ISLAMABAD – If you are planning to buy low-budget car in Pakistan, there’s some potentially good news on horizon. The government is working on a major overhaul of the auto sector under draft AIDEP 2026–31, which could make cars more affordable through easier financing, lower down payments, and longer repayment plans.
The country is preparing sweeping transformation of its automobile industry under the draft Auto Industry Development & Export Policy (AIDEP) 2026–31. The proposed reforms aim to revive struggling auto market, restore consumer demand, and make vehicle ownership more affordable after years of rising prices, strict financing conditions, and economic pressure.
As per reports, the government is considering easing of auto financing rules to boost car sales. Under the draft, eligible locally manufactured vehicles could be financed up to Rs1 Crore. Loan repayment periods may be extended to seven years, while the minimum down payment could be reduced to 15%.
This will help bring back buyers who have been priced out of the market due to high interest rates and tighter lending conditions.
A major and potentially controversial change under consideration is the phased liberalization of used vehicle imports. While stricter inspection and certification requirements will apply, import duties could gradually be reduced from 40% to zero by FY2030. At the same time, depreciation benefits on imported used vehicles would be capped at 30% to balance affordability with protection for local manufacturers.
The draft policy includes strict new rules aimed at protecting car buyers and improving transparency in the market. These include fixed booking prices to prevent sudden price hikes, penalties for delivery delays linked to KIBOR + 3%, and a cap of 20% on advance booking payments. In addition, manufacturers or authorized importers will be responsible for full warranty coverage, and spare parts profit margins at 3S dealerships would be capped at 20%.
The government is focusing heavily on promoting local automobile production. The policy aims to encourage consumers to prefer locally assembled vehicles over imports through easier financing and supportive regulations. Officials say this strategy is designed to strengthen domestic industry and revive related supply chains, although the proposals are still under consultation and not finalized.
The draft policy sets aggressive long-term goals for the sector. These include annual vehicle production exceeding 500,000 units, auto exports reaching $1 billion, and NEVs accounting for 30% of total vehicle sales. It also targets production of 100,000 tractors annually and the installation of 3,000 electric vehicle charging stations across the country.
The government plans to develop 3,000 EV charging stations nationwide, including fast chargers, Level 1 and Level 2 systems, and battery swapping stations. The framework also proposes fixed electricity tariffs for EV charging, investor incentives through viability gap funding, and mandatory installation of Level 3 chargers at fuel stations in each province.
To encourage EV adoption, several incentives are being considered. These include free registration and token tax exemptions for EVs in Islamabad, potential toll tax exemptions, government procurement of NEVs, and the development of an “Islamabad Electric Mobility City.” A phased transition from internal combustion vehicles to NEVs is planned to begin in December 2027.
If you look back at last 10 years, car prices in Pakistan have surged by 80% to over 150%, making vehicles increasingly unaffordable for the average household.
Honda Civic that cost under Rs3million a decade back, now sells for up to Rs1 Crore. Toyota Corolla has risen from about Rs. 2 million in 2015 to over Rs. 7 million today, while even entry-level cars like the Suzuki Alto now cost around Rs3 million.
This dramatic rise in prices is mainly due to the sharp depreciation of the rupee, persistent inflation, rising costs of imported auto parts and raw materials, and higher taxes and duties.
Global supply chain disruptions further worsened the situation, and four wheelers that were once considered affordable are now often viewed as luxury items, while used car prices remain high and volatile.
Upcoming Cars in Pakistan 2026: List of New Launches, and Expected Prices
