Pakistan’s proposed Auto Policy 2026 offers the prospect of lower taxes on selected vehicles. But cheaper cars across the market are far from guaranteed.
Auto industry expert Masood Khan expects limited overall relief, with some buyers benefiting more than others. Speaking on ARY News programme “Ba Khabar Savera”, he argued that the proposals favour electric vehicles without necessarily making private transport substantially more affordable for ordinary households.
The outcome will depend on which measures secure approval, which vehicle categories they cover, and how manufacturers adjust prices.
Which Buyers Could Benefit?
Khan identified several proposed changes that could affect purchase costs:
| Vehicle category | Proposed treatment discussed by Khan |
|---|---|
| Battery electric vehicles | Retain the 1% sales-tax rate |
| Range-extended electric vehicles | Increase sales tax from 1% to 6% |
| Plug-in hybrids | Reduce sales tax from 18% to 9% |
| Selected smaller vehicles | Reduce federal excise duty and capital value tax |
These remain proposals, rather than a confirmed tax schedule. At the government’s November 7 briefing, Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan said the draft would go to the Federal Cabinet. Proposed sales-tax concessions also required approval from the International Monetary Fund.
Conventional hybrids need particular care. Published accounts differ on whether they would receive the same concessions as plug-in hybrids, making the final official schedule essential before drawing conclusions about individual models.
How Much Could Prices Fall?
Khan estimated that selected vehicles costing between Rs5 million and Rs6 million could become Rs250,000 to Rs300,000 cheaper through reductions in duties and taxes.
That estimate does not establish a market-wide price cut. His assessment did not include a model-by-model calculation or confirmed manufacturer prices.
A proposed levy on conventional petrol-powered vehicles could also increase costs for some buyers. The policy could therefore produce different outcomes across the market, rather than a uniform reduction.
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The government, meanwhile, says lower manufacturing costs and stronger competition should improve affordability. Its wider objectives include local production, exports, vehicle safety and greater transparency.
Public Transport Deserves Attention Too
Khan questioned whether incentives for private vehicles adequately address the needs of people who depend on public transport.
His argument places buses and other shared transport alongside the debate about cheaper cars. Reducing the purchase price of selected vehicles would benefit eligible buyers, but it would not directly improve the journeys of people who cannot afford a private vehicle.
That makes the balance between private-vehicle incentives and public transport investment an important part of the policy discussion.
Can Electric Vehicles Support Local Manufacturing?
Khan supports an approach that connects electric-vehicle adoption with technology transfer, domestic production and employment.
He warned that subsidies for imported vehicles alone would offer limited industrial benefits. Greater imports of finished vehicles or components could put local parts manufacturers under pressure if assemblers replace domestic suppliers with overseas alternatives.
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The government has also identified localisation and exports as policy priorities. The practical question is how the final incentives will encourage manufacturers to build stronger production networks within Pakistan.
Why Policy Consistency Matters
Khan’s final concern was continuity. He recalled how consumers invested in compressed natural gas conversion kits after government encouragement, only to encounter difficulties when fuel availability declined.
He warned against a similar reversal affecting electric-vehicle buyers if electricity constraints later change government priorities.
For now, the proposals point towards selective relief. The approved tax notifications and manufacturers’ revised price lists will show which buyers actually benefit and by how much.
