Pakistan’s proposed Auto Policy 2026-31 could make cars significantly cheaper, with preliminary industry estimates pointing to price reductions of 8 to 22 per cent across several vehicle categories. The Auto Policy 2026-31 price cuts would be the most direct benefit for buyers if the latest draft becomes law.
According to estimates reported by ProPakistani, conventional petrol cars could become 8 to 10 per cent cheaper, while hybrid electric vehicles (HEVs) may drop by around 9 per cent. Plug-in hybrids (PHEVs) could see reductions exceeding 20 per cent, and battery electric vehicles (BEVs) with import values below $15,000 could become about 22 per cent cheaper. Higher-priced BEVs may see reductions of around 8 per cent.
Auto Policy 2026-31 price cuts: the tax details
The price cuts flow from the tax structure in the latest draft. Topline Securities notes that the draft retains the 1 per cent general sales tax on BEVs but proposes 9 per cent for PHEVs and 6 per cent for range-extended electric vehicles (REEVs).
That is a shift from the previous draft, which proposed a uniform 1 per cent GST on all new energy vehicles, and from the earlier policy, which taxed PHEVs at rates between 8.5 and 12.75 per cent.
Not every category wins. REEVs could become about 3 per cent more expensive under the proposed structure, a reminder that the policy picks clear favourites among electrified drivetrains.
The draft also plans to cut tariffs on localised completely knocked-down (CKD) parts from 25 per cent to 15 per cent by fiscal year 2031. Topline Securities has warned that this tariff reduction could hurt local auto-parts manufacturers, though it added that intense competition could push automakers to pass the savings to consumers.
What it means for buyers and the industry
For buyers, the message is simple: waiting could pay. Expectations of lower prices may prompt customers to postpone purchases, which could slow vehicle sales in the short term and leave automakers holding existing inventory. That anticipation effect is a familiar risk whenever a price-cutting policy is announced before it takes effect.
The estimates also sit alongside the policy’s wider ambitions. The Auto Policy 2026-31 already targets $6 billion in vehicle and parts exports over five years, and a separate car-levy proposal is projected to raise Rs188 billion. Together, they signal a government trying to make cars cheaper to buy while taxing the industry harder to pay for it.
Safety, meanwhile, is getting separate attention: Toyota is recalling over 100,000 Land Cruiser hybrids globally over a fuel-tube fire risk, a reminder that price is only one part of the ownership equation.
The honest caveat is that these are preliminary industry estimates, not guaranteed showroom prices. The draft can still change, the tariff phase-down runs to 2031, and automakers will decide how much of the tax relief they pass on. Buyers should treat the 8-22 per cent range as the industry’s best reading of the draft, not a promise.
Frequently asked questions
How much cheaper could cars get under the new auto policy?
Industry estimates suggest petrol cars 8-10 per cent cheaper, hybrids around 9 per cent, plug-in hybrids over 20 per cent, and BEVs under $15,000 import value about 22 per cent cheaper.
Which vehicles could get more expensive?
Range-extended electric vehicles (REEVs) could become about 3 per cent more expensive under the proposed tax structure.
What GST rates does the draft propose?
The latest draft retains 1 per cent GST on BEVs, proposes 9 per cent for PHEVs and 6 per cent for REEVs, according to Topline Securities.
Could the policy hurt local parts makers?
Topline Securities warned that cutting tariffs on localised CKD parts from 25 per cent to 15 per cent by FY2031 could hurt local auto-parts manufacturers, though competition may force savings through to consumers.
