot be determined until the relevant tax changes take effect.
The new policy also targets the controversial practice of charging additional premiums on vehicles, commonly known in Pakistan as own money. Under the proposed measures, automobile manufacturers would be prohibited from collecting more than 20 percent of the total vehicle price as an advance booking payment.
The restriction is intended to discourage excessive upfront collections, improve transparency and reduce financial pressure on buyers.
Despite the excitement surrounding potential price reductions, automotive industry experts have expressed serious concerns about the future of local manufacturing. Experts warned that reducing tariffs on imported automotive components could weaken Pakistan’s existing production facilities.
Pakistan introduced two major automobile policies during the previous decade to attract investment, encourage manufacturing and expand exports. However, the country failed to achieve the expected progress, particularly in developing a strong automotive export industry.
The previous policy provided 25 percent tariff protection to locally manufactured components, yet localisation remained disappointing. Instead, manufacturers increasingly relied on imported semi-knocked-down vehicle kits, including parts that Pakistani factories could potentially produce. The new framework proposes reducing protection for locally produced automotive components from 25 percent to 15 percent.
Pakistan already possesses industrial capabilities in sheet metal fabrication, rubber manufacturing, forging and casting. Market sources believe these industries could face mounting pressure if imported components become significantly cheaper than locally produced alternatives.
The policy also aims to dramatically expand Pakistan’s automotive exports, with a target of $6 billion. However, industry experts questioned whether the country has the production capacity and industrial strategy required to achieve that ambition.
The government announced export target without presenting sufficiently clear implementation roadmap. He argued that an industry dependent on imported vehicles and assembly kits cannot easily become internationally competitive.
Automobile dealer questioned how Pakistan could strengthen its export performance while continuing to rely on approximately $3 billion in planned imports of vehicles and automotive components. Experts believe foreign manufacturers should be encouraged to establish genuine production facilities in Pakistan through agreements involving domestic manufacturing, technology transfer and export commitments.
They also argue that automotive policy should prioritise Pakistani suppliers, local engineering capabilities and the development of vehicles that can compete in international markets. Without these measures, the policy could benefit importers and car buyers in the short term while weakening the country’s industrial foundation over the longer term.
Despite the headline-grabbing projections, there is no confirmed date when all the expected vehicle price reductions will become effective. The government intends to lower import duties gradually over the five-year policy period, meaning consumers should not expect every listed vehicle to become cheaper immediately.
Suzuki Alto to get Rs3.5Lac Cheaper in Pakistan amid Auto Tax Shake-Up?
